It is one of the ironies of the subprime mortgage crisis that while millions of people stand to lose their homes because they can no longer afford to pay their mortgage, the people at the top of the financial institutions that wrote the loans or packaged the risky debt on Wall Street are still tucking themselves in at night, safe and sound inside some very ritzy real estate.
On Monday Lehman Brothers declared bankruptcy, and late Tuesday night AIG, the largest insurance firm in the world, was essentially taken over by the federal government in an effort, the government explained, to stave off further disruption to the economy.
Thousands of employees are prepping their resumes and many more people are left to contemplate their dwindling nest eggs. But for the companies' executives, men who months ago were given multi-million dollar bonuses despite peering the devastation on the horizon, there is little to worry about.
When Lehman Brothers declared bankruptcy on Monday, the company left about 25,000 workers worldwide in the lurch, wondering where their next paycheck will come from. CEO Richard Fuld, on the other hand, can contemplate his next move from a lavish home in Greenwich, Conn. The multi-million dollar manse has 20 rooms and includes an indoor squash court. Fuld and his wife regularly make the ArtNews list of Top Collectors for their interest in "works on paper, especially postwar art." And Fuld has some pretty powerful friends. He managed to get no less a luminary than Bill Clinton to give the commencement address at Middlebury College last year. Fuld's son was graduating.
Fuld has been with Lehman Brothers for 39 years, acting as CEO for 15. And like most CEOs, he could count on a healthy compensation package. According to Forbes Magazine, Fuld ranked number No. 11 in CEO compensation, raking in $354 million dollars over five years, with an annual compensation including salary and stocks believed to be hovering in the $63 million dollar range.
And that's not an unusual payout, according to Dave Schmidt of James F. Reda and Associates, an executive pay consulting firm. "Salary is generally under a million, something like $750,000, and then there are long-term incentives like stock and stock options that are paid out in the form of bonuses," said Schmidt. Of course there are often other incentives built into a CEO's contract too, like a car and driver, travel on the company jet, security, legal fees, financial planning, even tax preparation -- all on the company dime.
Annual compensation in the multi-million dollar-range enabled Fuld to call more than one swanky address home. In addition to the Greenwich estate, the Fulds own an apartment at 640 Park Avenue -- one of Manhattan's most prestigious buildings. A real estate listing boasts that a similar full-floor apartment has five working fireplaces, parquet de Versailles floors, six staff rooms, a library and "ample closets."