Pandit Gets Paid

NEW YORK ( TheStreet) -- Ousted Citigroup ( C) CEO Vikram Pandit is "not entitled" to a severance payment, but Citigroup late on Friday announced it had granted him an "incentive award."

While Pandit abruptly resigned as Citigroup CEO on Oct. 16, with chief operating officer John Havens also giving up his executive position that day, Citi said in its filing that both "have remained employed and received their regular pre-existing base salary and benefits," and would actually exit the company on Nov. 30.

On his way out the door, Pandit will receive an incentive award of $6,653,333, while Havens will receive a slightly higher award of $6,792,222.

The payments will be made with 40% in cash up front, with the remainder "delivered in four equal installments promptly following each of January 20, 2014, 2015, 2016 and 2017."

The company was careful to note that the bonuses were "subject to Citigroup's standard clawbacks applicable in the event of circumstances such as gross misconduct during employment or awards based on materially inaccurate financial statements."

Pandit "continue to vest in deferred stock and deferred cash incentive awards currently valued at approximately $8,825,000," as part of his compensation for 2011, according to the company, while Havens will see similar vesting, to the tune of $8,725,000.

After carefully engineering Pandit's ouster for several months, according to a New York Times report, Citigroup chairman Michael O'Neal graciously credited Pandit with steering the company "through the financial crisis, realigned its strategy, bolstered its risk management processes and returned it to profitability," while adding that "John's focus on our institutional businesses increased our capabilities and helped steer our clients through volatile times."

Investors will be looking for Citigroup's new CEO Michael Corbat to speed up Pandit's "good bank/bad bank" strategy of placing noncore assets within the company's Citi Holdings subsidiary and allowing them to runoff, in order to continue right-sizing the company's balance sheet, while freeing up more capital to return to shareholders.

Citigroup currently pays a nominal quarterly dividend of a penny a share. The Federal Reserve in March rejected the company's initial 2012 capital plan and later approved a revised plan that didn't include any additional return of capital.

Deutsche Bank analyst Matt O'Connor said in his firm's weekly Bank Cheat Sheets on Monday that he expects Citigroup to receive approval to return a total of $2.774 billion in capital to investors during 2013, including $1.199 billion in dividends, and $1.575 billion in common share repurchases. The analyst expects Citi's shares to have a dividend yield of 1.1% for 2013.

Citigroup's shares closed at $35.93 Friday, returning 37% year-to-date, following a 44% decline during 2011.

The shares trade for 0.7 times their reported Sept. 30 tangible book value of $52.70, and for eight times the consensus 2013 earnings estimate of $4.64 a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $5.04.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.