Wednesday, September 17, 2008

I wonder why they went bankrupt.

I was just reading an interesting piece on the Wall Street Journal Law Blog which speculates that the trustee in Lehman Brothers' historic Chapter 11 bankruptcy filing could could possibly attack the bonuses handed out to Lehman executives over the last year on the ground that they were fraudulent transfers made by an ailing company.

The article reports that Lehman paid about $5.7 billion in executive bonuses last year. The article also states that the bonuses are typically 60% of compensation. After brushing off my high school algebra textbook, I figured that the estimated annual salary in 2007 of Lehman executives was approximately $9.5 billion (I hope that's right). I have absolutely no idea how many "executives" there are at Lehman, but could they even have 500? I have no idea. Reuters states that they had 28,600 total employees worldwide. 500 executives sounds about right. Assuming 500 executives, that means that they each earned approximately $19,000,000 last year!!!!!!!!!!!!!!

That's some major coin. What could they have done to be worth so much money to that company? Probably nothing. You know they just basically took a percentage of everything that came into the company. Maybe if the "executives" hadn't been so greedy, they could have kept drawing more moderate salaries for many years to come. Instead, as soon as they had a bad year, they had to start typing up their resumes.

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