Sunday, October 12, 2008

Lehman: $100 million bonuses before bankruptcy

THE Lehman Brothers board signed off on more than $100m (£59m) in payouts to five top executives just three days before the bank went bankrupt leaving thousands of employees out of work in London.

The payoffs, approved on September 12 by the Wall Street giant’s compensation committee, included over $24m in severance packages to the collapsed firm’s top three London executives.

The committee agreed a $16.2m pay-off for Benoit Savoret, chief operating officer for Europe. This payment had been guaranteed by the firm after Savoret had turned down an approach to join a rival firm. Andy Morton, the fixed-income business head, was set for a $2m golden goodbye.

Both were forced out in a shake-up orchestrated from New York in the waning days at the troubled bank. A $5m package for Jeremy Isaacs, the European chief executive who also left, was approved as well.

The executives never received the payments – detailed in internal Lehman documents seen by The Sunday Times - because the company filed for bankruptcy protection the next working day, September 15.

It wasn't just the hedge funds scrambling for Lehman's cash. It was also their executives trying to get in on last hit!

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