gixxer1000 wrote:
Under your philosophy I could start a business and grow it to 100 employees for 10 years during which time everyone is making money. So then in the next couple years I could pile on massive amounts of debts to pump my company full of cash and then use that unearned cash to pay everyone including myself millions of dollars. And now that my company owes all this money I simply go bankrupt and keep all the money and let the taxpayers pay the debt.
Of course i never stated anything of the sorts in my reply, but in fact you could if you wanted to. It may not be ethical, heck, it may not even be legal, but if we're on hypothetical's then no one is stopping you. Of course taxpayers don't usually pick up the tab in a bankruptcy.
But on the other hand exactly how does this relate to Lehman? Because if you look at Lehman's historical results, their debt-to-equity ratio in 1994 (when they spun off Amex) was approximately 21-1 and through the LTM of 2008 was only 14-1. Lehman was never leveraged over 22-1 in any full financial year since 1996 and actually reduced their leverage every year from 2000 until they filed for bankruptcy.
And which taxpayers are paying for Lehman's debt?
gixxer1000 wrote:
And why is that. Did he invent the wheel or fire. Does he save lives or cure diseases. You tell me how the world would be vastly different had he not taken the that job at Lehman. The company would have collapsed without him? No, Another guy with similar experience would be in his position and would have probably made the same mistakes.
If you want to be a cynic and make asinine statements, then by all means. However, his life is filled with more accomplishment than most people's ever will and that is a fact.
gixxer1000 wrote:
You open by saying he earned that money in good times. So what about the bad times? If you make people money you make millions but if you lose people money you keep making millions?
In who's employment agreement does it say that a person owe's the company money if the company loses money? Why would anyone ever take that job? Yeah, you still get paid even if the company loses money, that's how it works. Also, CEO bonuses are usually paid on many different metrics depending on the company's goals for the year. Specific to Fuld, he takes about 95% of his bonus in restricted shares that vest over 3 years (meaning you can't sell them for 3 years). When stocks go up, he makes lots of money. When his stock goes down, he make less money (and in this case, he lost a lot of money).
As an example: He may get paid $1 million in stock vested over 3 years if Lehman finishes in the top 3 of the European fixed income league tables. Lehman overall may have a terrible year, but that was a goal for the company and he earned it. Just a tip: Boards don't always line up CEO pay with maximizing shareholder value in the next year. They sometimes look longer term than next year.