John Waples and Danny Fortson
Download 'Too Hot', an exclusive Specials track from iTunes
STAFF at Lehman’s New York office who helped to cause the world’s biggest corporate bankruptcy are to share in a $2.5 billion bonanza.
The bonus, which has been described by London staff as a “scandal” has been pledged by Barclays Capital, the British-based bank that last week acquired Lehman’s American operation and took on 10,000 staff.
The $2.5 billion (£1.4 billion) pot, which has been ring-fenced as part of the acquisition, has caused huge resentment among the 5,000 staff in the firm’s European and Middle Eastern operations who are not guaranteed to be paid after this month. There are, however, hopes that half the jobs in Lehman’s Canary Wharf office could be saved today by either Barclays or Nomura. Bids are being submitted for its UK equities and investment-banking business.
A Chapter 11 bankruptcy document filed by Lehman Brothers Holdings Inc says that Barclays has identified eight individuals out of the New York staff of 10,000 who are vital to make the deal succeed and a further 200 who are identified as “key”. It is thought that these eight directors will be locked into two-year contracts worth between $10m and $25m a year.
The $2.5 billion had been accrued as part of the contribution to Lehman’s group profits for the first nine months of the year. Barclays said there is no obligation to pay it out but analysts say the competitive pressure to keep key staff means he will have to. Bob Diamond, president of Barclays Capital, said: “You can expect us to manage this with the same discipline and performance terms that we have at BarCap”.
The biggest bonuses are likely to be for Michael Gelband, the bank's global head of capital markets, and Eric Felder and Hyung Soon Lee, global co-heads of fixed income.
Barclays has asked all 10,000 employees to attend work tomorrow at the bank’s Manhattan headquarters. Over the next three months
it will decide how many to keep and will use some of the bonus to meet remuneration packages. It is thought several thousand could be made redundant.
One London-based Lehman employee said: “It’s an absolute scandal. I will never work for an American firm again. It looks like they are prepared to cut you off at the knees. Nobody from America has been in touch since we went into administration on Monday.”
Another said: “Every other financial institution has been saved, including Lehman Brothers in the US, but it’s another story for the employees in Europe.”
Lehman has attempted to demonstrate in recent years that it is a global united company. Its mission statement says: “We are one firm.”
Price Waterhouse Coopers (PWC), the administrator to Lehman’s European operation has demanded that the firm repay £4.4 billion that was transferred from the UK to Lehman’s US holding company just hours before the firm collapsed. This left London with no money to pay staff.
Win a luxury weekend to Newcastle and its neighbour Gateshead, find out more here
Risk, resilience and embracing new technology
Industry sectors news at a glance. Interactive heatmap, video and podcast
Discover the power of collective thinking. Submit a solution and be in with a chance to win a Media Hub Home Entertainment System
The inside track on current trends in the charity, not for profit and social enterprise sectors
Everything the Business Traveller needs to know to make a better trip
Make the most of the summer and enter our fabulous photographic competition, you could win a £5000 holiday
Corsica is an island of beauty and contrast, an ideal holiday destination
Enjoy further reading from Travel to Fashion, Business to Sport, discover more
Shortcuts to help you find sections and articles
The clever way to lease a new car is with Car leasing made simple™
2009
per month on 36-month
Personal Contract Hire (PCH)
2008
42850
Car Insurance
£24,250 - £30,346
MI5
London
£60,000
The Environment Agency
Bristol
Up to £90K
Boots
Midlands
OTE £85k
Credit Protection Association
Nationwide Opportunities
Completely London
Luxury Condo's in Manhattan with NYC views
The best new homes in Wimbledon?
Nationwide
Fabulous Cruise And Cruise & Stay Offers Including Virgin Atlantic Flights Prices Start From Only £699pp!
Last Minute Cruise And Cruise & Stay Offers. Med From £499pp, Caribbean From £699pp!
5 star quality at a 3 star price.
8 fabulous Canadian cities ...you won’t find cheaper
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper
News International associated websites: Globrix Property Search | Property Finder | Milkround
Copyright 2009 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.
Why are these bonuses not withheld and used to alleviate some of the problems this company is in?
S, Hampshire,
FYI all Americans are not the same, we are being hurt the most since we will carry the brunt of the cost of the bailout, i do realize many worldwide are hurt. Kudos to AIG head who declined to collect his 22 million payout. Would be nice for the rest to do the same
Ismael Otero , Lake Mary, Fl, USA
I am sorry.
A. Olmo, Princeton, USA
"Fury"? What is this, the Daily Mail?
Sarah, Wellington,
This is the new American way, pay the greedy generously and punish the victims senselessly.
Toygar, Orlando, USA
We should file class action charge against those liers on Wall Street. If we were to bail out them with 700 billion tax payers money, we should have right to file criminal charges against those got billions of bonus, because those are all taxpayer's money.
ray, Detroit,
Ruthless. shocking.
Zahid W, London, UK
Everyone is so shocked but I'm sure that the usual chain of events will occur. Expressions of outrage, followed by business as usual.
Unless this financial crisis is more serious that any previous one, the corporate leeches will be back on the gravy train before long.
P Lindsay, Cambridge, United Kingdom
They want to pay these bonuses in order to retain key staff???
They will be lucky to get a job anywhere else with this track record. It's the same old story; one rule for them and another for the rest.
Phil Holmes, Munich, Germany
Can't the courts sue these people - US and whoever?
If not, the governments should sue for repayment of damages and debts?
Pat from Texas, Arlington, TX, USA
last year the top 1% of the US population income was 28% of all income in the USA.
something is wrong here
bill, boston mass, US
So now we need a 'class action suit' against everyone of the bonus getters for the 'fear and threat to life and property' that their actions have caused to the world. That should get the cash back
Keith, Newcastle, England
As an AMerican I am absolutely disgusted at this morally corrupt behavior on Wall Street and the whole credit pay nothing insanity. That anyone could vote Republican is absolutely beyond me. It is this selfishness and thinking only of me, this pumping up of terrorism and fear, not of our actions!!!
Bebe, LA, California
Makes perfect business sense - handsomely reward those who led Lehman's to destruction and ensure that they who least deserve (and need) it to continue to wreak havoc. So much for corporate social responsibility.
John, Nottingham, England
please, please don't let anyone say they're surprised. - the reporter on bbc when Lehman's went down said staff were leaving with boxes or into limousines. says it all - this is why it's happened - those making the decisions don't pay for their errors.
Phil Barnes, horwich, england
Stop borrowing money and this will all go away. We have all created this machine with its really unhealthy appetites by weakly surrendering to the "got to have it now" mentality.
Robert, Manama, Bahrain
Execs have all the power of course they are going to pay themselves first billions of dollars for going bancrupt its legal, and they will continue to do so until new laws are created. They are like Las Vegas bookies win or lose they win
mark, Guadalajara, mexico
Barclays are taking the brunt of the critiscism today, but please don't forget the HSBC directors who are up for a bonus of £130 m; again with the acceptance of that nice little self supporting club and at the expense of the rest of us.
Anyone know of a bank where the customer matters?
Richard Johnson, Yokohama, Japan
Outrageous!
Albert, San Diego, USA
Dan, Bognor
you compare business man to drug dealers? never mind that it is business that directly or indirectly employs every person on the planet.
you commentors can understand that this is nothing to do with government, barclays has taken the risk, its their choice about the bonuses.
will, grimsby, uk
I agree with those who find this bailout (and the larger one perhaps to follow in the mortgage market) to be a sterling example of the contemptible immorality that is all too common these days among (especially American) corporate capitalists.
Scott, Delaware, Ohio, USA
Scott A. Fisher, Delaware, Ohio, USA
If my careless act were to case other drivers to crash resulting in their injury and loss of income, the court would hold me responsible for monitary damages. Yet, the high executives of the world's largest insurance company have done the same kind of act and apparently will not be held responsible.
bob, Oklahoma city, usa
I think middle Britain and middle America needs to send a strong message to our conniving governments that continued plundering of Mr Averages resources is now at an end. I don't want to find out I am expcetd to pay a penny for funding any of these finacila disasters.
William, Skipton, England
I'm speechless
Mike, Leeds,
Scandalous. I think it would be fair to have a world-wide overall tax on the banking industry going forward to repay the taxpayer - in this case is the public of the countries involved - for the funds that are being committed to cleaning up this mess. There need to be consequences for them.
Derrick, London, UK
Absolutely shocking! How could Lehman file under the section that protected their creditors? And now this! How I hate globalisation and American corporations. They are absolutely disgusting. Worker bees are just cannon fodder for their rich lifestyles.
Olivia Thompson, Cape Town, South Africa
Barclays refused to cancel my charges to help me get back on my feet for just one month. And yet there was an 'assumption' of bonuses for the staff who ruined a 158 year old bank?!?
This makes me so angry. Next time they come calling for more taxpayers money we should tell them where to go!
Anthony Lester, Brum,
If you think it would be better under Cameron, you
Had better think again.
This is Preditory Capitalism at work
.
How do you like it people???
Graham, Swansea, UK
Again directors/employers are alledgedly being paid for their incompetence whilst Working Man signs on. If anyone has any say in matter & Barclay's do do what has been reported; I for one will be taking my overdraft elsewhere. For their company to go bust & then take bonuses is fraudulent, isn't it
Jay , Hazel Grove, ENGLAND
Bankers and executives always claim to be in short supply and use the glib "market forces" argument to justify their pay, but there seems to be no shortage of either at the moment. In contrast the country is desperately short of skilled people e.g. engineers. Shouldn't market forces apply there too?
Chris K, Cheltenham, UK
Good Grief what sort of bonus would these failures have received if they had been succesful? Any chance we can have the names?
john, Kouvola, Finland
hahaha - all week we've had commentators writing in the Times & elsewhere telling us not to rejoice those who've lost their jobs, yet even Lehmann's own staff are prepared to shaft their own colleagues. What lovely people.
Tony, London, UK
What market forces? We are being told by all the so called experts that this is the worst crisis to hit finacial markets since the depression. How many banks are lining up to pick up these guys for multiple millions when thousands all around them are losing jobs? This is obscene.
Cameron, Melbourne, Australia
Mikko, Drumnadrochit, Scotland - this has NOTHING to do with our government at all. And if you think regulation will be tighter under Cameron - re read your economic philosophy books
Greg, London,
The Barcap staff are being prepared for a very poor bonus this year, now the takeover tareget of Lehmans US get guaranteed bonuses - this will cause a lot of friction! Robbing Peter to pay Paul.
Name withheld, London,
I've never liked Barclays, and this latest scam-fest hardens my resolve never to be a customer.
Leslie, Bristol,
11 years of Labour and Gordon as chancellor. Vote them back in and get even more of this.
Mikko, Drumnadrochit, Scotland
If those in Leman USA who caused the transfer of funds to US at the last minute are found to have acted illegally under UK law; will Bush permit us to extradite them for trial in UK?
I doubt it, somehow.
Frank Page, HOOK,
A recipe for civil unrest.
Paul Gibbons, Milton Keynes, UK
The working class are just fodder to keep these rich brats in their big mansions while we have to scrape to pay our fuel bills, my friend had absolutely nothing left after he paid his fuel bill and had to borrow money from his family to buy food for his children, what a sad world we have created.
william thomson, lincoln, uk
Why am I not surprised at this act of venality?
Someone told me once of a (supposed) Russian saying- "Fish rots from the head".
In this case, it certainly appears to do so.
Arundel, South Coast, UK
This collapse,with others ,is the inevitable result of the biggest financial fraud in history.
The guilty parties should be brought to justice,not rescued to re-offend
B.Calvert, London,
How can our political leaders stand by and allow the banking sector to continue fiddling while Rome burns.
If there is any reason for Governments to intervene this is it. If they cannot prevent companies from handing out rewards for failure or immense economic damage, tax the rewards at 100%.
peter fieldman, paris, france
Welcome to Chapter 11 bankruptcy from the US, protect national interests and shaft foreign investors/staff. Let's have chapter 11 for the EU!!!
Jon, London,
What's exactly the deal b/w Barclay and Lehman? The deal should be scrutinised by financial committee at Parliament. Banks are getting bigger and bigger and are all "too big to fail". All taxpayers are at stake for banks' big transactions as such! We should speak to our MPs about this concern
Min, London,
Low income families in my area are losing their jobs because of the effects of the credit crunch created by these highly paid bankers. British pension funds should instruct Barclays not to pay any money to these loss makers. Nor should they give jobs to the failures in investment banks in Britain.
John, Kent,
Are these the same smooth-talking "experts" who simply followed the bandwagon and failed to spot the obvious flaws in sub-prime mortgages, excessive credit, and complex financial vehicles that no-one understood? These fools should be sacked for incompetence, not rewarded with new mega-contracts.
Chris K, Cheltenham, UK
Bonuses for failure! I wonder where Diamond is taking Barclays and have no confidence that Varley and the other directors understand all the ramifications.
David, Poole,
Worried the key staff might go elsewhere?
Where pray tell?
This tops the biggest pyramid con in history
V Cooper, Somerset, UK
Why should the tax payer bailout the fat cats, what has happened to the principle of free markets and capitalisim, they never existed.
Governments around the world have spent or are planning to give 1.5 Trilion dollars to Banks, apparantley this is more essential than World poverty.
MJF, London, UK
I agree they should be employed to explain the potential 'fraud' charges that some people should be facing. Problem is who is going to unravel it all. Our political system seems unable/ unwilling to become involved - unless it is with our money, Which is a short term fix!
Russell Pagan, Thundersley, UK
Barclays chief executive thinks that it "acquired net assets of about $4 billion for $250m." Hmmmm. I think he is about to find out that one reason Lehman failed is because NO ONE knows what assets is has and what they are worth. NO ONE. That's the shell game we've all been playing. Good luck!
Janet, Salt Lake City, Utah, USA
We might expect a civil reaction to the greed-is-good financial sector, when the population face austerity as a result of the banks continuing excess.
Immoral, obscene, and arguably provocative...
Pat, Coromandel, NZ
"Competitive Pressure to keep key staff"? Where would any of these guys get another job? Barclays should keep them at work on the promise that it will not publish their names. In the meantime, what happens to financial morality? The ordinary customer might now 'knock' Barclays for millions. Hmmm.
John Carty, Medellin, Colombia
Any UK Lehman banker offered a higher salary would have left to another company without a seconds thought. Every banker knows the risk and hence enjoys the salary with premium. BarCap have to keep the top people because they are the business - no point buying it otherwise.
tim, HK, hk
Would these be the same "analysts" who, being in the industry, have a vested interest in continuing to talk up the value of these skills? Figures of $10m - $25m, albeit for very few, are obscene at the best of times, but immoral when shareholders (Main St pension funds) will get nothing.
Joseph Wright, Seattle, US
Yes, let's protect huge payouts for abject failure. The business model continues, the obscene disparities continue and the greed & fear continue. This is not the way forward. Surely?
M Zauner, Norwich,
What more would you expect from Americans?
Neil, Tenterden, UK
I guess that in 200+years we have turned into a full fledged Kleptocrarcy. My fellow Americans will bray like sheep as they vote for the deregulators like McCain who enabled this wholesale looting of our tax dollars. At least they will no longer be able to say regulation is Socialism!!
Marty Price, Oakland,Ca., United States
The unfortunate reality is this, the most intelligent and immoral will prevail in legitimate and black markets. Consequently those situated in socialist democracies pick up the bill for ruthless drug dealers as well as ruthless traders and banking execs, although who can tell the difference?
Dan, Bognor, UK
the government needs to legislate against this type of thing. bankcruptcy and bonuses when shareholders have been wiped out. this has to stop. it's about time these people realised they are not that special. go and do something socially useful like teaching instead. greed, greed, greed.
stephen, china, china
"We are one firm".
Nice feelgood HR practice that may come back to haunt them.
In Australia it would be pretty much game set and match, we recently had a case that all these corporate statements must be followed through (refer Nikolic from memory).
Could be good.
Rob, Sydney, Australia
'the assumption of a bonus pool for Lehman'
says it all really
James , Birmingham,
Makes you sick reading this stuff. We should let these banks go to the wall now they even pay out bonus for a failure this shows you how arrogant these lunatics are. I guess you could coin the phrase untouchables
Kevin Reynolds, London,
Hello! What did you expect from the money markets ??
Honesty,what a laugh,welcome to rip em off planet earth.
Mike B, Lincoln, uk
Umbrella's are "Free", till it Rains! Guess the Rest?
Paul, Newtown, Powys, UK
Might be expensive for Barclays if the £4.4bn is clawed back to London as ring fenced internally can't surely protect the money from creditors if Lehamn the owner/controller of the money?
Bad news is that Brown has got involved with his unique Jonah touch. Who opened Lehman new HQ?
Damian, Brighton, UK
this stinks to high heaven...
pcooke, Gloucester,
After reading this, I don't think the US bailout will work.
Quite simply this will destroy whatever remaining confidence anyone had left.
It is so beyond obscene as to leave the reader either incandescent with rage or completely despondent.
Either way the moral hazard argument is now a moot point.
Gerard Schmidt, London, England
Hello? "Net assets of around $4 billion"? What about the secured and unsecured creditors? If a holding company hoovers up subsidiary assets, but won't honour debts, and still claim equity exists somehow, then in the UK that's wrongful trading - as well as being wrong.
Jonathan, Hertford, UK
Never work for a yank company there like Bush and co keep you when they need you but throw you at the first chance..
Tim, London, United Kingdom