NEW YORK (Reuters) - Before Citigroup (C.N: Quote, Profile, Research, Stock Buzz) opted to sell its Phibro energy trading unit, the Obama administration's pay czar told the bank that anybody earning $100 million a year in salary may be taking "excessive risk."
Kenneth Feinberg, the pay czar, disclosed the conversation in his most public statement so far about Citigroup's decision to sell Phibro.
"I know it when I see it," he told the Reuters Global Finance Summit, referring to excessive risk.
Phibro became a lightning rod for criticism on Wall Street pay. Its star trader, Andrew Hall, stood to make as much as $100 million this year after making a similar amount last year.
The bank, which is roughly one-third owned by the U.S. government, said in October that it was selling the trading unit. Sources at the time said the profitable unit was sold mainly to appease Feinberg.
Critics of government involvement in the financial sector say that Citigroup was forced to sell a profitable business for a pittance. Phibro has made money every year since the 1990s, but it has not always been profitable, and in 1998, the bank considered selling the business.
The law that created the position of special master for pay says that the government should eliminate incentives for senior executive officers to take "unnecessary and excessive risks" that threaten the company's value.
"It may be that Citigroup determined under the law that anybody making $100 million a year in salary is engaged in excessive risk taking," Feinberg said at the Reuters Global Finance Summit in New York.
When asked if he indicated to Citigroup that any employee making $100 million may be taking excessive risk, Feinberg said, "yes."
A Citigroup spokesman was not immediately available for comment.
(Reporting by Dan Wilchins; Editing by Phil Berlowitz)
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