As taxpayers, you and I are owners of Citi Group Inc. Our 34% stake is valued today at about $35 Billion dollars and our most profitable employee is Andrew Hall who runs the energy trading operation. His old boss told the Wall Street Journal that “he has made money every year for the company he works for – a lot of money.”
His department has had earnings (not revenues, but earnings) of 1.86 Billion over the past 5 years. If you had an employee whose average annualearnings are $375 million per year, would you pay him $100 per year? I would. In fact, his department was one of the very few profitable operations within Citi over the past few years.
Enter government Bureaucrat Kenneth Feinberg from the treasury department who “urged” CitiGroup to sever ties with its (our) star employee or he would issue an “embarrassing ruling” if CitiGroup honored Mr. Halls Contract.
Pause and reread.
Citi Group is being pressured to not honor a legally binding employment contract with an individual who has been generating steady, reliable profits for the bank, our bank.
With little option, Citi officials sold this highly profitable business for just the net asset value of the unit’s assets. Not the net asset value of the business, just the assets on its books. In essence, it gave away the business, and our star.
“If you’ve got to sell, why should I pay a premium?” asked Steve Chazen, the CEO of Occidental Petroleum and buyer.
Mr. Feinberg made it very clear that he thought CitiGroup should make a clean break. “Something like that would probably be best.”
Best for whom? We gave away a very profitable business, lost our star employee and a reliable money maker, how is that best?
These are the same people who want to manage our health care…