Whether oil trader Andrew Hall gets a nine-figure bonus is now in the hands of Obama administration comp specialist Kenneth Feinberg.
The $100-million bonus is based on a contract with Citigroup, now operating under the aegis of the U.S. government. A New York Times story, written by David Segal, reports that the situation raises thorny questions about “the hazards of mixing the public interest with capitalism at its most unbridled, and it raises basic questions of fairness.”
Hall is the 58-year-old head of Phibro, a commodities trading firm in Westport, Conn., and his “nine-figure payday” represent his share of profits from what the NYT described as “a characteristically aggressive year of bets in the oil market.” Hall’s contract is is owed the money under a contract with Citigroup, and therein lies the rub. Since the bank was saved with roughly $45 billion in taxpayer aid, Obama administration compensation specialist, Kenneth R. Feinberg, will decide whether the trader gets what is owed to him.
A spokesman for Feinberg, Andrew Williams, responding to a NYT query via email, said the reviews of compensation are just getting underway 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,” Williams wrote in the email, “but it’s clear that Mr. Feinberg has the broad authority to make sure that compensation at those firms strikes an appropriate balance.”
Citigroup’s co-head of global markets, James Forese, believes contracts such as Hall’s will live up to the administration’s intent. “We’re confident in the value these types of profit-sharing arrangements bring to the company and its shareholders as they directly align compensation with performance,” Forese wrote in an email.
[Feinberg will address the Boardroom Leaders Forum on November 16 in New York. For more information, click here.]
Judy Warner is deputy editor and editorial conference director at NACD Directorship magazine.