Lehman Brothers, Fannie Mae & Freddie Mac CEO Payouts
US Congress targets Richard Fuld over salaries, bonuses
October 07, 2008
US Congress has demanded that the head of Lehman Brothers justify some $US500 million he earned since 2000.
As US lawmakers grilled Richard Fuld on his own earnings, he has also been asked to explain the huge bonuses sought for top executives as the bank failed. The $37 Million Park Ave. Apartment Your Bailout Bought
Mr Fuld, the chief executive officer of Lehman Brothers, the investment bank that fell prey in September to the credit crunch, was called to account by the House of Representatives oversight committee.
Committee chairman Henry Waxman targeted Mr Fuld, saying that he had earned some $US500 million ($690 million) in bonuses and wages from Lehman Brothers. Mr Fuld owned a $US14 million getaway in Florida, as well as a home in Idaho filled with an art collection, Mr Waxman said.
And he pointed to an internal Lehman email in which the bank's compensation committee ecommended, as late as September 11, giving golden handshakes of more than $US20 million to be shared among three departing executives.
“In other words, even as Mr Fuld was pleading with Secretary (Henry) Paulson for a federal rescue, Lehman continued to squander millions on executive compensation,” Mr Waxman told the committee.
The hearings are the start of a series of probes promised by Congress - which on Friday passed an unprecedented $US700 billion ($980 billion) rescue package to shore up Wall Street - amid the country's worst economic crisis since the Great Depression in the 1930s.
Mr Waxman told Mr Fuld: “You've been able to pocket close to half a billion dollars and my question to you is, ‘Is that fair for a CEO of a company that's now bankrupt’”.
“It's just unimaginable to so many people”.
Figures provided by Lehman Brothers showed that Mr Fuld received some $US52 million from the bank in 2000. By 2006, that had ballooned to more than $US106 million.
But Mr Fuld disputed that he had pocketed that much in eight years, saying: “I would say to you that that 500 number is not accurate.”
“I think for the years you're talking about here I believe my cash compensation was close to $US60 million and the amount I took out of the company over and above that was closer to $US250 million. Still a large number though.”
In a series of written testimonies received over the weekend, Mr Waxman said that Mr Fuld &ldqo;takes no responsibility for the collapse of Lehman”.
“Instead, he cites a 'litany of destabilising factors' and says that 'in the end, despite all our efforts, we were overwhelmed'.”
Lehman Brothers sought bankruptcy protection on September 15 after a frantic weekend of talks failed to find a buyer for the Wall Street giant that has been ravaged by credit and real estate woes.
The massive bankruptcy filing in the US federal court in New York listed $US639 billion in assets and $US613 billion in debts, prompting a bloodbath on the global financial markets.
Japan's Nomura Holdings is buying a swathe of Lehman's operations in Europe, Asia and the Middle East, after British bank Barclays sealed a $US1.75 billion deal to acquire its investment banking and trading units.
‘We can't continue to have a system where Wall Street executives privatise the gains and then socialise the losses. Accountability needs to be a two-way street,” Mr Waxman said. /p>
‘Many experts think Lehman's fall triggered the credit freeze that is choking our economy, and that made the $US700 billion ($A913 billion) rescue necessary.
‘Mr Fuld will do fine. He can walk away a wealthy man, who earned over $US500 million. But taxpayers are left with a $US700 billion bill to rescue Wall Street and an economy in crisis.
‘While Mr Fuld and other Lehman executives were getting rich, they were steering Lehman Brothers and our economy toward a precipice.”
Fannie & Freddie
BNET Business Network:
http://blogs.bnet.com/secdocuments/?p=59 9-19-08
Under the government takeover plan of Fannie Mae and Freddie Mac announced Sunday, top executives and board of directors from both troubled mortgage lenders -- which hold or guarantee more than $5.2 trillion of the nation's $12 trillion of mortgages -- are being replaced.
Curious as to how much Daniel Mudd, the outgoing CEO of Fannie Mae, and Freddie Mac's departing CEO Richard Syron would receive in case of removal from their positions, I checked in on details of respective employment agreements.
As neither man voluntarily retired or was removed for "cause" (material breach of contract), Mudd is entitled to receive cash severance of $1.98 million (two years of base salary) and a cash bonus of $2.23 million, according to Fannie Mae's 2008 proxy filing.
Syron should get $1.10 million (one-year's salary) and a cash bonus of $2.64 million, according to Freddie Mac's 2008 proxy filing.
In addition, Mudd holds pension benefits with a present value of $4.92 million and Syron has pension assets worth $1.46 million, as of December 2007.
<"If misery loves company," said Henry David Thoreau, "misery has company enough."
Those who have lost their homes due to unforeseen reset increases in their adjustable rate loans, taxpayers footing the bailouts, and/or existing stakeholders in both lenders might take solace in knowing equity awards due to Mudd and Syron -worth $13.4 million and $13.8 million, respectively, on December 31 -are now worthless.
Fannie Mae CEO's pay rose in 07 as losses mounted
Mon Apr 7, 2008 3:02am EDT
NEW YORK (Reuters) - The head of Fannie Mae, a company chartered by Congress to help more Americans own homes, reaped a 7 percent rise in pay last year, to $13.4 million, while the ompany lost money and the country suffered its worst housing crisis in decades.
Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) posted a $2.1 billion loss in 2007 and its shares fell 33 percent as the subprime mortgage crisis bled into all parts of the mortgage market while home prices fell nearly 9 percent.
Fannie Mae Chief Executive Daniel Mudd also received $5.4 million from stock awards that vested in 2007, according to a Securities and Exchange Commission filing by the company.
Mudd's compensation included just under $1 million in salary, $2.2 million in incentive payments, about $10 million from stock and option grants, and $153,531 in other compensation, according to the filing.
Fannie Mae and its rival Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) hold charters from the government to support home ownership.
The companies, which are privately owned, do that by raising money from investors to support combined investments of $1.4 trillion, and honor guarantees on loans backing mortgage securities they issue.
Fannie Mae and Freddie Mac CEOs to get golden parachutes Daniel Mudd and Richard Syron, who are stepping down, have already made millions at the troubled mortgage giants and are expected to take away millions more.
By William Heisel, Los Angeles Times Staff Writer
10:13 PM PDT, September 8, 2008
Shareholders in Fannie Mae and Freddie Mac saw the value of their stock nearly disappear Monday after the mortgage giants had been taken over by the federal government, but the companies' chief executives will leave after banking millions and taking millions more on the way out the door.
Fannie Mae's Daniel Mudd and Freddie Mac's Richard Syron stepped down but are helping with the transition of their companies into federal conservatorship under the Federal Housing Finance Agency. The agency has not said how much they will earn in their new roles.
estimates, Mudd, 49, and Syron, 64, will leave with an additional $7.3 million and $6.3 million, respectively, as part of a severance package, according to an analysis by Paul Hodgson at the Corporate Library.
"Had they left at the end of December, they both would have walked away with more than $20 million, but the drop in the stock price has had a dramatic impact," said Hodgson, a senior research associate.
"It's still a substantial payoff for an executive who has managed a company so badly that the federal government has had to step in and save it."
Forbs
The heads of America's 500 biggest companies received an aggregate 54% pay raise last year. As a group, their total compensation amounted to $5.1 billion, versus $3.3 billion in fiscal 2003.
The Highest-Paid CEOs (2008)
- Terry S. Semel
- Link to picture no longer available... Barry Diller
- William W. McGuire
- Howard Solomon
- George David
- Lew Frankfort
- Edwin M. Crawford
- Ray R. Irani
- Angelo R. Mozilo
- Richard D. Fairbanks