If Andrew Hall made Citigroup money, why shouldn't they pay him?

I agree. Everyone hears 100MM and gets mad. This person made Citigroup $667MM over the last year. He did not lose them any money; he made them well over half a billion, let that sink in your minds before you get angry. The issue that perhaps needs to be addressed is the percentage that should be paid to people like this. Obviously, this guy is worth quite a bit, but what percentage of the revenues that he generates should he be paid? In this case, he got 15% of the gross amount, which just happens to be 100MM. I personally would think that 10% of the post tax revenue generated would be sufficient, which would be closer to 30MM or so, but then again I did not negotiate his contract. Regardless, the guy netted Citi probably around 280MM even after considering the bonus and taxes. As for the bonus, it will be taxed very heavily (as bonuses usually are) and will end up back in the hands of the government anyway, so we as taxpayers will not be out so much.

The issue is how he is able to generate these profits. My issue is once again that none of these guys has any skin in the game, what would have happened if his bets went bad!. No one is talking about the actual amounts of profits he generated. Do we raid his personal accounts of all the losses if the trade was bad. I guess Citi made this deal so it should be honored. If I were a biz owner of citi, I would not want citi to be leveraged and take too much risk and leave it vulnerable. What got us into this messy position is "not pricing in risks". I think that term not only applies to stocks, bonds, CDOs but also business incentives.

I'm down the line a free market type, but this is not the case.

This presents complex legal and public policy issues because Citigroup (of all the 8 or 9 major banks) could definitely be put in the category (perhaps with 3 or 4 other major banks) that BUT FOR the bailout funds, Citigroup would have in all probability ended up in bankruptcy, so the trading subsidiary would have ended up as an asset with the secured creditors among others having cliams directly against it - so its very existence, at least in current form at this point - is somewhat doubtful.

My suggestion, do a fast deal, accept 50 million as full payment, forego paying the extra 20 million in taxes, and go on vacation until things quiet down. A nasty legal battle with the bad PR this could generate is simply not worth it.

On the other hand should the people who lost the billions over last year be required to sell their homes, cash in their 401k's and tell their kids that maybe college should be put off for a year or two so they can repay the shareholders 100,000,000 for the money they lost, perhaps the door should swing both ways.

Well, the fact of the matter is, the guy worked for Citi Bank and made them a lot of money.
He could world for Goldman Sachs, Bank of America and/or Wells Fargo.
If he did the job they say he did, he made them 6.67 times what his salary is supposed to be.
In other words, if someone is making $50,000 a year with a company, then they would have to generate approximately $350,000 in revenues.
Isn't that worth it?
How many auto workers making $100,000 last year generated $700,000 in revenues?
How many other people generate 7 times their annual salary in company revenues?
Fair is fair. That was his contract with the company, now why the whining and complaining.
This is not an issue of public relations. This is an issue of playing fair with your employees.
If they don't want his skill and expertise, then he would certainly be welcomed at Bank of America, Wells Fargo, Goldman Sachs and so on.
The government is very short sighted if they think they can control the amount of money that people make.
That's why they call it the free enterprise system!
If more people were paid what they were worth, then maybe a lot more companies would be making more money, because their employees would be working a lot harder to improve the bottom line.
That's why the communist system doesn't work. People get paid no matter if they work or not.
So, why should anyone go the extra mile, if they are not rewarded for doing so?
It takes enourmous talent to be a top trader and make money for a company. Government Czar or not, I wouldn't want him to leave my company!

Well, JET99999, do you understand business? If his subsidiary (or even just his office out of his subsidiary) produced $667MM in revenue through anything other than a statistical fluke, someone would buy it for big bucks. Even if Citigroup had been liquidated -- chopped up and sold off at fire-sale prices after bankruptcy -- There would have been many bidders at several billion dollars for a stream of income like that in the economy we are in.

And, James Raider, though I generally agree with your assessment, I think the vast majority of them really thought what they were doing was substantive. After all, they were making housing affordable for people who earlier couldn't have dreamed of owning a home. They were feeding an incredible level of consumer spending, and keeping a boom economy going by mortgage equity withdrawals. Though they should have realized the whole thing would implode devastatingly, I figure all but a few of them really believed that "It really is different this time."

CORRUPTION! CORRUPTION! CORRUPTION! CORRUPTION!

$100million is a joke. Why not spread that money out to the shareholders? Maybe create more jobs? Can't Mr. Hall make due with a $5million bonus??

Anyone who defends this kind of pay is failing to realize that there are hundreds of other people out there who can make the same profits Mr. Hall did, and they would do it for a tiny fraction of his compensation. With that being the case, one must really think about why a board of directors or any other department within a company would ever agree to pay someone that much. It's absurd!

$100m is outrageous.The USA is more and more becoming a nation of the rich and poor. No middle class left. The rich never satisfied with enough. The rich rolling in theirs excesses while the "middle class" suffers most all the unemployment, most all the foreclosures and bankruptcies.
He didn't make the profit, his workers did. Give him a bonus but come on $100m. ANY worker in America would have danced at $1m, but not those oinkers.

No wonder Citi needed bailed out, they're giving away 15% of their total PRE-TAX revenue to one guy. Who negotiated that contract? Maybe they can give him 100M in Citi stock with a stipulations on when he can sell it. Motivate him to increase the stock valu while keeping him working at citi.

Citigroup was paying 54c a share quarterly dividends through 11/07. They next 3 quarters were 32c per quarter. Didn't Citigroup insiders know their assets were "troubled"? Why did they continue paying those high dividends? To keep up their executive stock options, of course. Corporate executive greed is unfortunately the norm -- not the execption. Why can't anyone learn this?

How about this minor point. When it comes to sales, to justify a salesman's salary that salesman must make the company typically 300 timeswhat he makes. So this guy would have to make for the company $600 million in order to justify a $2 million salary. And generally salesmen get commissions of 5% of the value above some given point. (profit on sales above say 30%). So if he had $2 billion in sales, and that generated $600 million profit. Then that is $1.4 billion in cost. (30% of $1.4 Billion = $420 million)
So deduct the $420 off of his $600 million = $180 million) Then multiply that $180 million times the 5% commission = $9 million. His $100 million bonus is clearly not justified. If his contract was written in some other manner than it couldn't be a legitimate contract as it gives away in consideration far more than the value of the service provided.

There's an idea I can go for. Take all of that money. Determine what the all time high of the stock was worth. (say $40 per share). Divide his and all the other exects by the amount per share. Then all his money goes into a fund where that number of shares is bought on the open market. Whatever remains goes into a fund to repay shareholders who lost money on the stock. Those share are held in that account with all dividends paid going to repay the shareholders. When the share price gets back up to the all time high (+ his commission percentage of his pay package say in this case 15% ($40 x 1.15) makes $46) then he gets the shares and has to pay taxes on it as regular pay, then and only then can he sell them. If the share price goes to zero, he loses everything and has to pay the taxes on the whole amount of money any way. That will give him the incentive to not takes risks that would lose anything.

There is one point that is just partially made here. He did not make any of those sales that generated the profits. He was just in charge of the unit. He could have generated a profit on paper but not in reality. (Like the CEO of Black and Decker did a few years back) he counted long term contracts in the year they were signed as 1 yr sales. So a $10 billion contract over ten years was counted as $10 billion in sales this year. Since there was only $1 billion in actual sales under this contract in the year; he counted the other $9 billion as sales profit in that first year to justify his giganitc bonus. He then further used it as a "1 yr sales growth" in order to drive up the price of his shares of stocks and value of his options.