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Lehman crashed, but he earned $22 million

Susan Kitchens, Forbes | September 16, 2008


When Lehman Brothers chief Richard Fuld decides to depart, he'll be a very rich man.

Earlier this year, Fuld, a 30-year veteran of the once-venerable Wall Street investment bank that filed for bankruptcy protection this past weekend, was awarded $22 million in retirement pay. Since that cash was earned during his years at the firm, Fuld has a good chance of keeping it, says David Schmidt, senior consultant at James F. Reda & Associates, a compensation consulting firm. But, he adds, "Fuld has lots of stock, stock options and restricted stock that are essentially worthless."

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But Fuld's $22 million package is dwarfed by others who led their companies down the tubes. Merrill Lynch chief E Stanley O'Neal picked up $161 million from the Wall Street brokerage when he left last October after $40 billion of subprime-related write-downs.

Former Citigroup head Chuck Prince stepped down with a $68 million package. Even former Bear Stearns chairman Jimmy Cayne picked up a reported $60 million after selling some of his Bear stock in the aftermath of that firm's fire sale to J P Morgan earlier this year.

"These guys took most of their pay in the form of equity," says Schmidt. And, at the time they left, the equity "was worth something."

Not that Fuld is going anywhere anytime soon. But, like many on Wall Street, Fuld does not have employment or severance agreements, according to Schmidt. Instead, much of his pay is tied to stock performance.

With 3.3 million shares of Lehman stock, Fuld is the broker's largest individual shareholder. In March, his stake would have been worth $158 million. Lehman's shares were trading below $1 on Monday.

"Fuld has taken a huge hit," says Schmidt. "As far as the other guys were concerned, well, they were better off leaving their companies when they did." Lehman did not immediately return calls for comment.

Don't worry about Fuld, though. Between 1993 and 2007, he took home $466 million in pay, according to executive pay research firm Equilar. This figure includes base salary, bonus and long-term incentive plan payouts, and the value realized from stock option exercises and other benefits. His stock option gains accounted for 78 per centĀ of that compensation figure.


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