The bank said on Friday the payments to Pandit and former chief operating officer John Havens reflect the progress the bank made in 2012 and work they did in some earlier years.
The statement came less than a month after board members led by chairman Michael O’Neill told Pandit privately that his work was not satisfactory, sources said at the time. Michael Corbat, head of Europe, west Asia, and Africa for Citigroup was named the new chief executive.
The payments are the final chapter in the reign of Pandit, who was named chief executive just as the financial crisis started and shepherded the bank through three government rescues and a series of subsequent miscues.
O’Neill lost confidence in Pandit after missteps that included the bank’s failure to win regulatory approval to return capital to shareholders this year, sources had said.
Payments to departing officers are a thorny matter for corporate boards because investors question the benefit the company gets from handing money over to executives that no longer work there.