Lehman Employees Lost $10 Billion
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Saturday, June 14, 2008
Lehman Brothers' employees lost at least $10 billion as shares of the fourth-largest U.S. securities firm plummeted 74 percent from their high last year.
Richard Fuld, Wall Street's longest-serving chief executive, lost $180 million as the credit-market contraction wiped out $30 billion of his firm's market value. Fuld's loss was the biggest among insiders, who own about 30 percent of outstanding shares, the New-York-based company said.
Lehman shares rose 14 percent yesterday, the most since April 1 and the first increase in five days. The firm replaced Chief Financial Officer Erin Callan and President Joseph Gregory on Thursday after failing to quell speculation about mounting losses and the firm's ability to weather the collapse of the mortgage market. The stock is the worst performer this year on the Amex Securities Broker/Dealer Index.
"His credibility is on the line," Bruce Foerster, who was a managing director at Lehman before starting South Beach Capital Markets, an advisory firm in Miami, said of Fuld in a Bloomberg TV interview yesterday. "The board's credibility is on the line."
Lehman had 28,100 employees as of the end of February. The firm has eliminated about 6,400 jobs, or 23 percent of its workforce, in the past 11 months.
Fuld, 62, whose career at Lehman spans four decades, has endured previous crises of confidence. He slashed the company's assets by 20 percent in 1998 when slumping debt markets in Russia and Asia prompted speculation his company might founder.
Fuld received $40 million last year, including a $4.3 million cash bonus, $35 million in restricted stock and $750,000 in salary. He got $40.5 million in 2006. In late 2006, the company said it would give Fuld 246,395 shares a year for 10 years provided he stays at Lehman.
Bear Stearns former chairman James Cayne watched his stake in that company plummet from almost $1 billion last year, when the shares peaked at $171.50, to $61 million, when he sold his remaining holdings in March. Cayne, 74, led Bear Stearns as chief executive for 15 years until January, when he stepped down after the firm posted the first loss in its 85-year history.
