Pandit, whose doctoral thesis for Columbia University was titled “Asset Prices in a Heterogeneous Consumer Economy,” was ousted after the board concluded his mismanagement had caused setbacks with regulators and cost credibility with investors, a person with knowledge of the decision said yesterday, requesting anonymity because the deliberations were private.

The Federal Reserve in March blocked Pandit's proposal to increase payouts to shareholders, who rejected his compensation plan in a non-binding vote a month later. Moody's Investors Service cut Citigroup's credit rating by two grades in June, and last month the bank took a $4.73 billion pretax writedown on the value of its stake in a brokerage venture with Morgan Stanley.

Among Corbat's first tasks as CEO of the New York-based lender will be to prepare a submission for the next round of Fed stress tests in early 2013, O'Neill, 65, said on the call. It failed part of the test this year.

The new CEO also may have to weigh in on whether big banks should be broken up, a debate stoked in July when Citigroup founder and former Chairman Sanford I. “Sandy” Weill said he advocated it.

Citigroup plunged about 89 percent since Pandit took over as CEO on Dec. 11, 2007. The shares have climbed 42 percent this year through yesterday.

Corbat has a bachelor's degree in economics from Harvard in Cambridge, Massachusetts, where he played football as an all-conference offensive guard.

'Torch Fat'

He was assigned by Pandit in April 2009 to divest $573 billion of assets as permanent head of the Citi Holdings unit, which held unwanted businesses. They included private-equity stakes, auto loans, a life insurer, a student-loan firm, a fund-of-hedge-funds business as well as mortgages and corporate bonds. In 2010, he pursued an exercise regimen called the Spartacus Workout that, according to MensHealth.com, is designed to “torch fat” and “send your fitness level soaring,” people with knowledge of his routine said.

The Spartacus Workout entails a series of minute-long exercises including squats, pushups and dumbbell lifts, with 15 seconds of rest in between, according to MensHealth.com. The process is repeated twice. Corbat also is a trustee of the U.S. Ski and Snowboard Team Foundation.

By the end of 2011, when Corbat was transferred to become the bank's European regional chief, the assets in Citi Holdings had been cut 61 percent to $225 billion.

As CEO he'll look to dispose of more businesses and cut costs further, said Tom Brown, who runs hedge fund Second Curve Capital LLC, based in New York. It's a strategy O'Neill used in the early 2000s as the chief of Honolulu-based Bank of Hawaii Corp., where the stock price tripled during his tenure.

While Bank of Hawaii revenue dropped on his watch, costs fell faster, boosting profit, Brown said.

O'Neill became known for a “relentless focus on process,” Brown said. “O'Neill's going to help Corbat in that regard.”

Citigroup, the third-biggest U.S. bank by assets, might sell or shut some of its 1,017 bank branches in North America, said Gerard Cassidy, an analyst with RBC Capital Markets in Portland, Maine.

“Citi had a grandiose plan of retail banking in major urban areas around the world,” Cassidy said. “O'Neill and now Corbat will take a very hard look at business lines that may not justify their remaining at Citi.”

O'Neill, Corbat and Pandit didn't respond to interview requests yesterday.

Spider-Man

Corbat told graduates of the all-boys Salisbury School in Connecticut that “short-term thinking is what led to the downfall of some of this country's once-great companies,” according to a transcript of his 2010 commencement speech on the school's website. He was a trustee of the preparatory high school, which his son had attended.

He also quoted the comic-book character Spider-Man. “With great power comes great responsibility,” he said.

Corbat joined Salomon Brothers Inc. in 1983. The Wall Street firm became part of Citigroup under Weill in the 1990s.

Corbat became head of emerging markets in Citigroup's fixed-income unit, and took over corporate lending in 2004. Four years later he was assigned to run the wealth-management division, which included serving ultra-high-net-worth clients.

His pay totaled $9 million for 2010, including a $500,000 salary, $3.4 million cash bonus and stock awards valued at $5.1 million, according to a company filing. His pay for 2011 wasn't disclosed. Citigroup said yesterday that Corbat will receive a base salary of $1.5 million as CEO.

Bank cleanups haven't always been seamless for Corbat. Resolution Trust Corp., the government agency that sold the assets of failed savings-and-loan institutions, alleged in 1995 that he was one of two Salomon employees who broke ethics rules by entertaining the agency's employees.

Corbat, whose firm earned $45.9 million in fees from the agency, discussed asset sales while spending $1,456.17 on a day of hunting in Millbrook, New York with two Resolution Trust employees, the New York Times reported then.

The agency's inspector general found no connection between contracts and the entertainment.

Steve Bell, the other Salomon employee cited, said in an interview yesterday that the consequences were minimal.

“In essence they said 'Don't do it again,'” he said, adding he doesn't recall any fines.

Corbat was “a straight-shooter,” said Mark Field, a former Salomon colleague who's now a senior managing director at Guggenheim Securities LLC.

'Good Guy'

“In the land of Wall Street, where you meet all types, he was just a good guy,” Field said.

Corbat gave underlings the feeling they were working with him and not for him, said Richard Couch, a managing director in Citi Holdings's financial office until 2010. Other executives at the firm, he said, “definitely walked around with a little more of an air that they were in charge and you needed to do what they did, or else.”

Corbat must show colleagues that Citigroup can “come back to a time when they were a prestigious and well-thought-of institution,” Couch said. It “hasn't been that way for many years now.”

Roger Caron, a fellow Harvard lineman who played in the National Football League, said Corbat once told him to stay on the field despite a knee injury.

“He kept encouraging me to play on,” Caron said.

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