Andrew Hall’s $100m payday looks more likely

By Felix Salmon
August 12, 2009

Way to duck the issue:

Citigroup’s contract with energy trader Andrew Hall, which reportedly could pay him up to $100 million this year, will not be subject to rulings by the Obama administration’s pay czar, a source close to the bank said on Wednesday…

The source said Hall’s contract will be exempt from review by the pay czar because it was signed before a cut-off date of Feb. 11, 2009…

It was not immediately clear why Feb. 11 was the cut-off date.

My guess is that this just means Hall will cash his $100 million and leave, in one form or another. Certainly there’s no chance of him getting such a rich contract again.

On the other hand, what if his contract doesn’t expire for many years yet? Would Feinberg really be powerless to control the pay of Citi’s top-paid employee indefinitely? And if so, who made these rules?

7 comments

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The constitution of the United States of America made the rules. It’s a contract. The Government doesn’t have the authority to just abrogate contracts at will.

Posted by Ryan | Report as abusive

Except that contracts are reworked all of the time. It’s disengenuous to trott that out as an excuse when it’s convenient but hide it in the closet when it isn’t.

Posted by Argel | Report as abusive

Citi’s American operations will likely continue to lose money as home prices are still falling and credit card default rates are likely to rise.

Yet their international operations are so profitable that it seems plausable that they will be able to earn their way out of the hole they dug themselves into.

With preferred dividends reduced due to the conversion Citi should in theory be able to slowly rebuild it’s capital the old fashion way… borrow money from the fed at one percent over night and buy fed approved debt (like AAA agency backed mortgage backed securities.) The last time I checked a 1% spread on one hundred billion dollars was a billion dollars. Nice work if you can get it!

There will be bumps in the road going forward but by keeping rates near zero the banks simply can’t lose solvent or not.

-y2kurtus

Posted by y2kurtus | Report as abusive

As a stock holder of C to see that stock go from 53 down to almost 0 and to read this joker is making over 100 M makes me sick. Clearly he is not helping the company in any matter. He is makeing risky trades that have HURT C and made the Govt. come in to take a huge stake. I say pull his contract and go back to Europe. Risky trades are NOT WELCOME in any stocks I own. Jerk.

Posted by J | Report as abusive

Clearly J is as ignorant to the situation as he is about investing.

Hall and his division have been profitable for 15 years and his division was one of the only profitable divisions for C last year.

C’s stock fell despite Hall’s spectacular success because Phibro is too small of a department to have a significant impact on C’s bottom line.

Perhaps J should be more upset with the people who authorized the risky mortgage loans instead of someone who has made money time and time again.

Posted by R. Danneskjold | Report as abusive

Let me see the stupid contract. I guarantee you I will find a loop hole to avoid paying him.

Posted by Lee | Report as abusive

As a small shareholder in Citigroup I say to hell with him, no one is irreplacable.

Posted by J W Europe | Report as abusive