Lehman Bros head took home $300m

[Ram]

The head of failed US investment bank Lehman Brothers has told Congress that he took home about $300m in pay and bonuses over the past eight years. Richard Fuld, whose firm went bankrupt last month, made the statement during testimony before the House Oversight and Government Reform Committee. The panel is holding its first hearing into the cause of the financial crisis. It is being held amid renewed market turmoil, with shares plummeting further in Europe and the US. Committee chairman Henry Waxman opened the hearing by saying the credit freeze threatened the entire economy. "To restore our economy to health, two steps are necessary," he said. "First, we must identify what went wrong. Then we must enact real reform of our financial markets." 'Feeling horrible' Turning to Mr Fuld, Mr Waxman asked whether it was true he had received $480m (£276.2m) in pay and bonuses since 2000 - and whether this figure was fair. Mr Fuld replied that the correct total was about $300m (£172.6m). "We had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders," he said. Mr Waxman also criticised Mr Fuld for requesting multi-million dollar bonuses for departing executives just days before last month's collapse. "In other words," he added, "even as Mr Fuld was pleading with [Treasury] Secretary [Henry] Paulson for a federal rescue, Lehman continued to squander millions on executive compensation." Mr Fuld said he took "full responsibility for the decisions that I made and for the actions that I took" and defended his actions as "prudent and appropriate" based on information he had at the time. "I feel horrible about what happened," he adde http://news.bbc.co.uk/2/hi/americas/7655178.stm ------------------------- $300 M!! Most companies dont even make a profit of $300 M in 8 years!

[CC1981]

Most companies dont even make a profit of $300 M in 8 years!

Which planet are you living on ? This is a BANK we are taling about...a frigging bank...300 million profit in ONE year is nothing for them,nevermind over 8 years for any bank of significant standing.

[Ram]

Which planet are you living on ? This is a BANK we are taling about...a frigging bank...300 million profit in ONE year is nothing for them' date='nevermind over 8 years for any bank of significant standing.[/quote'] Only you can take a tongue-in-cheek comment that seriously and refute it just for the sake of it. Wondeful!

[Ram]

I dont have any problems with astronomical CEO pay, but I do have a problem with this:

Mr Waxman also criticised Mr Fuld for requesting multi-million dollar bonuses for departing executives just days before last month's collapse. "In other words," he added, "even as Mr Fuld was pleading with [Treasury] Secretary [Henry] Paulson for a federal rescue, Lehman continued to squander millions on executive compensation."

This is ridiculous. One on hand, you're begging the govt to bail you out, while on the other hand you're sanctioning multi-billion dollar bonuses for departing executives! Thats nonsense.

[Lurker]

I dont have any problems with astronomical CEO pay, but I do have a problem with this:

I definitely have a problem with astronomical salary of the CEOs. a) The salary is ultimately charged off the consumer. The 300 million paid to CEO was NOT coming out of the Company's profit, it was passed off to the consumer. So every service that Lehmann Brothers provided went up by that amount. If you have about 10-15 top executives, including Board of Directors, you are looking at a cool 2-3 billion dollars over past 8 years. Yes I have umbrage to that. b) The salary for Lehmann Brother Executives(holds true for most companies) was NOT affected when the company started to tank. It is not that Lehmann Brother CEO willing cut back his renumeration by say 25%(say 10 million a year) and saved about 100 jobs at Lehmann. Instead he laid off 100 people so his salary is not affected. I take umbrage to that too. c) When Lehmann Brothers(and other companies) were making money hand over fist it did not pass on a single penny to folks like me who did not have any connection, shares or otherwise, from it. Now that it has gone bankrupt I am supposed to pay off 2500$ to bail these mofos. I take umbrage to that as well. xxxx

[fineleg]

Lurker, The thing is if there is someone who is willing to pay so much, there is someone who will accept the pay. The focus needs to be on the bolded part. Do you think the pay for every industry or position is 'reasonable'. If so, civil engineer in India should make as much as IT person. But that does not happen either. I think Lehman CEO shud be punished for being irresponsible with decisions he made. But, thats besides the point I am making in this post.

[Kohum]

I definitely have a problem with astronomical salary of the CEOs. a) The salary is ultimately charged off the consumer. The 300 million paid to CEO was NOT coming out of the Company's profit, it was passed off to the consumer. So every service that Lehmann Brothers provided went up by that amount. If you have about 10-15 top executives, including Board of Directors, you are looking at a cool 2-3 billion dollars over past 8 years. Yes I have umbrage to that. b) The salary for Lehmann Brother Executives(holds true for most companies) was NOT affected when the company started to tank. It is not that Lehmann Brother CEO willing cut back his renumeration by say 25%(say 10 million a year) and saved about 100 jobs at Lehmann. Instead he laid off 100 people so his salary is not affected. I take umbrage to that too. c) When Lehmann Brothers(and other companies) were making money hand over fist it did not pass on a single penny to folks like me who did not have any connection, shares or otherwise, from it. Now that it has gone bankrupt I am supposed to pay off 2500$ to bail these mofos. I take umbrage to that as well. xxxx

Very well put :thumbs_up: :two_thumbs_up:

[Lurker]

Lurker, The thing is if there is someone who is willing to pay so much, there is someone who will accept the pay. The focus needs to be on the bolded part.

Fineleg, think of how a CEO is offered the job at any of these big Corporates. There is a vacancy. A few top guys are interviewed and one of them is offered the job. Now who interviews these candidates? It is the Board of Directors. Sometimes it may include key shareholder a la Warren Buffett etc. Otherwise it is almost always the Board of Directors. Now what comprises this Board? Well obviously another lot of high paid Corporate biggies. Essentially a bunch of crooks pay another crook. The point, if someone is willing to pay then someone will accept it, shall hold true if the CEO was selected by shareholders themselves. Most of the times, if not always, the shareholders are kept in the dark and it is only during the chaos like this that we actually get to hear how much the CEO is worth.

Do you think the pay for every industry or position is 'reasonable'. If so, civil engineer in India should make as much as IT person. But that does not happen either.

Thats something I have mentioned oft before. The business model where an IT person, never mind that he is not even an Engineer, makes almost 10 times that of a civil(or other form of engineering) is highly unstable and dare I say unethical too. And IT folks are way overpaid anyways. I am the first person to admit that. xxx

[fineleg]

Agree about the Board of Directors consisting of other such folks, and this being a "old boys network" sort of thing going on. Gotta agree about what you are saying on that. --- BTW - I think the IT thing being special will come down to more earthy levels. What has already happened is that - every Tom, Dick and Harry is now an "IT person" and nearly the vast majority of non-doctor-aspiring high school and college folks in India want to go into IT (though it is reducing now due to Biotech etc also growing). It is supply and demand. The supply for IT is plentiful now - you have a lot of folks (talented, medium level, and mediocre - all levels). The result being IT salaries will surely go down going forward.