Citi may give in to $100 million man

Citigroup (C) seems to owe the head of its Phibro energy trading unit $100 million in compensation. The federal government's pay czar may try to negate the payment. The public looks at the deal as another example of excessive Wall Street pay.

According to an exclusive report in The New York Times, Citi is looking at several options to solve its problem about honoring its pay package to Andrew J. Hall. The paper reports that high on the list "is a deal that would give control of the unit to Mr. Hall."

If Citi gives up on Phibro and hands the unit, or a majority interest of it, to Hall, it will show just how far government regulators have gone to set up arbitrary pay rules that undermine the chances of the financial recovery of big banks. Phibro, by several accounts, has made Citi $2 billion over the last five years.

The Administration refuses to admit that one size does not fit all in the compensation game. Many Wall Street executives are overpaid, but a modest number of them produce huge profits for their firms and cutting their rewards is likely to drive the best of them out of their firms and into private financial institutions.

If Hall leaves Citi or gets control of Phibro it will be a clear case of bureaucracy winning out over intelligence.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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