NEW YORK ( TheStreet)--If Citigroup ( C) shares can build on the decent run they've had since the Oct. 16 ouster of CEO Vikram Pandit, it might spark other bank boards to show some spine and give their overpaid, under-accomplished chief executives the heave-ho. As of Friday's close, Citigroup shares are up 2.56% since Pandit got the boot. That is less impressive than Bank of America ( BAC)'s 12.08% gain over the same time period, but better than JPMorgan Chase ( JPM), Wells Fargo ( WFC), Morgan Stanley ( MS), Goldman Sachs ( GS) and the Financial Select Sector SPDR ( XLF). Recent lackluster performance aside, however, many banks are in a long term slump. Citigroup, Bank of America, Goldman and Morgan Stanley and JPMorgan continue to trade below book value, for example. That cannot be a pleasant experience for board members, who many times represent large shareholders. "Board members have a pecuniary interest that is not being met," says Gary Townsend, President and CEO of Hill Townsend Capital. Townsend believes Bank of America CEO Brian Moynihan is "particularly vulnerable," since he is tasked, as Pandit was, with shrinking the institution he runs. "That is a difficult process to manage of course and if you're a good organization you want to be growing, not shrinking. Moynihan in his strategy is continuing to shrink the bank, reduce the size of the earning assets, to sell off operations and it'll be very difficult for Moynihan to ultimately succeed as long as he's pursuing those policies," Townsend says. Both in the U.S. and the U.K. there has been increasing discussion of giving shareholders a greater voice and trying to encourage a longer-term view among both shareholders and management, according to Joel Shapiro, lecturer at Oxford University's Said Business School. Good governance has become increasingly important, even as scandals, such as Libor-fixing, JPMorgan's "London Whale," of HSNC's nearly $2 billion fine for money-laundering dominate headlines, Shapiro notes. "A lot of these companies aren't looking very good right now and they're not going to perform very well at least in the short term, so that might embolden boards at this time to shake things up," Shapiro says. Still, not everyone is convinced what happened at Citigroup will be so easily replicated at other institutions.
"I think this is specific to Citigroup and in particular the chair of the board,
former Bank of Hawaii CEO Michael O'Neill has a very very particular viewpoint on how financial institutions should be run, so I don't think this is necessarily indicative of future actions," says Michael Yoshikami, CEO of Destination Wealth Management. "It does show certainly a very activist perspective by a board and I think in some ways given some of the fiascos we've seen at other other companies where the board essentially was asleep as the CEO acted I think it does remind boards that they have a responsibility for oversight, but whether it will lead to more aggressive actions at financial institutions I wouldn't say that's the case," he says. Yoshikami's view seems sensible enough at the moment, but if Citigroup shares take off in 2013 under new CEO Mike Corbat, expect more boards to start holding other CEO feet to the fire. -- Written by Dan Freed in New York. Follow @dan_freed