Of all the bottle-service-swilling, massive-apartment-purchasing douchebags Wall Street's recent boom has birthed, Citigroup's Andrew Hall probably does not deserve to become the face of outsize executive compensation. Hall, who runs Citi's secretive energy trading unit, Phibro, is a quirky dude with an awesome life. Phibro is so successful — it accounts for a "disproportionate" amount of Citi's income, per today's Journal — that the 57-year-old has enjoyed free rein over the past few years. He and his team work out of a former dairy farm in Connecticut, close to his mansion in Southport. He sometimes skips out in the afternoon for ballet classes or to go rowing, and spends his off time collecting contemporary art and weekending at his German castle, Schloss Derneberg. And, he gets paid hundreds of millions of dollars a year. But that could change this year. Hall's contract says he is due to receive a $100 million bonus, but with Citi virtually owned by the government, and the Treasury Department's new Special Master of executive compensation, Kenneth Feinberg, looking to make his mark, it's seeming like Hall could get stiffed.
And raked over the coals.
Mr. Hall's pay package puts Citigroup in a tight spot. Ripping up the contract could trigger Mr. Hall's departure and a potentially messy legal fight. But making any large payouts, even if they're based on previously agreed contracts, could subject Citigroup to political and investor fallout.
For the administration, it's a Sophie's Choice moment: Give the man who owns a freaking castle his paycheck and suck up the fallout, or make a big show of holding it back to save face with the populace, then lose just as much, if not more, money when Hall departs for greener pastures, leaving a trail of lawsuits in his wake.
Citi in $100 Million Pay Clash [WSJ]
U.S. Pay Czar to Rework Contracts Deemed High [WSJ]
Earlier: Citigroup’s Andrew Hall Has Castle, Demands Bonus
Citigroup Trader Andrew J. Hall Has Castle, Is Schnabulous