Government Employee Entitled to A $100,000,000 Bonus!

Yes, I know I’m being a tad bit facetious here, but not really. After getting US$45 billion in government aid, the US government and we the people of America own roughly 36% of Citigroup. The interesting debate is whether Citigroup employee, Andrew J Hall should be paid his $100 million bonus as described in his contract.

Most initial responses are with a vehement “HELL NO!” Who on earth deserves to get paid that much, people must think. However, what if Andrew Hall was responsible for bringing in $1 billion in revenue? Is it so egregious to pay the man responsible, a 10% cut? After all, $900,000,000 sure does employ and pay for many other Citigroup employee’s salaries! Should Citigroup risk not paying their star, and his team of employees for the overall sake of the firm and shareholders? As one colleague aptly put it, “RB, we live in America not North Korea!”
The problem lies with such an eye-popping number. If Andrew brought in $1 million in revenue, nobody would balk at him earning a $100,000 bonus. It’s not Andrew’s fault that Citigroup almost went under due to its sub-prime lending standards. It’s estimated that Tiger Woods routinely earns in over US$70 million a year. The reason is simply because he brings in more to his sponsors than what he earns, otherwise his earnings would be unsustainable. Although I’m envious as the next person, especially as a partial owner of Citigroup since I’m a tax payer, shouldn’t we support the honoring of a contract? Perhaps we should look into who drew up this contract for Andrew in the first place instead.

Citigroup has treated me well in the past, and I’ve been a long time client. That said, recently, I’ve been disappointed since they raised my credit card rates for no reason, even though the Fed Fund rate and 10-yr treasury yield are at all time lows. Their savings and CD rates are also among the lowest I’ve seen compared to other banks. I’m also amazed that they publicly announced a 50% pay raise to many of their employees recently as well. Citigroup will remain as my “Go Broke Bank” bank, however I’m voting with my feet and moved all my savings out of Citigroup and to a local boutique bank. Let them make a big spread off of someone else. Citigroup will always be just a bank for easy access, and not much more.

Readers, love to hear your thoughts on this $100 million bonus debate, and whether Citigroup should answer to the people, given our 36% ownership. Maybe Andrew can just give $10 bucks to 10 million people and we’ll call it even?

$100,000,000 Bonus Article

Regards,

Financial Samurai

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Anonymous says

    My parents worked in the government for 30 years. The biggest raise they EVER got was 10%. Usually, it's just inflation plus a couple %, so 5% or so. It's pretty amazing what the government is paying nowadays. 50% pay raises? SIGN ME UP!

  2. Jim Olson says

    I will work my entire life and not make one tenth of what this man makes in a year in bonuses. I struggle to pay for health insurance, and worry every month how to play my basic bills. I have multiple advanced degrees, and I have chosen to serve doing what I do. But I have to say, I would really like one year's worth of pay like this. I could pay off all my student loan debt, all my one credit card (Chase just closed my former WaMu card down…) and maybe be able to put some of it away for retirement. Maybe, just maybe, people like Andrew could help out people like me. He doesn't have to give away all of his $100 million, but it would sure help a lot of folks if he gave it away in chunks of $100,000 at a time to people like me. Just my $.02

  3. says

    Hi Jim – Thanks for sharing your thoughts. I share your feelings 100%. Some people just happen to be in an enormous position to earn a lot of money, it's really unbelievable. When many Americans are struggling to get by, we better not hear Andrew start complaining!

    In fact, I have a sense that Citigroup is damned if they do, damned if they don't. If Citi pays this guy $100 million, there will be plenty of clients, with much more money than me voting with their $'s and moving money out of Citibank. Billions could easily leave in disgust. It's not like they offer great rates anyway. They could go to their other bailed out brother Bank of America, or better yet, a local bank or credit union instead.

    Best,

    Sam

  4. Anonymous says

    not a clear cut yes or no in my opinion but I got screwed over with no bonus this past year along with thousands of other people, so I wouldn't say it's unfair if he doesn't get his bonus. Those of us that are working, including him, are lucky to have our jobs, isn't that the more important thing?
    Hopefully the market will continue to rally, 9500 let's go! Charlie

  5. RB @ RichBy30RetireBy40 says

    9,500? How about Dow 20,000! :) I think people are moving beyond the fear stage now, and it's back to greed, just like that. Hence, the secret is to just hold on in the down and up cycles. Thnx for sharing.

    RB

  6. Anonymous says

    I think a lot of Citibank's own employees would want to leave in disgust if payment went through. Citibank has several hundred thousand employees worldwide, a lot of whom make an average salary. They shouldn't bear the brunt of vilification, just like 99% of Wall Streeters who didn't deal with sub-prime mortgages shouldn't bear the brunt.

    However, it's clear that America is turning into a socialist regime under the new administration. If we can't fight em, join em. Give him the 100mil bonus, and let the government slap a 99% tax rate on it. That still leaves him with 1 million bucks!

  7. ApprenticeOfLife says

    God bless the US legal system. No one deserves $100 Mil bonus, but some idiots at Citi agreed to it contractually so Mr. Hall is entitled to it if he spends millions on legal fees to fight it! After which like the above reader says, Uncle Sam will slap on 99% tax and he will be left with nothing! If he gets paid $100 Mil, rest assured he will need to hire extra security for fear of protesters loitering in front of his home, sadly.

    I have often wondered why the world does not have any issue with A-Rod, Tiger Wood, Angelina Joie or Brad Pitt making millions whereas they do with Wall Street folks even pre-crisis? I think it is because we derived pleasure from watching athelets and entertainers perform, and we can't see how someone like Mr. Hall performs on his job (with the full backing and resources of Citi – its capital and people, mind you, had he been on his own, he surely could not possibly have brought in the same amount of revenue, let's face it) to bring in that $1 Billion revenue. Now the same can be said about atheles and movie stars, without the Major League,NBA, PGA or major movie studios, would they be able to bring in the same revenue? But nonetheless Wall Streeter's talents aren't publicly displayed for the viewing pleasure of the world at large. Oh well, no one says life is fair!

  8. RB @ RichBy30RetireBy40 says

    Apprenticeoflife – Good to hear from you and thanks for your opinions. I'm surprised not more people are showing their populist beliefs here in the commentary section given how many people have read this article today already. Perhaps Americans just don't care, and agree that what is deserved is well deserved, even if it is $100 million bucks!

    Really good point on Mr. Hall and the movie stars having the broad help of others and a system to make them successful. We should ALWAYS be thankful to the people around us for helping us out.

    Tiger Woods and Brad Pitt entertain the public and for that they will generally be loved by the masses. It's funny though… even the biggest actors are pawns to the movie producers like Katz or Spielberg who are the mega rich. Everybody is a pawn to someone, whether they like it or not.

    With the market at another year high today, it sure looks like the good times are back.

    Rgds,

    RB
    Rich By 30 Retire By 40

  9. Anonymous says

    No, he should not be paid for the simple reason that the firm Ciigroup as a whole is not doing well. No matter how great ajob I have done, if my firm does not do weel, I get no bonus. In fact many of us even maight be laid off though we were in the profitable divison and had nothing to do with the comapny's misfortunes.

  10. Resort at Squaw Creek says

    Anon 10:11pm – If no matter how well you perform, you will never get paid commensurately if the firm does well, then don't you think most people will stop working hard and just free ride the system? Over time, the company becomes uncompetitive, and then everybody suffers.

    RSC

  11. Anonymous says

    If I was Andrew Hall's family, I would be seriously fearful of ridicule and attack. If Andrew was smart, he'd work on a deferred compensation scheme where the money would be parceled out over 10-20 years. That's still $5-10 million a year!

  12. BG says

    Wait a minute. Does Andrew work for Citigroup, or does Citigroup work for Andrew? At my company: if I invent something the makes massive profits for the company, it is still the companies intellectual property. I can make no claim of ownership on the invention, nor the “profits”.

    Why is this so different for a bank? Did Andrew somehow put HIS OWN money on the line to make Citigroup megabucks where he would deserve a 10% cut?

    Since when do employees come in line before shareholders? And if Citigroup is a company that bleeds all it’s profits as bonuses to employees, who in their right mind would want to be a Citigroup shareholder?

    • says

      It’s a contentious topic indeed. He’ll probably get $100 million in stock options at $3bucks, and sell 3 years later at $10 bucks and actually make a $300 million bonus for the year!

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