"At this point in the Lurches of Lehman, we aren't certain whether chief executive Dick Fuld will become Wall Street's latest human sacrifice or whether the firm itself will survive or in what form. ... When you look at Fuld's compensation package, you have to laugh at the idea that giving CEOs big slugs of equity aligns their interests with those of regular shareholders. Lehman's stock was down 60% for the year as Fortune went to press, but Fuld hasn't been asked to return a single penny that he's made from selling stock he received as compensation. By Fortune's count, Fuld, a bond trader turned CEO, has realized almost half-a-billion dollars from cashing in stock options and restricted stock awards since Lehman went public in 1994. ... By our calculation, which Lehman declined to discuss, Fuld has knocked down $489.7 million (before taxes) from selling 14.1 million optioned and restricted shares. (He seems to have kept 2.7 million). ... Lehman won't fail, but its stock ain't necessarily a bargain", Allan Sloan (AS) at Fortune, 7 July 2008.
"It's apparent that such notables as J.P.Morgan's James Dimon and Lehman's Richard Fuld [RF], as directors of the New York [Fed], will make decisions which will benefit their companies and themselves. ... [RF] was quoted by the Financial Times of London of June 4, 2008, with having made the following remarkable statement: 'The federal reserve's decision earlier this year to lend directly to investment banks should take questions about Lehman's liquidity off the table.' Let's analyse this statement a bit. The ... 'decision' ... is a reference to the 'primary' facility extended to Bear Stearns [BS] of $25 billion, which turned out to be part of the loans in effect made to J.P. Morgan of $55 billion. This is so because [BS] no longer exists and the loans are to J.P.Morgan now, $29 billion of which is non-recourse. ... [RF] does not say that questions of Lehman's liquidity are off the table because of the soundness of their present assets, liabilities and cash. He says the liquidity questions are 'off the table' only because of Lehman's expectations of being treated at least as well as J.P.Morgan by the New York [Fed] when and if Lehman demands bankers welfare (i.e. dole) payments from the FED and ultimately from the tax payers. ... Fuld suggests that if Lehman comes calling for a $50 billion loan from the FED offering dubious mortgages which Lehman values at $50 billion, he can assure Lehman and the public that Lehman will get the money because Lehman's illiquidity is off the table. ... [BS] CEO Schwartz was not on the NY FED Board. In fact no one from [BS] is on the Board. ... If [RF] approves a loan from the [NY Fed] to Lehman which he certainly indicated he would do, then he violates Title 18 section 208. And it can not be any clearer", John Olagues (JL) at www.optionsforemployees.com/articles/article.php?id=137, 8 June 2008.
Borrowing from the Mogambu Guru, "Hahahahahaha", Lehman (LEH-NYSE)! LEH must be run by a bunch of ignorant accountants. Why should LEH care if employee share issuances are "dilutive"? LEH's concern should not have been EPS, but was LEH stock over or underpriced. LEH shows the efficient market's hypothesis at work, i.e., its management hasn't a clue what LEH is worth. Imagine, people and companies ask LEH for financial advice! Hahahahaha!
I spin this story differently from SC. I think LEH's issuing employees stock in lieu of cash and stock shows LEH is trying to save cash. If LEH is cheap at $22.85, I expect many SEC Form 4s to be filed, by LEH's senior management buying lots of LEH. LEH's 2008 Proxy Statement, available at www.lehman/com/shareholder/proxy shows Richard Fuld (RF) "owns" 10,851,590 shares of which 1,800,000 "may be acquired within 60 days of January 31, 2008". RF's 30 November 2007 SEC Form 5 , at http://www.sec.gov/, shows he owned 3,298,578 shares, including GRAT shares. Hey, RF, show LEH you care. Buy say 10 million shares in the open market. It's only $166.5 million. You're a wealthy man. Show us LEH is worth at least $16.65.
Thank you AS. RF is a good stock trader, he sold 14.4 million shares of LEH at an average price of $34.63 ($489.7 / 14.1). Let's see how much he buys now.
Suppose RF recuses himself from a Fed vote to extend LEH credit? So? Will the other Fed heads let LEH crumble, or save it at the taxpayer's expense, or in the knowledge that each in turn, will "recuse" himself at the appropriate time, approve it? Repeal the Federal Reserve Act. Now!