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Citigroup Sells Unit That Employs $100 Million Bonus Man

Citigroup will sell Phibro, its profit-making commodities unit, to oil and gas giant Occidental Petroleum, shedding the bank of a $100 million compensation controversy that was to have come to a head later this month, The Post's Tomoeh Murakami Tse reports from New York.

Occidental said Friday morning that it would acquire Phibro, led by star trader Andrew Hall, for “approximately its net asset value.” Occidental said its net investment would be about $250 million.

The sale comes as Treasury’s master of special compensation, Ken Feinberg, is making the final decisions on how much compensation should be paid to the top 25 earners at seven companies that have received large amounts of government bailout money.

As public criticism mounted over Hall’s bonus -- which could have totaled $100 million for this year -- Citigroup has been under intense pressure to not pay it.

Though Feinberg technically does not have control over Hall’s 2009 bonus, which was based on a previously approved contract, it could have ignited a public and political uproar akin to the AIG bonus fallout earlier this year.

Citigroup has received $45 billion in taxpayer bailout money.

Hall, along with other senior management and employees, will remain in place at Phibro. Occidental said “significant portions of current and future bonuses will be deferred and retained by Phibro and paid out in future years.”

These future payouts will be adjusted to reflect Phibro's results during that period, it said.

The senior management team has also agreed to make a significant investment in Phibro and receive returns dependent upon the company's future performance, Occidental said. Phibro has been a profit generator for Citigroup in recent years, even as other parts of the bank suffered massive losses. For the past five years Phibro's earnings averaged $371 million per year. The transaction is expected to close by year end.

-- Tomoeh Murakami Tse
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By Frank Ahrens  |  October 9, 2009; 11:25 AM ET
Categories:  The Ticker  | Tags: $100 million bonus, Andrew Hall, Citigroup, Ken Feinberg, Occidental Petroleum, Phibro, pay czar  
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