The Times of London says that a mere three days before Lehman Brothers went bankrupt, the firm approved $100 million in payouts to departing executives.
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.
According to Tony Lomas, the lead administrator, they will now be treated as unsecured creditors.
Ouch.
Failing Lehman in $100m payout plan [Times of London]
(Photo: scurzuzu )
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the party continues
@crazyasianman: No, the party didn’t continue. The payouts were put on hold the next day, and now that they are listed as unsecured creditors will probably never see any money from this.
Especially if the Govt keeps up its promise to keep an eye on executive payouts with the bailout in progress.
@seamer: @seamer:
fair enough… but those “ifs” often have a bad habit of evading scrutiny… hopefully not right now though
They can contribute that money to the crisis… what nerve.
I hope they are LAST on the list of unsecured creditors… let the real creditors get paid before they ever have the chance to see a dime.
And people really still wonder as to why the general public has dislike and even downright hatred toward over paid executives?
Maybe, if we hurry, we can get them enough tax payers money so those execs can still get a massage.
@Jabberkaty: But will it have the happy ending? I think not.
@gyroball: “You get egg roll, see, happy ending!”
Why is this not criminal?
@zentec:
Why is this not criminal?
Because these guys and the the guys like them pay for the campaigns of those who decide what the laws are.
@rubberpants: And make sure that even if it were criminal they know enough people to avoid serving any jail time.
I’m waiting for the “But, they earned that money.” comments.
@mac-phisto: A company I worked for went bankrupt owing me $2200 in outstanding invoices.
Since their funding fell short 8 million dollars (yes… 8 million) I figured no way in hell am I getting paid.
NOT TRUE! They made a “convenience class” of people owed $3000 or less. In exchange for the convenience of being paid “first”, we were offered 15% of what we were due.
$330 was better than nothing. :/
@zentec:
Actually , it could have been. If they had helped themselves to that much money while knowing that the firm was insolvent,a bankruptcy judge could find that a “fraudulent conveyance” of assets and ordered its return.Looks like these silly ,greedy bastards just didn’t move fast enough…
@zentec:
Why SHOULD it be criminal to compensate employees any amount the company desires?
@mugsywwiii: When the employees in question are also the ones approving the compensation, there are no checks and balances in the system. Since a corporation has rights under the Law, deciding to pay yourself money that the company DOES NOT HAVE is tantamount to stealing from the company. The stewards of the company must always act in the company’s best interests, not in their own.
Now, you could say, “Well the company would have been bankrupt anyway.” That is true, whether the executives took the bonuses or not would make no difference to company. However, this is (a) highly unethical because only a select few employees (i.e. the ones at the top) were rewarded rather than *all* the employees, and (b) there is less money left over to pay creditors (e.g. you can only pay them 40 cents on the dollar instead of 50 cents). That would be similar to a situation where you would come to me and say, “Can I borrow $50 to get a bus pass to work and when I get my paycheck I will give it back to you.” and instead you go to the bar, blow the money on booze, lose your job because you didn’t show up for work, and now because you’ve been fired you have no paycheque and thus cannot repay me the $50.
It was face-punchingly bad taste, and has to be criminal in some way. It is hard to believe that they actually were that bold and thought they could get away with it.
@neilb: Wall Streeters always think they can get away with anything.
@Miss Pontificating:
The reason they think that is because they do get away with anything. If you were constantly robbing banks and no one seemed to care or even paid you to do it with no consequences, you’d probably keep doing it.
It doesn’t matter that they didn’t receive the payments. It’s the intent that’s astonishing.
shit, even if they get a penny on the dollar, it’s still a million bucks
I dont care if I’m thread-jacking… but can someone please fix the RSS feeds… i’m getting everything BUT the consumerist feeds…. (gawker, gizmodo, valleywag, etc… and i’m not even subscribed to these).
Hey, If they Earned it.
You know they work harder and longer hours than the rest of the riff-raff blue color folks. That doesnt even count the education and intellect factor that goes in to being an exec..
$100m? A Bargain!
@thebluepill: Who are these mysterious blue color folks?
@Kuonji:
They used to be identifiable by their “Blue Collar” jobs.. But they have been kicked in the balls lately and left in the cold and singing the blues..
Now they are just “Blue Colored” people..
@Kuonji:
Thanks imageshack
@thebluepill:
LOL..
wait, are you being serious? The execs I’ve met are complete retards and probably only got to where they were by being sneaky jack-offs. Everyone thinks Bill Gates is smart, but he’d have nothing if he weren’t a simple-minded, shady douchebag that got away with scamming people out of their products.
@thebluepill: That is such crap! They didn’t earn it if they rode their company into bankruptcy and that education and intellect garbage is nothing but elitist bullpuckey.
What goes into being an exec these days is greed and a total disregard for the planet and every other living thing on it.
@Nofsdad:
Sarcasm escapes you?
Should be illegal, if I went and made a bunch of cash withdraws from my credit cards then declared bankruptcy a week later then they would not let me declare against that since it was so recent.
Should be the same to large corporations.
@corinthos:
My girlfriends ex-husband did exactly that, in the last few days before the bankruptcy laws were radically changed. He bought 5 big screen LCD, a tractor, a riding lawn mower, a motorcycle and about $80,000 more worth of stuff and got to keep it all. Free and clear. Mentality is the same only the numbers are bigger.
is it even fair to treat them as unsecured creditors? anybody that doesn’t have collateral ends up in this category including subcontractors that haven’t been made whole yet!
funniest part about this? this is the ultimate example of executive raiding of the coffers. equity holders (the “real” owners of a bank) are going to lose everything & whatever crumbs are left over will end up in the pockets of the very people that caused their money to be lost. classic.
I have a serious question here, if someone could help. How can they get $100m packages if the business is bankrupt? If they’re bankrupt, where is this money coming from, and if they HAD this kind of money, how can they be declaring bankruptcy?
Just a general question about how this works, not necessarily about Lehman specifically.
@Crabby Cakes:
The same way they pay all of their other employees or buy anything – credit.
Think I just threw up in my mouth a little bit
@thebluepill, I hope that you are not serious, if you are, how about I come over take your wallet, house, car, whatever you own and take it from you because I feel I deserve it. I work two jobs with long hours and see most of it gone in taxes. The idiots at Lehman Brothers should all be in jail.
I say round them up, release the bulls. Charge admission. Fund bailout.
I can sympathize with the with the executives that are left holding the bag in this case. After all, they don’t qualify for overtime, so they have to make up the difference somehow when the work more than 40 hours a week.
And yes, I’m being sarcastic.
This seems far too nefarious for the departing executives to not be in on it. What are regular employees who are owed money treated as? And do they get theirs before “unsecured creditors”?
Disgusting. I wish I could read what historians c. 2090 say about this era in corporate management and fiscal polarization. We’ll make the robber barons, Gilded Age, etc. look like chump change.
@ElizabethD: Now they’ll just be called robbers.
wonder what the pro-business laissez-faire types would say about this looting of shareholder value by out-of-control CEO’s.
@ironchef: I think we heard from a couple of them above.
Sounds like a lead parachute.
Serves them right…
greed by financial instituitions and hedge funds god us into this mess. Its time for wall street execs and hedge fund managers to pay for destroying the american economy. Put en up against a wall and shoot em. dont jail em or fine em. Kill em
I would venture to guess that as unsecured creditors, they get to write the whole amount off on their taxes.
People, if you believe that this isn’t going to continue going into the future, you’re dead wrong. History has shown that executive compensation is on the rise and unless the board of directors of major firms are replaced by people whose names must include “Scrooge”, it will continue.
Remember that the BOE approves these deals, and the people who are appointed are friends, buddies, indentured acquiantances and relatives of those who are running the company.
It IS bullshit, but there it is.
@mariospants: Yes it’s true, despite claims to the contrary… these overpaid lumps will find a way to steal millions from taxpayers.
The sad part is that even 100,000,000 is jut a drop in the bucket compared to $700,000,000,000. Does that give you a feel for just how much money we’re committing to the “bailout”?
We need some regulation, not more trickle-down wishfulness.
Side note, It’s not The Times of London,
it is just The Times.
Yes, and because the government is bailing them out, England’s taxpayers essentially are paying the $100M to the execs.