$100M to Castle Owner for Risky Bets
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.