Lehman Bros., the Wall Street giant, collapsed in September 2008 in the nation’s largest bankruptcy and arguably kicked off a financial meltdown that helped drag the economy into the Great Recession.
Just one year before, it awarded 50 top executives financial packages that would have been worth about $700 million if all had gone well for the firm, according to internal documents obtained by the Los Angeles Times and confirmed by The New York Times.
Three executives together were given packages worth more than $100 million at the time, the documents show.
Because much of the compensation was in the form of stock in Lehman, however, the amounts that the executives actually received were likely far less than the $700 million. The top-paid person in the group, Robert Millard, told the L.A. Times that more than half of his $51.3 million package was in stock, which as the newspaper says “was rendered worthless by the bankruptcy.”
Still, as the N.Y. Times says, “Wall Street critics blame the outsize salaries of bank employees as a core reason for the global financial crisis, arguing that the promise of large pay packages led to excessive risk taking.”
And the L.A. Times adds this:
“Wall Street critics say the rich pay deals show how the short-term trading mentality had taken over the financial industry a few years ago.
” ‘The numbers are shocking but consistent with the fact that in some ways Wall Street has been run as a casino for extracting money from the real economy and using it to pay extraordinary high levels of compensation — one might say obscenely high — to a small number of people,’ said Lisa Donner, executive director of the advocacy group Americans for Financial Reform.”