Oil trader’s $100 million payday may raise eyebrows

Oil trader’s $100 million payday may raise eyebrows

In a few weeks, the treasury department’s czar of executive pay will have to answer this $100 million (Rs485 crore) question: Should Andrew J. Hall get his bonus?

Hall, the 58-year-old head of Phibro, a small commodities trading company in Westport, Connecticut, is due for a nine-figure payday, his cut of profits from a characteristically aggressive year of bets in the oil market.

There is little doubt that Hall is owed the money under his contract.

The problem is that his contract is with Citigroup, which was saved with roughly $45 billion in taxpayer aid.

Corporate pay has become a live grenade in the aftermath of the largest series of corporate bailouts in American history.

In March, when American International Group, rescued at vast taxpayer expense, was to give out $165 million in bonuses, Congress moved to constrain the payouts. Protesters showed up at the homes of several executives.

But Hall’s case is more complex.

He is the standout performer at an operation that has netted Citigroup about $2 billion over the last five years.

If Citigroup will not pay him the huge sums that he has long made, someone else probably will.

The added wrinkle is that Hall works in a corner of the trading world that appears headed for its own infamy. Regulators are already pushing to curb the role of traders like Hall, whose speculation in the energy markets may have played a major role in the recent gyrations of oil prices.

Among those who believe the Phibro-Citigroup relationship is doomed by bailout politics is the $100 million man himself.

People with a sound knowledge of discussions between Phibro and Citigroup say that Hall is quietly pushing for what is being called “a quiet divorce" from his parent company and that he has had preliminary talks with one possible suitor.

Wary of publicity and worried that he will become the next marquee villain of the financial collapse, he has discussed with Citigroup’s leadership a number possibilities, including a spinoff.

A spokesman for Kenneth Feinberg, the Treasury’s pay czar, said the reviews of compensation figures were just starting and that pay levels must strike the right balance between discouraging excessive risk-taking and encouraging reward.

“We are not going to provide a running commentary on that process," spokesman Andrew Williams wrote in an email. “But it’s clear that Mr Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance."