According to The Wall Street Journal, "The discussions include converting a substantial chunk of Mr. Hall's compensation for 2010 to equity from cash." That concession may make the Treasury Department, which is involved in compensation decisions at firms that still have TARP funds, to save face. Hall would be taking a risk in the future by not having all of his pay-out in the form of cash.
It is understandable that Citi is anxious to please both Hall and the government. The bank does not want federal officials breathing down its neck on comp issues, or any issues at all. But Hall's Phibro produces tremendous profits. If he leaves the firm, those profits could be in jeopardy.
The problem with any settlement is that it sets up a system of "haves" and "have nots" even among Wall Street's elite. A firm like Citi may defend a highly profitable employee, but mount no defense for an executive whose work is only modestly profitable. The pay czar should craft a system where one program can be applied to all compensation packages and applied fairly. It looks like that is not going to happen.
Douglas A. McIntyre is an editor at 24/7 Wall St.
