Fury at $2.5bn bonus for Lehman's New York staff
By David Prosser
Monday, 22 September 2008
Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.
The revelation sparked fury among the workers' former colleagues, Lehman's 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done.
A spokesman for Barclays said the $2.5bn bonus pool in New York had been set aside before Lehman Brothers filed for chapter 11 bankruptcy in the United States a week ago. Barclays has agreed that the fund should continue to be ring-fenced now it has taken control of Lehman's US business, a deal agreed by American bankruptcy courts over the weekend.
Barclays is paying $1.75bn for the US operation of Lehman and is keen to retain its best staff. It said it had made no promises to individual staff members about how much they will receive but that the bonus fund would be paid out. In addition to the $2.5bn cash pool, Barclays is also in negotiations with about 30 executives it considers to be Lehman's best assets and plans to offer them contracts worth tens of millions of dollars. British employees of Lehman described the bonus payments as a "scandal" as they waited anxiously yesterday to see whether a deal could be struck with buyers circling the bank's European operations.
Many of Lehman's UK staff are particularly angry about the US payouts because it has emerged that in the days running up to the bankruptcy, some $8bn in cash was transferred out of the account of the bank's European business into accounts at the New York head office.
There is no suggestion any of this cash was used to supplement the bonus fund, but partly as a result of the transfers, PricewaterhouseCoopers (PWC), the administrator to the European business, initially found it impossible to guarantee salaries would be paid. The September wages of thousands of European staff were only secured in the middle of last week, when PWC negotiated a £100m loan to fund the payments. PWC wrote to Lehman Brothers' head office in New York last week, requesting the repayment of the $8bn, but a spokesman said yesterday that the administrator had received no formal response.
The row will increase pressure on the Government to tackle perceptions that City pay is out of control. ..... "There's been a great deal of irresponsibility," the Prime Minister said. "There's an element of the bonus system that is unacceptable.".........
"What is appropriate for regulators to do, is the need to ask searching questions about the nature of people's remuneration and to ask questions of institutions as to whether they are paying out bonuses before they are really sure whether the profits are really there."A spokesman for the TUC said the US payouts were unfair. "It looks like those that will suffer the most from the Lehman Brothers' collapse are those at the bottom of the corporate chain while many of those at the top will be looked after," he said.
Critics of the UK's attitude towards City pay also pointed out that the US has much stronger litigation laws. For example, advocates acting for Lehman creditors in the US said over the weekend that they might sue Richard Fuld, the investment bank's chief executive, who was paid $34.4m last year, in an attempt to force him to return some of the money.
good for you, however you still have it wrong. You think everyone in public life is cheating, maybe, but they don't run my life, or tell me what I can or cannot do, or how much money I can make or spend, once you have mastered your own life perceived problems go away.
To whine with the masses is like sheep to the slaughter, again someone has to work to pay for the American Dream, a chicken in every pot, 40 acres and a mule, then what?
Another liberal attacking the messenger, your use of the English language is quite horrid. Why do ya'll insist on being lower then whale dung, is it part of your liberal makeup or college education?
I want you on my list as I need to know how the left thinks in order to put things in perspective. However being liberal does allow you to be rational, only go on the attack, no debate just insults. Your swastika is showing...
Re: "Nope elk! Still the same ol' fart. Was it my brevity that may have led you to believe I was someone else? Was I too kind to keep? Maybe i do have a split personality...just exactly who am I today?"
Here (but maybe it was a coincidence) is what I was responding to:
keep_investing says: "elk_1, I have "still_working_55" on ignore for being a right-wing whore."
and then bucks2pennies responds to that post with: "I know you have me on the ignore list but not likewise. I enjoy your posts... cut to the point. Agree or not, you have a cutting style without, imo, being a vulgar half-wit....'keep' 'm coming!"
Nope elk! Still the same ol' fart. Was it my brevity that may have led you to believe I was someone else? Was I too kind to keep? Maybe i do have a split personality...just exactly who am I today?
I know you have me on the ignore list but not likewise. I enjoy your posts... cut to the point. Agree or not, you have a cutting style without, imo, being a vulgar half-wit....'keep' 'm coming!
elk_1, I have "still_working_55" on ignore for being a right-wing whore.
The poor dumb bastard doesn't realize he'll be working until he's 105, because of what his hero the IDIOT(aka; GW) has done to the economy.
I am a Republican too and I just got tired of having the ring in my nose, being led by big business into believing the American Dream is real and I can have it too (True, I have worked long and hard and even am managing to have a decent life to boot [nothing to do with my being a Republican] - so using your logic of "I have mine", I am to ignore or chastise the problems of others). All along the big boys [both democrat and republican members] think acquiring our American Dream by doing “hard labor” is beneath them and that the REAL American Dream is to become exhortative filthy rich on our backs ... by not lifting a finger themselves, treating common folk like you as a stupid idiot, cheating you freely, gouging you when they can get away with it and walking away free and clear (and more wealthy) while you bear the life's cost of their mistakes. Go on, keep believing the crap they have fed you over the last 8 years, smile, and be prepared to bend over while you dream of hitting the lotto so you too can join the ranks of the filthy rich – cause you aren’t going to make it working hard at making a living and ‘investing’ any spare change that you may have after covering your living costs … and by the way, Democrat party members work at making a living too!
Re: "As I am a republican I have to work as everyone can't be on welfare...."
We all, certainly, know the latter because after the Billionaires and their Corporations take their dole of Welfare there is precious little left.
This is what the current Republican administration call "free enterprise" - let the capitalistic market place be unencumbered with Government oversight (in otherwords, it is ok for the 'big boys' to pad their pockets while screwing the 'little boys' - and when all h--l breaks loose, stand to gain while our elected officials try to brainwash the American Public into believing that the common investor is somehow at fault by not remembering that "there is risk to investing". Really? Should we also know that in the end, we carry the entire burden of that risk on our shoulders?
I was horrified to read the bail-out plan proposed to clear the bad debts. It would give the Treasury power to do any thing, their actions not reviewed by anyone and not required to follow the law. I am against this total power, except for get back money from the staffs of these companies. They should get not only their bonuses, all their current and future assets. They should throw these bums out on the street wearing only a barrel with a sign saying, "I'm sorry I stole your money". Treasury can say if you complain, I put a bullet in head, because we is the law.