Refresh my memory. Didn’t Bear Stearns have a separate chairman and CEO when it failed last March? I think it did!
And a fat lot of good that did shareholders. I mention this because I see federal regulators are pushing Citigroup (NYSE:C) to make some changes in its executive suite. Sir Win Bischoff is said to be on his way out as chairman, while Richard Parsons is on his way in. The move, the New York Times reports, is intended “To restore confidence in the beleaguered financial giant.”
Please. The feds can redraw Citi’s org chart however they want. They can take ISS’s good-governance checklist and insist Citi implement it down to the last tick box, and it still won’t likely do Citigroup much good.
That’s because the key to fixing what’s wrong at Citi doesn’t have much to do with the details of what its top management structure looks like. It has to do with the quality of the people who are actually making the decisions. I happen to be agnostic on whether Vik Pandit is the guy to lead Citigroup out of the wilderness (although I’m becoming less enamored with him by the day). But I doubt it matters much whether Pandit is chairman as well as CEO, or just CEO, or whether Citi has a “lead director” as well as a chairman, or whatever else the governance types' latest fetish is.
The fact is these little rules don’t matter much. Oh, they don’t do much harm. But if you don’t have the right people in place, they won’t do much good, either. If the federal government, as major shareholder, can help Citigroup get the right people in the right jobs, it will contribute significantly to the company’s eventual recovery. But if all it’s doing is following the latest governance fad, it’s just wasting management's time at a moment when Citi’s leaders need to be focusing relentlessly on the matter at hand.