Clash Brewing over $100M Citi Bonus

By: Daniel Carty
Topics: Bailouts

(CBS)

The controversy over executive pay in the financial sector appears far from over, with Citigroup and the government poised to clash over the bank's scheduled $100 million bonus to energy trader Andrew J. Hall later this year.

Hall's potential nine-figure payday is stipulated in his contract with Citigroup, which owes a lot to his management of the lucrative Phibro energy trading unit. But, of course, Citigroup is on the hook for $45 billion in government aid and White House executive pay czar Kenneth Feinberg is looking for ways to rein in banks' super-sized bonuses.

As the Deal's George White points out, the situation presents a bit of a conundrum for Citigroup– satisfying the government's demands for fiscal sanity in executive pay structure would also mean perhaps losing its top money-earners, making its return to profitability all the more difficult.

It would also require nullifying an existing contract simply on the basis of its unpopularity, a prospect fraught with legal complications.

On the contract issue, White lays out the two schools of thought:

Roger Ehrenberg argues that "if contracts entered into legally and without prejudice are all of a sudden cast into doubt, the entire foundation of free and fair commerce is in jeopardy."

But Reuters' Felix Salmon counters that "Hall's contract would be worth bupkis if Citi had gone bankrupt; the only reason it didn't was that the US government bailed it out. So if the US government wants to call some shots here, it can."

Citigroup's position is particularly hazardous because they, unlike some other financial giants like Goldman Sachs and JPMorgan, didn't post 2nd-quarter profits, meaning they're still tethered to the government to a greater degree.

Other banks may also take their cue on bonuses from whatever happens to Citi, so there promises to be many gazes fixed on it when decision time comes.

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by kdh1960-2009 August 26, 2009 1:54 PM EDT: A.J. Hall is a speculator, a gambler. Sometimes you win. Sometimes you lose. When the government had to step in, Hall's luck changed. Get over it, A.J. It's not like you need the money. Walk away. Uncle Sam is the dealer, and the odds are always with the house. You know that better than anybody.; Reply to this comment


by amstaffs July 28, 2009 8:47 PM EDT: I do not care if Republican or Democrat, since the whole thing is done and we are in a recession. The fact is: Millions of good hard working people are without a job (including myself).

A) I wonder how much money ONE person needs. Mr Hall can never spend 100 mill plus his annually salary - which is most likely also in millions. How many people could survive for the next two to three years - until the recession is over - on 100 million ? 1111 families for three years (30k annually).

B) I completely agree with Reuters' Felix Salmon that: "Hall's contract would be worth bupkis if Citi had gone bankrupt; the only reason it didn't was that the US government bailed it out. So if the US government wants to call some shots here, it can."

C)If we let Citi / Mr Hall get away with his 100 million bonus, we have to pay all the CEO?s (including GM, Ford,...) their bonuses and at that point we would have been better off, flushing all the bail-out-money down the toilet.

So for me NO Bonus until Citigroup is in the black?s and has payed off his debs to US.; Reply to this comment


by jetranger7 July 28, 2009 8:16 AM EDT: I'd Immediately FIRE that Andrew Hall, and have him Escorted off the premisis by armed guards, and without any form of Compensation what so ever,, see everybody this is exactly what my Rants are about all the time on these Blogs about those with these so-called Higher Education from these Over-Glorified Colleges and Universities, idiots like this moron,, are so highly over paid its ridlicious and absurd, this guy is worth 100-Million Dollars,, than I've been under paid for the last 20- years,, franklt I wouldn't give him 10- cents to mow my yard, chances are he couldn't even handle that, on a riding tractor ! Get Rid of this Idiot Moron,, Immediatley - NOW !!!!; Reply to this comment


by PacificGatePost July 27, 2009 10:38 PM EDT: THE MOST IMPORTANT LETTER ALL CEO?s SHOULD RECEIVE

Isn't it time the system went in for some much needed repair?

Due diligence and oversight long ago slid out the window. No one was watching.

A dramatic change swept through all of North America's boardrooms over the past 30 years. It is one of the underlying causes of the headache the economy is now feeling, but more importantly, it has resulted in the general feeling of "disconnect" by most Americans from the billions in bonuses being paid to too many on Wall Street who produce absolutely Nothing.

"We the shareholder of your companies, ?.

http://pacificgatepost.blogspot.com/2008/03/letter-to-ceos-of-fortune-1000-cos.html; Reply to this comment


by mainerose July 27, 2009 3:12 PM EDT: I hope he has good security and bodyguards. One of these days, some poor schmuck who has lost his shirt thanks to Hall and his ilk is going to lose it and get some of these greed-mongers.; Reply to this comment


by harpoot July 27, 2009 2:54 PM EDT: Bend over tax payer. It's all greased up and headed for a hole near you.; Reply to this comment


by davlar2 July 27, 2009 2:50 PM EDT: $100M is an outrageous bonus for ANYONE. The President himself makes 1/10th of that during his entire term of office, and no, Hall "didn't have a better year..."; Reply to this comment


by Benton09 July 27, 2009 2:48 PM EDT: We the Corporate Slaves of our Money Worshipping company, swear our allegiance as long as we receive our big bonuses, perks and outlandish salary. We promise to find the most cost effective employees as possible so as to continue our self centered me, me, me and how much for me creed. To H*ll with our country and it's people for our God is Corporate Profits no matter how they come.
And now we bow before the Almighty Dollar and His son the Stock Market.
AMoney

Corporate Prayer; Reply to this comment


by Illuminated1 July 27, 2009 2:17 PM EDT: They are full of themselves to believe giving more money to anyone will be making the company a better company.
This is just all been a lie....
The corporation needs our help, but the people behind it all have masterminded our nation's economic disaster, while profiting from it.; Reply to this comment


by Missyriver July 27, 2009 1:25 PM EDT: This is what is partly wrong with this country - "greed" The man has no sole, he sees first hand what this country is going thru and then has the nerve to ask for $100 million, I say don't pay and let them sue and let a tax paying jury decide.; Reply to this comment