When Citigroup’s chairman Mike O’Neill spoke on an investor conference call about the abrupt resignation of CEO Vikram Pandit, he said that the timing made sense because strategic planning was underway.

“And so, if we are going to hold [the new CEO] accountable for our performance, he clearly needs to have a role in setting the targets,’’ O’Neill said.

Citigroup Inc. has had a bad year. Make that a bad decade. The company’s stock price fell 89 percent during Pandit’s tenure. But the bank is hardly alone. Many of the more than 7,000 banks and thrifts in the country have problems of their own, so the question of whether you have the right CEO on the job, and if not, how to get rid of him or her, is one that many banks are trying to answer.

Courage is step one. Is the board independent enough from management to actually fire the CEO?

The Wall Street Journal reported last week that the “shake-up amounts to an extraordinary flexing of boardroom muscle at Citigroup, a company that until recently had a board stocked with directors handpicked by former CEO Sanford Weill who rarely challenged management decisions.”

Chairman O’Neill, a longtime banker and stellar CEO at the Bank of Hawaii, has only been there since April. Several other directors are recent appointees who signed on after regulators urged a board purge following the financial crisis, according to the Journal.

In fact, O’Neill had an office within 100 feet of Pandit, according to The New York Times. In his new job as chairman, O’Neill quickly got to work learning in the ins and outs of Citigroup and visiting the company’s various trading floors, according to news reports.

“The chairman of the board is critical,’’ says James McAlpin, a strategic planning expert and bank attorney at Bryan Cave LLP in Atlanta. “If you have the chairman and the CEO as the same person, that further complicates this. That makes it more difficult for the evaluation [of the CEO’s performance] to take place.”

If the board doesn’t want a non-executive chairman, a lead independent director who meets separately with other independent directors is key to maintaining independence.

It’s also important that the CEO be judged on how well he or she has executed the strategic plan. Tying the CEO’s performance to strategic goals with a formal annual evaluation is something that bank boards often don’t do.

As shocking as this might sound, banks are more likely to evaluate the performance of their tellers than their CEOs.

“There are a surprising number of banks where the CEO doesn’t see a performance review,’’ McAlpin says. “Particularly in community banks, it’s the exception rather than the rule. That makes it harder for the CEO to know how he is doing. Concern builds over time and suddenly the CEO finds himself in a very confrontational meeting with the board.”

Geri Forehand, national director of strategic services with Sheshunoff Consulting + Services, says that all CEOs should receive an annual performance review.

“When you hire a CEO, you have to have a way to evaluate the CEO, both quantitatively and qualitatively,’’ he says. “Every board should handle this in a formal matter. You should give your CEO an evaluation on an annual basis.”

He says the CEO should be fully informed of the metrics that will be used to measure performance and how they will be used, including how the board will factor in qualitative measures.

“I think the CEO wants to know what is expected of him or her,’’ Forehand says.

It’s not only good for the CEO, it’s good for the bank. A CEO who knows what he or she is supposed to achieve will be better able to actually achieve it.

When it’s time to make a tough decision, however, it works best for there to be a strong chairman or lead independent director. The full board needs to be involved in the discussions and the CEO needs to know the entire board has made a decision.

The board should also go through the process of identifying the next CEO far in advance of an actual resignation, which will make the transition easier, says Forehand.

The actual firing (or forced resignation), therefore, is part of a long, strategic process.

“It’s a very difficult conversation to have with a CEO,’’ McAlpin says. “[The CEO] wants to know the entire board has deliberated on this.”