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.