Pay Tsar Warning Could Be Behind Phibro Sale
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A warning from the pay tsar might have been behind the sale of Phibro.
Before Citigroup sold off the lucrative energy trading that operates out of a Connecticut barn, the Obama administration’s pay tsar warned that the man behind it might be taking “excessive risk,” Reuters reports.
Andrew Hall, an eccentric art collector and mastermind of the Phibro energy trading unit, is one of the executives who was at the center of the White House pay crackdown for companies that took the federal bailout.
He earned $98.9 million in 2008 and could have earned as much as $100 million in 2009, the Wall Street Journal reports.
That payout could have been an embarrassment for a company that took a government handout, according to some news reports, and there was speculation over what Citigroup would do with the Westport-based company.
In October, Citigroup sold Phibro to Occidental Petroleum Corp. an oil and gas exploration and production company in October.
The price was $250 million for a company that has earned money for Citigroup every year and was one of few profitable divisions. Last year, it generated about $667 million of Citigroup's total revenue of $53 billion, according to the Wall Street Journal. Citigroup lost $28 billion. Fortune Magazine calls it a turkey of a deal and thinks Citigroup should have charged more.
Last month, Steve Chazen, Occidental's president and chief financial officer, told the Wall Street Journal that he thought Citigroup sold because of pressure from the government.
"They would never sell this if it wasn't for the pressure of the government, in my opinion."
Kenneth Feinberg, who is known as the pay czar, recently shed more light on the sale when he told Reuters that anyone earning $100 million per year might be taking risks.
“I know it when I see it," he told the Reuters Global Finance Summit. "It may be that Citigroup determined under the law that anybody making $100 million a year in salary is engaged in excessive risk taking."
Posted Tuesday, Nov 17, 2009 - 8:08 AM EST
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