By: Matthew Arndt, CFA, CPA, CFP | August 26, 2009 | Investor Information, Wall Street Ethics

A floundering taxpayer supported Citigroup is under contractual pressure to pay energy trader Andrew Hall a $100 million bonus. The real question is does Hall deserve the bonus? Is such a huge bonus fair to shareholders and taxpayers who are supporting Citigroup? And will shareholders suffer if Andrew Hall decides to leave and go elsewhere?

It’s my understanding that traders like Hall get paid the overwhelming portion of revenue they produce while shareholders get pennies even though the shareholders are the ones putting all their capital at risk and are making it possible for traders to produce large revenues exposing the owners to a major potential blow-up.

When it comes to investing in banks and publicly traded hedge funds where the managers have little of their own money at risk it seems investors have very little upside and a tremendous amount of downside. It seems the shareholders are overpaying for the services of incompetent bankers and aggressive traders ’swinging for the fences’ with shareholder capital. In other words, investors in such dubious companies are being taken for a ride!

A couple of years of profitability is too short a time period to determine whether or not Andrew Hall is doing a great job or has just been lucky and might be exposing Citigroup to potential large losses. Given the fact that investors are receiving very little of the benefits that Hall has produced, as a taxpayer, I vote to let him walk.