Fuld

check it out, kinda has to irk you http://bespokeinvest.typepad.com/bespoke/2008/09/lehman-ceo-stoc.html

Interesting chart–he sold at every peak over the last six years. He must be a master of trending and technical analysis.

this guy was at the core of every financial issue we have running right now. he took huge bets with other peoples money. he walks away cash rich? that is so wrong. these guys shouldn’t be able to sell any stocks until the end of their tenure, and there should still be a 2 year hold. If they are fired due to lack of performance, then they lose it all (no parachutes). Time to place some risk on the CEOs. Having 50M in the bank, and having 250M at risk in the company stock, doesn’t cut it. I do not have a problem with rewarding success (defined as creating creating long-term shareholder value), but paying a CEO generational wealth, every year, creates the wrong incentive structure. Comp needs to be long term in nature and dependant on continued, long-term performance. Boards need to manage this issue and keep the comp structure in line. Boards need to be chosen by shareholders. way too many conflicts of interest in board rooms.

Gecco, you hit it on the head, this is about lack of leadership on the boards of these companies. The most powerful member of a board is the head of the compensation committee and in many instances the relationship between the CEO and this person is not arms length. It’s a scratch my back I’ll scratch your back situation even still after SOX. I’m all for free markets to set the pay for talented CEO’s it’s just that in many instances the salary is being set by a long time “good buddy.” Remember Dicky G?

Who was head of LEH compensation committee - do they disclose that?

FT reported that LEH board members did not have any experience in investment banking or finance, so if the board did not question the strategy, that understandable.

He didn’t buy once in the past six years? Lot of faith in his company

projectplatnyc Wrote: ------------------------------------------------------- > Who was head of LEH compensation committee - do > they disclose that? Yes, all board members along with their committee seats and salaries would be detailed in he company’s proxy materials. You could look it up online in about 5 seconds: LEH Compensation and Benefits Committee The Compensation and Benefits Committee (the ‘‘Compensation Committee’’) consists of Mr. Akers, who chairs the Compensation Committee, Ms. Evans, Sir Christopher Gent and Mr. Macomber, all of whom are independent under NYSE corporate governance rules. Each of such directors is a ‘‘non-employee director’’ within the meaning of Rule 16b-3 under the Securities and Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) and an ‘‘outside director’’ within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’). The Compensation Committee held seven meetings and acted by unanimous written consent two times during Fiscal 2007. JOHN F. AKERS Director since 1996 Age: 73 Retired Chairman of International Business Machines Corporation. Mr. Akers, a private investor, is the retired Chairman of the Board of Directors of International Business Machines Corporation. Mr. Akers served as Chairman of the Board of Directors and Chief Executive Officer of IBM from 1985 until his retirement in 1993, completing a 33-year career with IBM. Mr. Akers is a Director of W. R. Grace & Co. He is a former member of the Board of Trustees of the California Institute of Technology and The Metropolitan Museum of Art, as well as the former Chairman of the Board of Governors of United Way of America. Mr. Akers was also a member of former President George Bush’s Education Policy Advisory Committee. Mr. Akers serves as the Chairman of the Compensation and Benefits Committee and as a member of the Finance and Risk Committee.

http://www.lehman.com/who/bios/board_directors.htm -Richard S. Fuld, Jr. -Michael L. Ainslie -John F. Akers -Roger S. Berlind -Thomas H. Cruikshank -Marsha Johnson Evans -Sir Christopher Gent -Jerry A. Grundhofer -Roland A. Hernandez -Henry Kaufman -John D. Macomber

It’s very easy to say “let’s only pay them at them the huge sums at the end of their tenures” or “they should have to risk it all”, but the reality is that it would be very hard to attract a skilled executive if you said “OK, we’ll pay you a million in base, and 5 million in stock each year, but there’s no guarantee you’ll ever be able to cash out the stock.” My example is extreme, but it highlights a problem: the more draconian your comp structure, the less able you are to attract and retain talent. And as for parachutes, one of the original intents of the “golden parachute” was to generate incentives for an executive to push FOR being acquired, even if it meant losing their job. In absence of a parachute an executive would be far more likely to fight tooth and nail to fend off an acquisition, even if it was the best thing for shareholders. With that said I do feel that in some cases the EC paid is excessive and boards should have a bit more spine when dealing with comp matters. Aligning shareholder and executive incentives/interests is like balancing an angel on the head of a pin (someone let me know if that isn’t the expression).

I don’t agree AbbeFaria - if everybody was paid that way (or some sort of similar method) then you would have no problem attracting skilled executives. What are they gonna do? Become teachers??

So everyone takes a pay cut? Or everyone gets paid only in restricted stock and 10 year vesting options? EC IS a slippery slope and I think it’s gotten out of hand, but in the end people are going to want as much as possible to do what they do. I’ve seen a fair number of plans that were not egregious and were genuinely aimed at stimulating long term value creation. My only point is that people should exercise caution before railing against excessive EC - not that the EC wasn’t excessive.

its not about taking a pay cut, its about aligning incentive and making sure they have a long term perspective. I do thing think they should have pay cuts in terms of cash comp, and are severely limited in their ability to liquidate positions. There will be not shortage of demand for CEO positions, even if comp is restrucutured. This system is very broken and we are paying the price, right now.

I agree that this is the case in certain areas (some of the banks). The more restrictive or punitive the comp restriction, the less flexibility the comp committee will have to try to align the incentives with the shareholder goals. Gecco, I 100% agree it’s about aligning incentive and LT perspective, but if there is no shortage in demand for the position that would say that comp shouldn’t really go down (assuming a constant supply) in order to attract, retain, and motivate. I do believe that a major rethink is needed, was just hoping to add some grey to the picture.