How Much Did Lehman CEO Dick Fuld Really Make?

By James Sterngold Businessweek

Oliver Budde, former Lehman Brothers associate general counsel, says Fuld failed to disclose hundreds of millions in compensation
Before Lloyd Blankfein of Goldman Sachs (GS) took his place, Richard S. Fuld Jr.'s angry face was the universal symbol of Wall Street greed. On Oct. 6, 2008, three weeks after Lehman Brothers filed the largest bankruptcy in U.S. history, Lehman's former CEO found himself before Representative Henry A. Waxman, the California Democrat who chaired the House Committee on Oversight and Government Reform. Waxman has stared down plenty of CEOs over the years, yet this had to be one of the most intense confrontations of his career.

"Mr. Fuld will do fine," Waxman said. "He can walk away from Lehman a wealthy man who earned over $500 million. But taxpayers are left with a $700 billion bill to rescue Wall Street and an economy in crisis."

Fuld said he was a victim, not an architect, of the collapse, blaming a "crisis of confidence" in the markets for dooming his firm. Reckless management had nothing to do with it. "Lehman Brothers," he said, "was a casualty."

Fuld and Waxman went on to disagree about just how much money Fuld had taken out of Lehman before it went under. Fuld, now 64, said his total compensation from 2000 through 2007 was less than $310 million, not the $485 million that appeared on Waxman's chart. He said 85% of his pay was in Lehman stock that had become worthless. "I never sold my shares," Fuld said at one point. At another, he said he had not sold the "vast majority" of them.

"That just seems to me an incredible amount of money," Waxman responded.

Among those closely observing Fuld was a 49-year-old former Lehman lawyer named Oliver Budde who was watching the hearing at home on C-Span. Budde (pronounced Boo-da) was certain Waxman's figures weren't too high. They were too low, and he could prove it. Fuld, he believed, had understated the amount he was paid during those years by more than $200 million, and now he had done it under oath, for the entire world to see.

For nine years, Budde had served as an associate general counsel at Lehman. Preparing the public filings on executive compensation had been one of his major responsibilities, and he had been infuriated by what he saw as the firm's intentional under-representation of how much top executives like Fuld were paid. Budde says he argued with his bosses for years over the matter, so much so that he eventually quit the firm. After he left, he couldn't let the matter rest. He contacted the Securities & Exchange Commission and the Lehman board of directors but says neither showed interest in meeting him. He was so shocked by Fuld's testimony in front of Congress that he started thinking about writing a book going public with his story, which is told here for the first time.

"I wasn't surprised, because these guys don't surprise me anymore," Budde says. "But it just struck me—they're doing it again. I wasn't going to sit back and watch."

By his own admission, Budde lacks the aggressive career drive usually found on Wall Street. He speaks proudly of having been a "free spirit" in his younger days when he was a ski bum and took a year off during college to sail the Caribbean as a steward on a yacht. He grew up in Cheshire, Conn., and went to Columbia University, where he received a BA in economics in 1983. After college, he drifted into a job as a cabdriver in New York, which ended when an irate driver sprayed him with a can of mace after a fender bender on the FDR Drive. The experience made an office job suddenly seem tempting, and he found work as a paralegal at Skadden Arps, eventually going to law school on the firm's dime. He served as an associate for six years, working long hours, handling mostly corporate and securities-related matters. In 1997, when it became clear that he would not make partner, he decided to leave, landing as a vice-president in Lehman's corporate general counsel's office.