Lehman Raises Stock Portion of Staff Pay, Person Says - Bloomberg, July 2, 2008- Yalman Onaran
Lehman Raises Stock Portion of Staff Pay, Person Says (Update1)
By Yalman Onaran
July 2 (Bloomberg) -- Lehman Brothers Holdings Inc., the
securities firm that's saving cash following its first quarterly
loss, is increasing the stock portion of employee pay this year,
a person with knowledge of the matter said.
The ratio of stock awards in pay packages will rise to a
maximum of 65 percent of total compensation from 50 percent, the
person said. The decision was announced within the New York-based
company today. Employees will receive a mid-year advance equal to
one-fifth of their stock award last year, according to the
person.
Lehman, the fourth-largest U.S. securities firm, paid out
about $3 billion in company shares to employees last year,
according to CreditSights Inc. By increasing the ratio of stock
in compensation and not buying back shares as in the past, Lehman
can boost capital by as much as $4 billion this year, said
CreditSights analyst David Hendler.
``They can generate internal capital and keep nervous
employees focused on their work,'' said Hendler in an interview.
``They probably need the additional capital for further mark-
downs on their mortgage portfolio down the road.''
Lehman shares rose $1.40, or 6.7 percent, to $22.36 at 4:08
p.m. today in New York Stock Exchange composite trading. They've
declined about 66 percent this year.
The firm decreased the vesting period for restricted stock
awards to three years from five, to bring it in line with rival
firms' rules, the person familiar with today's decision said.
Lehman lost $2.8 billion in the second quarter, the first
quarterly loss since going public in 1994, because of writedowns
on mortgage-related assets. After selling $16 billion of such
assets, the firm still owns $64.7 billion of mortgages, bonds
backed by commercial and residential loans and real estate.
To contact the reporter on this story:
Yalman Onaran in New York at
yonaran@bloomberg.net.
Last Updated: July 2, 2008 16:10 EDT
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Lehman shares rally as speculation fades
Rumor that firm was to be sold for knock-down price was spurious: analyst
FRANCISCO (MarketWatch) - Lehman Brothers shares rallied on Wednesday
as speculation of a forced sale of the brokerage firm faded, analysts
said
Lehman (LEH:
chart,
profile,
more
10:16am 07/03/2008
Delayed quote data
+0.41,
+1.8%)
also rolled out a new employee compensation plan designed to retain talent.
Lehman shares gained 6.7% to close at $22.36 on Wednesday. The stock
slumped 11% on Monday to its lowest level since 2000 as a rumor
circulated that the firm may have to sell itself for a price below
where its shares were trading, according to the Wall Street Journal.
close to Lehman told the newspaper that neither a sale of the firm nor
more write-downs were looming. See story at WSJ.com.
"The rumor was spurious, but the market believed it and the stock
fell," Dick Bove, an analyst at Ladenburg Thalmann & Co., said in
an interview on Wednesday. "The stock is going back to more normal
levels now."
Such speculation is part of the current "hysteria" gripping financial-services stocks, Bove added.
"There's starvation for negative stories, so when anyone feeds things
like this into the market everyone jumps on it and accepts it," the
analyst explained.
updated employee compensation program this week. A bigger chunk of
total compensation will be awarded in stock this year. Some of this
year's equity awards were granted on July 1, as an advance ahead of the
usual bonus at the end of the year, according to a person familiar with
the situation.
at a discount and it would vest after five years. Now there's no
discount, but the stock will vest over three years. A third of the
stock will vest in the first year, while the second third will vest in
the following year and the final third in year three, the person
explained, on condition of anonymity.
Alistair Barr is a reporter for MarketWatch in San Francisco.