Sept. 18 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit said the bank will restructure its Phibro LLC energy-trading business as it faces what may be a $100 million payday for the unit’s chief, Andrew Hall.

“That business will be restructured and rationalized,” Pandit said yesterday at the 92nd Street Y in New York. When asked if $100 million was too much to pay, he replied, “Yes.”

Hall’s payout will be determined at the end of this year based on Phibro’s profits and may raise concern among lawmakers and regulators who are scrutinizing Citigroup’s compensation practices after a $45 billion government bailout last year. Hall may be owed $100 million under the terms of his contract with Citigroup, according to people familiar with the matter.

Citigroup, based in New York, is among seven bailed-out companies that last month had to submit compensation plans for top executives to Kenneth Feinberg, the Obama administration’s special master on pay. Pandit cut his own pay to $1 this year after getting a total of $10.8 million in 2008.

Hall’s pay is based on the performance of the Phibro LLC unit he heads, not the bank’s, making the sale of the unit more likely as a way of placing him outside the government restrictions, people familiar with the matter said last month. Citigroup booked $667 million in revenue from commodities trading last year, while the company overall had a record $27.7 billion net loss.

Hall didn’t respond to an e-mail and a call placed to his office.

More Profits

Phibro is profitable again this year, people with knowledge of the firm’s operations said last month.

A Federal Reserve proposal to rein in risk-taking at financial firms may impose sweeping curbs on “tens of thousands” of bank employees nationwide, the Wall Street Journal reported, citing people familiar with the matter.

While the Fed wouldn’t set pay levels for individuals, the central bank would review salary and bonus policies, with the country’s 25 biggest financial houses the main target, the newspaper said.

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: September 18, 2009 15:09 EDT