Lehman Loser Got $80 Million

A new book on Lehman Brothers sheds some light on the high-flying culture and spendthrift ways that contributed to the company's downfall.
Publish date:



)-- Don't be fooled by the headline: "Lehman's Desperate Housewives," an

excerpt from an upcoming book on Lehman Brothers

(LEHMQ.PK), is very much about business.

The social aspect of Wall Street has always been a critical part of the story. When I was working on

a story about JPMorgan Chase (JPM) - Get Report investment banking legend Jimmy Lee

, the main thing everyone talked about was the parties he organized. They didn't talk at all about what happened at the parties. The point was all the big shots who showed up.

What I did not think about was how, for at least some executives, there appears to have been virtually no part of their lives that was not connected to their work. In the excerpted chapter of her book, "The Devil's Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers," the writer Vicky Ward makes the case that executives who did not play by the social rules put forth by longtime Lehman boss Dick Fuld did not succeed at the firm.

The reason for following the Fuld family to Sun Valley was clear enough: the loot that accompanied success was unbelievable. According to the book excerpt, Niki Gregory, the second wife of longtime Fuld lieutenant Joe Gregory, had a personal budget of $15 million annually. The top Lehman officers and their wives jaunted around on Gregory's Sikorsky helicopter.

What is amazing, though, is the rewards that went to the losers. When Brad Jack, a former co-COO who I had never heard of despite some 10 years covering Wall Street, got pushed out of his job in June 2005, his severance package was $80 million.

I do not remember reading anything about that at the time. An Web search suggests Jack's severance package got little if any press coverage prior to the publication of Ward's book excerpt. Some of those millions, and the countless more -- maybe those that paid for Gregory's helicopter -- might have been usefully invested in better risk management systems, or in shoring up Lehman's balance sheet prior to its 2007 bankruptcy.

I assume a pay package like that was fairly routine at the time. Despite that, and the lack of public outrage against Wall Street in 2005, Jack's severance deal probably would have gotten some coverage if it had been disclosed more plainly.

Deals like that are now presumably more scarce, but despite the well-publicized modesty of

Goldman Sachs

(GS) - Get Report

boss Lloyd Blankfein, who earned "just" $9 million in stock in 2009, or

Morgan Stanley

(MS) - Get Report

Chairman John Mack, who has graciously accepted no bonus for three straight years, we still don't have much clarity on pay.

Various rules have been proposed, shareholders are a little more aggressive than they used to be (which isn't saying much) in asking for restraint, but it seems like it's only a matter of time before we go back to business as usual.


Written by Dan Freed in New York