Lehman Brothers CEO Richard Fuld, who received $34.4 million in pay in 2007, will be “terminated” by the bankrupt company without any bonus, said a lawyer for Lehman.
“His employment will end at the end of the year,” Harvey Miller, Lehman’s lead bankruptcy lawyer, of Weil, Gotshal & Manges, said yesterday during a break at a hearing in federal court in Manhattan. “He is being terminated. He will receive no severance or bonuses.”
Fuld, 62, has stayed on as CEO while lawyers and other professionals disperse Lehman’s assets to pay creditors after the fourth-largest investment bank filed the biggest US bankruptcy Sept. 15 in New York.
Alvarez & Marsal’s Bryan Marsal, Lehman’s restructuring officer, “is actually operating” the company, Miller said.
A large departure bonus for Fuld would have been illegal under US bankruptcy law, said Lynn LoPucki, a law professor who teaches at Harvard University and the University of California. Severance payments to insiders are limited to 10 times the termination money paid to other full-time employees, he said.
Fuld will continue to be chairman of Lehman’s board, said Jonathan Doorley, a company spokesman.
Marsal asked Fuld to stay on and help with the bankruptcy through the end of the year, Doorley said. Fuld did so “without any claim to severance or other bonus payment at the end of his employment,” Doorley said in an e-mail.
Fuld has been Lehman’s CEO since 1993, making him the longest serving chief executive of any major investment bank.
He joined Lehman in 1969 at the age of 23, and was head of trading when the firm was sold to American Express Co. in 1984. He was the CEO of Lehman when it went public in 1994.
The company earned a record $4.2 billion last year, then foundered under subprime and structured investments, listing $613 billion in liabilities in its bankruptcy petition.
Today, New York State Comptroller Thomas P. DiNapoli asked the court to appoint a trustee to oversee the bankrupt estate of Lehman and its units. Fuld and the firm’s board “are wholly inappropriate parties to supervise this company through this large and complex liquidation,” DiNapoli said in court documents.
Fuld and board members “should not be involved in directing any investigation into what led Lehman to its historic collapse,” the comptroller said in court papers.
Bloomberg