Interestingly, we now, finally, get to see some numbers on just how profitable Phibro has been:
From 1997 until the second quarter of 2009, Phibro averaged approximately $200 million per year in pre-tax earnings, while over the last five years Phibro’s earnings averaged $371 million per year. Phibro has been profitable each fiscal year since 1997, attaining profitability in 80 percent of all quarters.
If Andrew Hall was really in line for a $100 million bonus this year, that’s an enormous chunk of Phibro’s medium-term profitability. Paying Hall on the basis of average annual earnings over the past five years makes a certain amount of sense, but paying him 27% of average annual earnings over the past five years is more than a little excessive.
In any case, you can see why Citi says, in its own news release , that the numbers here “are not material to Citigroup’s earnings”: by the time Citi offsets Phibro’s annual profits (after payouts to Hall) with the amount that Oxy is paying for the company, the most important result here is that Citi has managed to lose its highest-paid employee (who owns a castle). That’s going to be very helpful when it comes to pay negotiations with Kenneth Feinberg.