Lehman Brothers Holdings Inc.’s plan to pay $50 million in bonuses to employees handling derivatives contracts was approved by a judge who said the payments provide essential incentives to employees with “unique skills.”
Lehman, the investment bank liquidating in bankruptcy, asked U.S. Bankruptcy Judge James Peck in New York last month for permission to pay the bonuses to about 230 full-time employees unwinding the contracts. The judge today sanctioned the payments as bankers, under attack after two years of failures and bailouts, risk more public fury by awarding year- end bonuses, according to a Bloomberg National Poll this month. Lehman told Peck in a Nov. 25 filing that the derivatives team had brought in more than $8 billion in cash and settled 17 percent of the contracts during the bankruptcy. A bonus pool “designed to motivate and reward employees” in the group will help to maximize the value of the remaining contracts, it said.
Also at the court hearing today, the judge told Barclays Plc it could not have documents it sought from Lehman creditors and the trustee for Lehman’s brokerage, said a spokesman for the trustee who declined to be named. Britain’s second-largest bank, sued three times last month over an alleged $5 billion windfall on its purchase of Lehman’s North American brokerage, had asked the judge to force two of the plaintiffs to produce documents showing what lawyers told them about the purchase when it happened in September 2008.
Judge Peck approved Lehman’s plan to put more money into its Aurora Bank FSB thrift unit. Diana Adams, the U.S. trustee who oversees Lehman’s bankruptcy, said in a Dec. 11 filing she questioned why Lehman needs to pay bonuses to people for merely doing their jobs, particularly vice presidents who have “limited authority” except for signing papers. She assented to the plan after Lehman said it was primarily designed to help employees and there are only four officers in the group.
Lehman filed the biggest U.S. bankruptcy in September 2008 with assets of $639 billion. Creditors including UBS AG, the New York Giants, Abu Dhabi Investment Authority and individual bondholders filed $824 billion in claims against the company. The case is in re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York.