Citigroup Inc's contract with energy trader Andrew Hall, which reports say could pay him up to $100 million this year, will not be subject to rulings by the Obama administration's pay czar, a source close to the bank said on Wednesday.
Pay czar Kenneth Feinberg on Friday is expected to begin reviewing compensation structures at several companies that received bailouts, including Citi, which has taken $45 billion from the U.S. Treasury's Troubled Asset Relief Program, known as TARP.
While Feinberg has authority over the top 100 employees' pay -- and Hall surely ranks among those -- the source said Hall's contract will be exempt from review by the pay czar because it was signed before a cut-off date of February 11, 2009.
TARP recipients are permitted to make bonus payments required under written contracts executed before February 11, according to compensation rules announced in June. It was not immediately clear why February 11 was the cut-off date.
Hall is the top trader at Phibro LLC, the Connecticut-based energy trading arm of Citi, which has become famous for outsized profits in the oil markets.
Citigroup declined to comment about its submission to the pay czar, but said in a statement that Phibro operates under a pay-for-performance contract, with compensation determined by year-end profits produced by the unit.
A Treasury spokesman said the department would not comment on the pay reviews of individual companies.
Treasury officials, who did not comment on Hall specifically, have said Feinberg will have broad authority to ensure appropriate compensation, although he cannot force companies to break contractual obligations not covered by rules that govern pay restrictions.
Laura Thatcher, who leads law firm Alston & Bird's executive compensation practice in Atlanta, said she expects that the rules will allow flexibility for Feinberg to revisit Hall's contract, should he so choose.
Compensation of that size -- you would think he would be looking at it, Thatcher said.
Last month, White House spokesman Robert Gibbs responded to questions about Hall's possible pay package, saying: One could easily come to the conclusion that that's probably a bit out of whack on any pay scale.
Feinberg has been consulting with seven companies, including Citigroup, American International Group Inc, Bank of America Corp, Chrysler Financial, Chrysler Group LLC, General Motors Co and GMAC Inc, a Treasury spokesman has said.
(Reporting by Steve Eder; Additional reporting by David Lawder in Washington; Editing by Gerald E. McCormick and Richard Chang)