Abstract

The case discusses Citigroup, Inc.’s sale of Phibro LLC, its profitable energy trading unit, to energy and chemicals giant Occidental Petroleum Corp. Citigroup sold the unit reportedly to end the controversy that erupted over the US$ 100 million compensation due to Phibro’s star trader Andrew J. Hall. The case mentions some of the arguments for and against making the payment. It then describes the reasons behind Citigroup’s decision to sell the unit, and some of the consequences of the sale on the company and on other companies in the US financial services industry. The case also touches on the possible benefits and threats to Occidental from the Phibro acquisition.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the role of compensation in motivating employees.: Understand the impact of government ownership on private enterprise. : Recognize the ethical issues involved in compensating employees extravagantly, especially during dire financial times.

Keywords

Citigroup, Phibro, Andrew Hall, Executive compensation, Pay review, Financial services