Citigroup tries to shed $100 million-man Andrew Hall
Citigroup Inc. (C) superstar trader Andrew Hall, whose $100 million potential payoff has created a political maelstrom for the New York-based bank, could be dubbed "the king of commodities." The British-born Hall even owns his own castle in Germany.
Maybe he can retreat to the 1,000-year-old fortress, where he held a gala to honor artist and filmmaker Julian Schnabel, to figure out where his otherwise spectacular career went wrong. According to the Financial Times, Citigroup is looking to sell or spin off or open up Phibro, the unit that Hall heads, to outside investors. Citigroup clearly wants political cover rather than having to pay Hall the percentage of Phibro's profits he's due.
For members of Congress, Hall is too tempting of a target to ignore. He is a rich banker at a time when many Americans continue to struggle financially and have difficulty understanding who deserves such a gargantuan pay day. Explaining to these people about the nuances of executive pay packages is a waste of breath.CEO Vikram Pandit seems to be cutting off the bank's nose to spite its face. Phibro, a hedge fund that trades with the bank's capital, has bolstered Citigroup's bottom line by about $5 billion over the past five years, according to the FT. But Citigroup is now 34 percent owned by the federal government as a result of the government bailouts, which leaves the bank at the not-so-tender mercies of the members of Congress.
Worse still is pay czar Kenneth Feinberg negotiating with the seven financial companies that received the most federal aid, including Citigroup, to determine the compensation of their 25 top executives by next month. In a recent speech, Feinberg argued that he wouldn't try to "claw back" past compensation unless it was an "egregious" situation. Whether Hall's pay falls into that category is tough to say. This is not a pay -for-performance issue here. Hall performed a service for his pay.
But Feinberg must have hinted to Citigroup that Hall's compensation was a problem. Otherwise, why would the company bother trying to dump Phibro. Pandit is facing pressure from investors and politicians. Last month , Pandit said that he agreed that Hall's potential payment was too high, but that an agreement made by prior Citigroup management compels the bank to pay Hall so much, according to the New York Times. The embattled CEO may be trying to deflect attention from himself.
As for Hall, he does not seem to be the type who sweats stuff like public relations. New York magazine points out that he angered his neighbors when he tried to install an 80-foot concrete statute on the lawn of his Greek revival estate in Connecticut. Hall, a noted art collector, eventually gave the art work to a museum in Massachusetts.
When celebrating Schnabel, Hall noted that the artist was someone who the art world tried to "ignore." The trading whiz will have no such luck.