Some anniversaries on Wall Street stir emotions of anger, frustration, and despair. Have one in mind? Now multiply it by billions (lost) and you get today's commemoration of the collapse of Lehman Brothers.
The empathy I have for those employees who did nothing but work hard every day, oblivious to the twisted debacle that took down the firm, is stronger than ever. So many innocents lost their jobs and their nest eggs.
But to those that knew what their strategies were doing, to those that contributed to the downfall, I reserve the most substantial level of scorn.
Skybridge Managing Partner, former Lehman Executive and author of Goodbye Gordon Gekko, Anthony Scaramucci said it best when he shook his head, and remarked, "Senior management rewarded people who were sycophants, not meritocrats."
Where were the board members whose responsibility should have been to ensure that management deliberated and protected shareholders?
To those that think I am dwelling on the past, there is a current phenomenon drawing my ire. Look at what's happening at Alvarez & Marsal. The very people who paved the path towards bankruptcy are the ones currently employed to manage and unwind the positions! And they are getting compensated for it!
I read an excellent piece in The Los Angeles Times about this incredible unfolding of events and all the anger came rushing back. Former Lehman CFO's Dave Goldfarb and Chris O'Meara along with Ted Janulis, former head of mortgage capital are all managing the disastrous positions they are responsible for and what's the sentence? None. Just executive pay. And while Mark Walsh is not working for Alvarez & Marsal any longer, he is working in private equity now, helping sell off all the commercial real estate he bought for Lehman shareholders.
But the definitive word comes from Lawrence McDonald, New York Times Best Selling Author of “A Colossal Failure of Common Sense—The Inside Story of the Collapse of Lehman Brothers.” This information is mind-boggling.
In 2007, he cited the following numbers for compensation:
- Mark Walsh - $17-$19 million
- Chris O'Meara - $8-$9 million
- Dave Goldfarb - $20-$25 million
Lawrence McDonald estimates that in 2010, they are still making a third of those rich figures.
"The balance sheet is at a premium," McDonald told me, "and total compensation for major players within Lehman is off at least 55 percent to 65 percent. I would add there must be equity based performance incentives as well."
Performance incentives? Millions still being pocketed?
Alvarez & Marsal is profiting off the catastrophic past and they are using some of the chief lieutenants to manage the operation. Does anyone else think something's not right here?
This is one anniversary where the problems continue to manifest. The inequity of fairness here is just as difficult to accept as the fate we learned of two years ago.
Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
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