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  1. #1
    Senior Member millere's Avatar
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    TARP recipient Citigroup doles out 100 million dollar bonus

    http://www.bailoutsleuth.com/

    Citigroup Says Trader's Contract Exempt From Pay Czar Oversight

    by AVI KLEIN

    Citigroup Inc. believes that a large bonus contract it signed with an energy trader is not subject to the oversight of the government's pay czar and will object to any restrictions imposed on it, according to a new report.

    Meanwhile, the trader himself has proposed a settlement to avoid a showdown entirely by converting much of his promised cash bonus into equity.

    Executives at the bank told the New York Times that its contract with Andrew Hall, which promised him approximately $100 million in bonuses this year, is exempt because it was signed before the law creating the pay czar position was passed.

    Whether employees like Hall should be able to collect large compensation packages has been an ongoing issue since the bailout began. Many critics in the public and private sector have questioned whether taxpayer money from the Troubled Asset Relief Program and similar initiatives should be funneled to executives and employees rather than used for new investments that stimulate the economy.

    Citigroup received $50 billion last year under TARP.

    Hall, a trader in Citigroup's energy practice, has posed a serious test to the authority of Kenneth R. Feinberg, the so-called pay czar. Earlier in the year Feinberg set a deadline of this coming Friday for the largest among the bailed-out companies, including Citigroup, to justify their compensation practices for their top employees.

    Although Feinberg cannot force any changes in the contracts, he has the right to offer public opinions about them, which are likely to be influential among members of congress and other critics. The law establishing his position says that he has no authority over contracts signed before the law went into effect, so long as the contract itself was legal.

    In arguing that the contract with Hall cannot be reviewed, Citigroup appears to be signaling a more aggressive approach to defending its executive compensation practices. For the past few weeks, the company seemed to be interested in spinning off Hall's trading unit, Phibro, to an outside buyer.

    That plan would have left the purchaser, presumably not subject to TARP oversight, to pay off Hall's contract.

    Hall himself is considering a deal, the Wall Street Journal reported. The paper said that Hall plans to write a letter to Feinberg agreeing to accept a large position in Citigroup stock rather than take his $100 million bonus in cash. Hall intends to detail how much money he has earned for Citigroup in arguing that his compensation package is fair and meets industry standards.

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    Senior Member SOSADFORUS's Avatar
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