Join us for chat on Lehman pay story
Los Angeles Times reporters Walter Hamilton, Andrew Tangel and David Lazarus will be conducting a live video chat with readers at 10 a.m. to discuss today’s front-page story on the $700 million awarded to 50 of the highest earners at Lehman Bros. months before the Wall Street bank collapsed in a history-making bankruptcy.
The Times disclosed the existence of internal Lehman documents revealing that each of the top earners were pledged $8 million to $51 million in cash, stock and other compensation. How much, if any, of the stock was cashed in before the bankruptcy wiped out its value couldn’t be determined.
The rich pay packages doled out to so many people surprised even some ex-Lehman employees, who were troubled at the enormous and uneven compensation given to select executives and traders.
Lehman filed for Chapter 11 protection in September 2008 in what would become the largest bankruptcy in U.S. history, sparking the biggest financial meltdown since the Great Depression. The investment bank buckled after betting heavily on sub-prime mortgages to people with shaky credit, which became worthless as housing prices tumbled and the borrowers stopped paying their loans.
The Lehman documents provide a rare peek into Wall Street compensation practices, because federal regulations require salary disclosure of only the five highest-paid officers of a corporation. The documents reveal, to the dollar, the pay packages promised to individual traders and investment bankers at Lehman — a well-kept secret up to now.
The records illustrate that enormous pay wasn’t limited to top executives but was dished out to a wide range of traders and others who sometimes took home even bigger paychecks than the CEOs who ran their companies.
The documents show total compensation but don’t provide a breakdown of salary levels, stock or cash bonuses. The Lehman bankruptcy meant that most of the 50 executives on the list probably did not get their full stock-based compensation.
The full story can be read here.
