$100M to Castle Owner for Risky Bets

Citigroup's Andrew Hall May Be an Early Test in the Government's Bid to Crack Down on Corporate Compensation

(CBS)  The government has said it wants to crack down on those big pay packages given to many corporate executives. Today, a House committee voted to ban the kind of compensation that encourages an executive to take risks that could threaten the company or the U.S. economy.

That goes even further than what the White House is proposing, as CBS News correspondent Kelly Wallace reports.

You might think someone who owns a castle in Germany wouldn't need to make millions more. But the lord of this castle is one of Citigroup's most valuable employees.

He's Andrew Hall and he runs Phibro - Citigroup's energy trading business - from this secluded farm in Connecticut.

"This is probably the poster boy illustration of high risk and high compensation," said John Coffee, a professor at Columbia University Law School.

Between 2006 and 2008, Hall's outfit earned Citi $2 billion.

The financial all-star is now due 30 percent of last year's profit - about $100 million. That's more than the four highest paid players in major league baseball make - combined.

It's a tricky situation for Kenneth Feinberg -- the new White House-appointed pay czar monitoring paychecks at companies rescued by the government.

"I think this is going to be the paradigm of exactly the kind of confrontation Mr. Feinberg is going to have to face," Coffee said. "He's between a rock and a hard place."

Feinberg's balancing act: weighing Wall Street's need to retain top talent to get back in the black and repay government loans against public outrage over corporate excess at a time when raises for average workers are being cut.

"Pay increases will be at around 3 percent in 2010 and that's the lowest we have seen in 10 years," said compensation consultant David Wise.

Next month the pay czar will review plans on how the seven biggest government rescued firms will pay their top staff.

A treasury official tells CBS News those plans must strike the right balance between rewarding performance and discouraging the risk-taking blamed for the financial crisis. It's proving to be a complicated equation.

[EDUMCATED_Hill_Billy]

Wendy Graham on her last day in office in charge of the CFTC under Clinton removed and created regulations that allowed the collapse of the economy - the next day she went to work for ENRON!!!!!!!! Who is her huband Phil Graham the Big time BUSH supportor??????? These banks then under the terms established by Wendy Graham and Hedge Funds were allowed into the commodities markets - there under her new regs they borrowed Money one from the other FDIC insured - for the same ammounts bought oil with their Loans (money on paper so it did not exist) created and artificial demand - guess what the loans were overnight 24 hour loans did not require Federal Approval - the next morning they defaulted on each other took possession of the oil and di it again and again with PHILBRO doing the leg work for BP and all of these banks under the table - Now the Knight for these Banking Kingdoms demands his pay for doing it again ?????? He is a threat to our National Security and should be deported back to England where they caught on to this same Ponzi Scheme and shut him down.

[grabandgo]

Our government is in shambles. Controlled by the rich.
nobama has been and will continue to be an embarrassment to all hard working American's.

[jetranger7]

Mama'S don't let your babies grow up to be ~~~ CEO's or Wall Street BANKERS OR POLITICIANS, let em' grow up to be poor and homeless, like the rest of us,, wishing we were rich and greedy,,, and someone else can add some lyrics,, cause I ain't good at it,,,

[whatsupwiththat]

30%?? 30% of profits to ONE employee. Citigroup signed this contract and this was approved by their Board of Directors? At this rate a company can only afford 3.3 employees before going broke. The people involved in this contract should all be held accountable. This type of outrageous contract is irresponsibe to the Corp. as well as to the stockholders who should all be suing Citi after learning of this contract. If this is allowed to stand as I suspect it will, this sets the new compensation standard for all greedy CEO's and the like. It is time to allow these type outrageous operatins to self-distruct and allow new enterprises to emerge. He should be allowed this money if legally contracted only after Citi pays back the public and then they are on their own, banned from public assistance.

[rhs648]

cbsblogger - Lets start small. Lets start with your money. If you are making $50,000 per year, why not let me tell you that you should be able to get by on $20,000. There will still be plenty of people we can divide the other $30,000 with. As long as there are people less fortunate than you, you should not be allowed to keep any more than you really need to scrape by. Say goodbye to new cars, TVS, cell phones, and cable TV. Are you beginning to see how foolish your stattements are?

[platteman]

Bet he gets the money. 100 million here, 100 million there, it is only money. I don't believe anyone is worth that much money ever.

[billpl-2009]

"He's Andrew Hall and he runs Phibro - Citigroup's energy trading business - from this secluded farm in Connecticut"

again...going after the wrong end of the problem!!

no crime in paying a fortune for taking risks! It's why they're called risks

the problem is...what's Citibank doing in the energy trading business???

any wonder why gas goes to $5.00 while supply is through the roof?

there's your answer
.....and no one's going to fix the problem

[ToolMangler1]

You 'chirped' it right that time Birdie.....

[hungry1968-16]

by gulliberal July 28, 2009 7:34 PM EDT
Where is the libtard outrage? IF the GOP were in the majority and these bonuses were going out, the LEFT would be burning cars in protest and marching in the streets...what gives???







What do "liberals" have to do with the bonuses being paid from Citigroup, to one of it's executives?

This is a private company conducting it's own business.

It's not like it's a "no bid contract" being awarded to a politically favored company, because it's former CEO was the vice president or something truly nefarious to US taxpayers.

[mas8baller]

He & his company signed a contract he lived up to his end you can't change the rules after the fact just because he did to good of a job. Alway as he didnt break any laws thing he gets it. Everything has risk taking your car to work you could get in a wreck, j walking hit by a car, boarding a plane you could crash, missing it may make you late for work but save your life who knows everything has risk & investing has never been without risk so what's new. Your protected 401k has risk are you not suppose to get one now? Buying a house has risk are you not suppose to buy one now? Even now locking in a low rate & low price doesnt mean no risk. As long as his risk was based on legal investments at the time they were made which they were then he lived up to his contract & deserves the money. Dont be jealous. Politicans get money and paid even when they screw up the country like the 7 months or the last 30 years in california. In 4 years the cult leader Obama & his cool aid drinkers will get paid no matter how bad they screw america. At least he worked for his unlike people on welfare.

[martin9p2]

Why do they say that $100M salaries are needed to retain "top talent"? Where else are those execs going to look?

[legacyabq]

Think what that P.O.Sht could do with tha with money.

Rich greedy people make mesick to my stomach..

Buying castles while children starve for lack of 5 dollars A MONTH for rice.

Sickening. Revolting.

God bless america.

[mas8baller]

I dont see you donating your money or other sports & celebrity figures you like donating what makes this guy different then Brad Pitt or Tony Romo? If you were rich you would just be as mad about being punished for other peoples laziness. Your happiness is yours to find & reach not mine not your parents not Obamas & certainly not America's. My happiness isn't your problem not anyone elses but mind. You have to pull your own weight & the bill of rights & constitution says you have the right not guarantee to "life liberty & the PURSUIT of happiness" Now were does it say happiness is guaranteed or achieved without effort by yourself or off someone else's success & hard work. So sick of people complainting about poor me because they screwed up and are failures or lazy a$$. You go out earn some money & donate it :) that would be great but when someone else goes out & earns money especially legally you have no say in what they do with it its their money.

[pvperson3]

That the bastard to court and make him fight for his contract to be upheld, the government has lawyers on the pay roll, use them.

[debinok1]

If Citigroup could afford to pay Andrew Hall 2 BILLION over 2 years, Why did they need bailed out with our taxes.

This has gotten so far out of hand.

We have to stop this for the good of this country and in the best interest of We the People.
http://www.thepetitionsite.com/1/are-we-confident-our-government-is-working-for-us

[tom_gwynn]

debinok1, read the story again. Andrew Hall earned 2 billion profit *for* Citigroup, he was not paid 2 billion. He is now apparently due 30% of the profit he made in 2008 as a bonus, which works out to about 100 million. Granted, that's still outrageous, even when one considers that it was profit made in the middle of a recession, when everyone else was losing their shirts.

[debinok1]

Still if he made them a profit of 2 billion, WHY did the taxpayers have to bail them out? And in my opinion NO he does not deserve a freaking bonus. Not when they still owe the taxpayers money. But the stinkin corrupt politicians(Dem and Rep) will bend over backwards to make sure he gets it.