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control of its Phibro commodities business to Andrew Hall, the
energy trader making headlines for demanding a $100 million payday
under his contract, The New York Times said on Thursday, citing a
person with knowledge of the negotiations. The possibility is one of
many options that Citigroup is considering after it had mulled a
sale of Phibro to Warren Buffett's Berkshire Hathaway Inc, the
newspaper said. Talks with the billionaire investor went nowhere, and
there was no firm discussion of price, it said. Citigroup and
Berkshire did not immediately return calls seeking comment. A bank
spokeswoman told the newspaper: "We are evaluating the best way
forward for stakeholders." The newspaper said Citigroup may decide
to transform Phibro into a partnership led by Hall, turning the bank
into a limited partner with a smaller share of the profits, and
requiring the bank to find new investors in that business. Other
options include asking Hall and other traders to work without
contracts, replacing Phibro's leadership, or winding down the unit,
the newspaper said. These options could backfire given that Phibro
has provided Citigroup with considerable recent profits, and that
much of Phibro's worth is thought to derive from Hall's abilities and
continued presence. Citigroup is trying to shed troubled assets
after huge losses resulted in the government giving the bank $45
billion of taxpayer funds and taking a 34 percent equity stake.
Known for owning a castle in Germany and for his collection of
expensive art, Hall runs Phibro in Westport, Connecticut. His pay
has gotten caught up in a political spectacle over how much companies
accepting taxpayer money should be allowed to pay their top workers,
including those whose compensation is contractually required. If the
companies were to pay too little, the argument goes, top workers
could flee to rivals not bound by pay limits, hurting the companies
and thus taxpayers' investments. Next week, the government pay czar,
Kenneth Feinberg, is expected to start reviewing compensation
structures at several companies that received bailouts. These
companies are Citigroup, American International Group Inc, Bank of
America Corp, Chrysler Financial, Chrysler LLC, General Motors Co
and GMAC Inc.
