Saturday, November 1, 2008

Stealing from employees at Lehman

A close friend of mine in investment banking was laid off in November at Lehman several years ago, with a token bonus. He had spent the entire year working. Bonuses in banking were typically declared in December and paid in Jan-Feb.

In banking, where bonuses are several multiples of one’s salary, and are part of the pay package, are “commoditized – so they are paid in tight bands”, taking away one’s bonus one month before the person is expected to get it, is the equivalent to stealing from employees. Its also a classic banking trick. November layoffs didn't surprise anyone on the Street.

I’ve had respect for Lehman’s hard-charging bankers. So I called my friend to offer my condolences at the demise of the iconic brand. He reminded me of the time that Lehman stole from him and told me that it was sweet revenge.

I don’t know if any of his bosses are still around, but I guess what goes around, comes around. I do feel sorry for the young Analysts, Associates and Junior VPs who were struggling with mortgages and loans; many may be forced from their homes.

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