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$100 Million Payday Poses Problem For Pay Czar

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http://www.nytimes.com/2009/08/02/business...ml?ref=business

In a few weeks, the Treasury Department’s czar of executive pay will have to answer this $100 million question: Should Andrew J. Hall get his bonus?

Mr. Hall, the 58-year-old head of Phibro, a small commodities trading firm in Westport, Conn., 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 Mr. 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 the American International Group, rescued at vast taxpayer expense, was to give out $165 million in bonuses, Congress moved to constrain the payouts, and protesters showed up at the homes of several executives.

As it happens, one can see some of those homes from Mr. Hall’s front lawn in Southport, not far from his office. But his case is more complex. Mr. Hall, raised in Britain and known for titanium nerves and a collection of pricey art, 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 he has long made, someone else probably will.

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

That suggests that last summer, drivers paid more at the pump, at least in part, because of people like Andrew J. Hall. How do you hand $100 million to a guy who may have profited because gas hit $4 a gallon?

Whatever the answer, the case of Mr. Hall highlights the hazards of mixing the public interest with capitalism at its most unbridled, and it raises basic questions of fairness. There was outrage last week over a report by the New York attorney general that about 5,000 traders and bankers at bailed-out firms got more than $1 million each last year. So it could be politically untenable for a company like Citigroup to pay gargantuan sums even to those who generate gargantuan profits — the very people the company must retain if it is to recover.

Among those who believe the Phibro-Citigroup relationship is doomed by bailout politics is the $100 million man himself. People with knowledge of talks between Phibro and Citigroup say that Mr. 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 of possibilities, including a spinoff.

Mr. Hall has plenty of sway over the fate of Phibro because much of its value is thought to flow from his expertise and track record. If he leaves, he could start another firm and bring colleagues with him.

History suggests that he is accustomed to getting his way. Two years ago, Mr. Hall waged a legal fight with the Historic District Commission of Fairfield over an 82-foot concrete sculpture that he had placed on the front lawn of his 7,300-square-foot Greek Revival mansion, where he lives with his wife, Christine. He thought he did not need permission to display the work, but because of his neighborhood’s preservation restrictions, the state Supreme Court ultimately ruled that he did.

Skimming of the top and making everyone else's life more expensive.

This man has produced nothing nor invented anything and has just played the casino and won, helping to add costs for the rest of us.

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answer...NO...the people owing him the money are bust.

he should stand in line with the rest of the creditors.

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http://www.nytimes.com/2009/08/02/business...ml?ref=business

Skimming of the top and making everyone else's life more expensive.

This man has produced nothing nor invented anything and has just played the casino and won, helping to add costs for the rest of us.

To me this is key. When the costs imposed massively exceed whatever value added to society, especially when the costs have associated with it large scale collateral damage. Then it needs to be regulated out of existence, for the benefit of the vast majority.

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