It looks like bankrupt Lehman Brothers executives will walk away with billions in bonuses for running their company into the ground with risky leveraged bets.
N.Y. Post cover, “GALL STREET: Bonus billions for Lehman bigs.” That’s based on a rewrite of this story from The (London) Sunday Times — “Fury at $2.5bn Lehman bonus”: “STAFF at Lehman’s New York office who helped to cause the world’s biggest corporate bankruptcy are to share in a $2.5 billion bonanza. The bonus, which has been described by London staff as a ‘scandal’ has been pledged by Barclays Capital, the British-based bank that last week acquired Lehman’s American operation and took on 10,000 staff. … A Chapter 11 bankruptcy document filed by Lehman Brothers Holdings Inc says that Barclays has identified eight individuals out of the New York staff of 10,000 who are vital to make the deal succeed and a further 200 who are identified as ‘key’. It is thought that these eight directors will be locked into two-year contracts worth between $10m and $25m a year.
“The $2.5 billion had been accrued as part of the contribution to Lehman’s group profits for the first nine months of the year. Barclays said there is no obligation to pay it out but analysts say the competitive pressure to keep key staff means he will have to. … The biggest bonuses are likely to be for Michael Gelband, the bank’s global head of capital markets, and Eric Felder and Hyung Soon Lee, global co-heads of fixed income. Barclays has asked all 10,000 employees to attend work tomorrow at the bank’s Manhattan headquarters. Over the next three months it will decide how many to keep and will use some of the bonus to meet remuneration packages. It is thought several thousand could be made redundant.”
