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Capitol Grilling for Lehman CEO
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Fuld defended Lehman's pay practices, saying "the system worked" because 85 percent of his pay was in the form of stock, aligning him with shareholder interests. He owned 10 million shares when Lehman filed for Chapter 11 bankruptcy protection last month.
"I'd like this committee to know I got no severance. I got no golden parachute. I had no contract. I never asked for a contract," Fuld said. "I could have sold that stock. I did not because I firmly believed that we were going to return to profitability."
Lawmakers were not sympathetic.
"You did well when the company was doing well and you did very well when the company was not doing well," said Rep. Henry A. Waxman (D-Calif.), chairman of the committee.
Several members targeted positive statements Fuld made during a Sept. 10 call with analysts about Lehman's balance sheet, five days before the company filed for bankruptcy.
"The problem is we have statements . . . at the time that they were made were simply implausible. That raises the question of whether your perspective was clouded or whether something else was going on," Rep. John Sarbanes (D-Md.) said.
The FBI is investigating whether there was fraud at Lehman Brothers, and the Securities and Exchange Commission is looking into what Lehman disclosed about housing-related investments and how it valued them.
Fuld said he spoke and made decisions based on the information he had at the time. He said on the Friday before the Sept. 15 bankruptcy announcement that Lehman and Merrill Lynch were in similar circumstances and in talks with other banks over a possible merger or sale. On Sunday, federal regulators decided to let Lehman fail. The next day, Merrill said it would be absorbed by Bank of America and Lehman filed for Chapter 11.
When asked if he wonders why federal regulators let Lehman go under but not insurance giant American International Group, Goldman Sachs or Morgan Stanley, Fuld replied: "Until the day they put me into the ground I will wonder."
