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Posted on Oct 22, 2008 - 1:23am by John P. in Finance, News
Ok. So, a good executive can be worth a lot of money to a company. I don’t have anything against a nice pay package, all things considered. But it is literally criminal for an Executive to receive a huge payout when they deliver negative results for a company. In my opinion, Exec pay should be merit based. If the exec delivers outstanding shareholder value, a big paycheck should ensue.
So, how then about these execs? Just 72 hours before the company filed for bankrupcy, Lehman awarded the top 5 executives $100 million. Yep. You heard that right. They drove the company into the ground and got rich off of doing it.
THE Lehman Brothers board signed off on more than $100m (£59m) in payouts to five top executives just three days before the bank went bankrupt leaving thousands of employees out of work in London.
The payoffs, approved on September 12 by the Wall Street giant’s compensation committee, included over $24m in severance packages to the collapsed firm’s top three London executives.
The committee agreed a $16.2m pay-off for Benoit Savoret, chief operating officer for Europe. This payment had been guaranteed by the firm after Savoret had turned down an approach to join a rival firm. Andy Morton, the fixed-income business head, was set for a $2m golden goodbye.
Both were forced out in a shake-up orchestrated from New York in the waning days at the troubled bank. A $5m package for Jeremy Isaacs, the European chief executive who also left, was approved as well.
The executives never received the payments – detailed in internal Lehman documents seen by The Sunday Times – because the company filed for bankruptcy protection the next working day, September 15.
According to Tony Lomas, the lead administrator, they will now be treated as unsecured creditors.
The committee also signed a $41m retention package for Eric Felder, the head of global fixed income in New York, and a $40m two-year deal for Jerry Donini, the US-based head of equities. These are understood to have been voided, replaced by new contracts under Barclays which bought the US business.
The pay deals will further inflame the debate raging about executive pay as the global financial crisis accelerates.
ah tis pure criminalness. this is why the gap gets larger every day
Wow that is awesome
Heheh 100 million $ is a big amount
Kool
100 Million $ you mean “100 Million $” Surly its a crime.And how can one justify it?
No-one should ever get that amount of money. It really annoys me when companies close or whatever and the big shots get all they shares bought from them and a heafty pay bonus…does my head in!
Outrageous, I would say. These executives are paid highly to ensure that their companies are run properly and not to the ground like Lehman was. And that is why we should not be using tax payer’s money to bail out these firms. Additionally, I might even go to the extreme of recommending that criminal charges be brought against them.
If these people have already withdrewn the money then no option left, or else this money should be taken back and used for clearing off the dues but its a bad practice to withdraw/pay of top executives such a high sum of money and filing for bankrupcy. :(
This is just ridiculous. The reason these guys get offered these extreme packages is because of their so-called expertise and the ability to run and grow a company. When they failed to run or grow the company effectively imo they didn’t hold up their end of the contract and it should be voided. In other words they shouldn’t get anything
Not surprising, nor should it be, after the Enron scandal.
One would see what has occurred with these individuals and take note that the results of their actions have produced benefits for them. This motivates others to aspire to go through the same process as these executives have, in order to acquire these similar awards. On the other hand, there are some individuals that would see what has occurred, and would be motivated to alter the system to not allow for the use of it in this fashion.
The article says the execs never received the money…