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 recommended, 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
In a series of written testimonies received over the
weekend, Mr Waxman said that Mr Fuld “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
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
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
“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:
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.
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 company 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
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
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 homeownership.
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."
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.