With only $1 billion left in cash by the end of that week, Lehman was quickly

running out of time. Last-ditch efforts over the weekend of September 13

between Lehman, Barclays PLC and Bank of America, aimed at facilitating
atakeover of Lehman, were unsuccessful. On Monday September 15, Lehman
declared bankruptcy, resulting in the stock plunging 93% from its previous close
on September 12.

Controversy of executive pay during crisis[edit]

Richard Fuld, head of Lehman Brothers, faced questioning from the U.S. House of
Representatives' Committee on Oversight and Government Reform. Rep. Henry Waxman (D-CA)
asked: "Your company is now bankrupt, our economy is in crisis, but you get to keep $480 million
(276 million). I have a very basic question for you, is this fair?"[49] Fuld said that he had in fact taken
about $300 million (173 million) in pay and bonuses over the past eight years. [49] Despite Fuld's
defense on his high pay, Lehman Brothers executive pay was reported to have increased
significantly before filing for bankruptcy.[50] On October 17, 2008, CNBC reported that several Lehman
executives, including Richard Fuld, have been subpoenaed in a case relating to securities fraud. [51]

Too Little, Too Late

However, these measures were perceived as being too little, too late. Over the
summer, Lehman's management made unsuccessful overtures to a number of
potential partners. The stock plunged 77% in the first week of September 2008,
amid plummeting equity markets worldwide, as investors questioned CEO
Richard Fuld's plan to keep the firm independent by selling part of its asset
management unit and spinning off commercial real estate assets. Hopes that the
Korea Development Bank would take a stake in Lehman were dashed on
September 9, as the state-owned South Korean bank put talks on hold.
Fuld was nicknamed the "Gorilla" on Wall Street for his competitiveness.[6] Cond Nast
Portfolio ranked Fuld number one on their Worst American CEOs of All Time list, stating he was
"belligerent and unrepentant".[7] Fuld was also named in Time magazine's list of "25 People to Blame
for the Financial Crisis".[8]
Fuld worked for Lehman for nearly 40 years. During this time, Fuld witnessed and participated in the
numerous changes which the organization endured, including its merger with Kuhn, Loeb & Co, its

acquisition by American Express, its merger with E.F. Hutton, and its ultimate spin-off from American
Express in 1994, once again as Lehman Brothers.
In 2006, Institutional Investor magazine named Fuld America's top chief executive in the private
sector. That same year in December, Fuld told The Wall Street Journal, "as long as I am alive this
firm will never be sold." In March 2008, Fuld appeared in Barron's list of the 30 best CEOs and was
dubbed "Mr. Wall Street".
Overall, Fuld received nearly half a billion dollars in total compensation from 1993 to 2007. [18] In
2007, he was paid a total of $22,030,534, which included a base salary of $750,000, a cash bonus
of $4,250,000, and stock grants of $16,877,365. [19] According to Bloomberg Businessweek, Fuld
"famously demanded loyalty of everyone around him and demonstrated his own by keeping much of
his wealth tied up in the firm", even buying Lehman shares on margin, according to a friend. [20]

Bankruptcy and aftermath[edit]

See also: Bankruptcy of Lehman Brothers
Fuld was initially praised for handling the initial subprime mortgage crisis well, better than any of the
other bulge bracket firms, behind Goldman Sachs.[21]
Fuld was said to have underestimated the downturn in the US housing market and its effect on
Lehman's mortgage bond underwriting business.[6] Fuld was already the longest tenured CEO on
Wall Street and kept his job as the subprime mortgage crisis took hold, while CEOs of rivals
like Bear Stearns, Merrill Lynch, andCitigroup were forced to resign.[6] In addition, Lehman's board of
directors, which includes retired CEOs like Vodafone's Christopher Gent and IBM's John Akerswere
reluctant to challenge Fuld as the firm's share price spiraled lower.[6]
Fuld would be criticized for not completing several proposed deals, either a capital injection or a
merger, that would have saved Lehman Brothers from bankruptcy. Interested parties had
included Warren Buffett[22] and the Korea Development Bank.[23] Fuld was said to have played a game
of brinkmanship, refusing to accept offers that could have rescued the firm because they didn't
reflect the value he saw in the bank.[6]
However, New York magazine had a different view on Fuld's last three months as CEO before the
firm's bankruptcy. Hugh "Skip" McGee III, then-head of the Investment Banking Division, had earlier
disagreed with COO Joseph M. Gregory's appointment of one of his subordinates, Erin Callan, as
CFO. On June 11, 2008, McGee organized a meeting of the firm's senior bankers, who forced Fuld
to demote Callan and Gregory. Gregory's replacement as president and COO was Bart McDade.

While Fuld remained CEO in title, it has been said that a management coup had taken place and
that the one guy in charge was now McDade.[24] New York magazine's account also stated that Fuld
was desperately searching for a buyer during the summer and even offering to step aside as CEO to
facilitate the sale of the firm, being quoted as saying "We have two priorities, that the Lehman name
and brand survive and that as many employees as possible be saved, and you'll notice our priority
isnt price".[25]
In his 2009 book A Colossal Failure Of Common Sense, Larry McDonald - a senior Lehman Brothers
trader in the years leading up to the crash wrote that Fuld's "smoldering envy" of Goldman
Sachs and other Wall Street rivals led him to ignore warnings from Lehman executives about the
impending crash, and that Fuld insisted the firm's chief risk officer left the boardroom during key
discussions. [26]
In October 2008, Fuld was among twelve Lehman Brothers executives who received grand
jury subpoenas in connection to three criminal investigations led by theUnited States Attorney's
offices in the Eastern and Southern Districts of New York as well as the District of New Jersey,
related to the alleged securities fraud associated with the collapse of the firm. [27][28][29]
On October 6, 2008, Fuld testified before the United States House Committee on Oversight and
Government Reform regarding the causes and effects of the bankruptcy of Lehman Brothers.[30][31]
[32]

During the testimony, Fuld was asked if he wondered why Lehman Brothers was the only firm that

was allowed to fail, to which he responded: "Until the day they put me in the ground, I will wonder."
Soon after Lehman filed for bankruptcy, there was a well circulated rumor promulgated initially by
the satirical financial blog "Dealbreaker" and overly excited reporters that Fuld was "punched in the
face" and/or "knocked out cold" by someone while working out in the company gym. According to the
man who was gym manager at the time, this never happened.[33]

After Lehman[edit]
On November 10, 2008, Fuld transferred his Florida mansion to his wife Kathleen for $100. They
had bought it four years earlier for $13.75 million.[34]
In late March 2009, Fuld had an email sent out stating that he joined Matrix Advisors, a New Yorkbased hedge fund.[35]
In May 2010, Fuld was registered by the Financial Industry Regulatory Authority (FINRA) as
employed by Legend Securities, a securities brokerage and investment banking firm in New York. [36]
[37]

Fuld left the firm in early 2012.[38]

Accolades and directorships[edit]

In 2006, Fuld was named No. 1 CEO in the Brokers & Asset Managers category, by Institutional
Investor magazine.[39] In 2007 he received a $22 million bonus.[40]
Fuld at one time served on the board of directors of the Federal Reserve Bank of New York, a
position he ceased holding shortly before the bankruptcy of Lehman Brothers. He is a member of the
International Business Council of the World Economic Forum and the Business Council. He also
serves on the Board of Trustees ofNew York-Presbyterian Hospital. He was also on the board of
directors of the Robin Hood Foundation but was removed from the Board following the Lehman
Brothers bankruptcy.[41]
In December 2008, Fuld was given the "Lex Overpaid CEO" award of the Financial Times for having
received $34 million in 2007 and $40.5 million in 2006, the last two years before his bank's failure.[42]

Fuld is an exception. After the bankruptcy, he stayed on to help

Alvarez & Marsal, the advisory firm in charge of sorting out the
mess. Then he struck out on his own. In 2009 he founded Matrix
Advisors, a consulting firm for mergers and acquisitions. In a
regulatory filing, Fuld reported that he works more than 60 hours a
week there. He renewed his securities license through a small
broker-dealer, Legend Securities, run by a friend, and even
underwent a medical exam for his student pilots certificate.
Famously driven, Fuld gave every sign that he meant to put the
Lehman nightmare behind him.
But the way in which these encounters are invariably described
with slight disbelief, as if someone had spotted a unicorn
underscores how far removed Fuld is from his former glory. It isnt
that hes pitied or despised, a former colleague explains. His name
simply doesnt come up.
Those still in contact with him say Fuld holds no illusion of a public
redemption. I will never heal from this, he told the staff of Spring
Hill at a lunch a few weeks after the bankruptcy. Lehmans fall was

particularly painful, friends say, because Fuld sees himself as having

adhered to a code of honor during the 15 years he was building
Lehman from an unwanted American Express (AXP) castoff into a major
Wall Street player. He famously demanded loyalty of everyone
around him and demonstrated his own by keeping much of his
wealth tied up in the firmhe even bought Lehman shares on
margin, says a friend. That money vanished in the crash. Friends say
Fuld, whose net worth once exceeded $1 billion, may have lost that
much. Meanwhile, the legal morass he left in his wake is closing in
on himand threatens to wipe out whatever dignity and wealth he
may have left.
For all that hes tried, Fuld cant seem to escape the reach of the
past. Although many of his peers also made disastrous decisions, no
one on Wall Street has paid a steeper price in reputation and
personal fortune. This owes partly to Fulds hubris, brutish manner,
and aggressivenesswhich earned him the nickname the Gorilla
but also, his handful of defenders insist, to circumstances and twists
of fate beyond his control. As Brad Hintz, a former Lehman chief
financial officer, says, Hes the great Greek tragedy of the crisis.
1

Wall Street may have turned its back on Fuld, but theres one place
where he remains a subject of vital interest. Management theorists
have seized on his tenure at Lehman as an illustration of how
executives can go awry. The latest issue of theJournal of Management
Inquiry contains a long study by British academic Mark Stein
titled When Does Narcissistic Leadership Become Problematic? Dick Fuld at
Lehman Brothers.