"I understand why the British are livid," said a friend (American) who is high up at Lehman. My friend was talking about the Sunday front page headlines -- screaming that a $2.5 billion bonus pot was being retained -- from the English bankruptcy court -- by Barclays to pay eight US senior executives who had reportedly been guaranteed $10 - $25 million salaries for two years.
All last week I'd been hearing two completely different stories from friends at Lehman here and Lehman in London.
Here, it was -- and is -- a roller-coaster as employees start interviews today with Barclays. But, last week, the Lehman executive committee briefed department heads as early as Monday that there might be a buyer, and department heads spread the news. They were able to do this because certain assets like the broker/dealer business had not yet filed for bankruptcy. Had Barclays not come to the rescue they would have done so by Tuesday night.
In other words, yes, US employees lost a lot of money but lines of communication were open. Now, US employees still have jobs, benefits, fully paid expenses -- or the promise of a decent severance package.
But in London, sources yelled angrily down the phone it had been an entirely different story. They had filed for bankruptcy, and, they way they saw it, their cash-flow had been taken and reallocated to New York -- for which they are suing.
And, unlike in New York, there had been no communication, other than from the administrators Price Waterhouse Coopers. People who'd been working abroad at the weekend were stranded -- and told to pay their own flights home. PWC told them to show up if they wanted to get paid for the month.
"It just made us feel that in the end the Americans just looked after themselves and shafted us," one British executive at Lehman London told me. "All this talk of 'we are one bank' had amounted to nothing." Unsurprisingly, many British employees didn't show up for work.
Over here, their peers think the Londoners' reactions have been understandable but not thought through.
"British bankruptcy laws required that only PWC tell London what was going on all last week," says a US employee. "Lehman management wasn't allowed to. The same would have happened if all US Lehman had filed for bankruptcy Sunday night."
Finally, my source says that British should not overreact over to the alleged $2.5 billion bonus pot and the reallocation of the money, since without it the Barclays deal would not have happened.
The eight executives to whom the $2.5 billion has supposedly been offered -- a fact not confirmed by Barclays or Lehman -- are "leaders" in the firm who will need the money as incentives to keep their teams in place. "They are senior, but not senior senior people, whose retention is crucial to the Barclays deal."
"We are all being headhunted like crazy," says my source. "It's understandable Barclays would want to give us an incentive to stay -- none of the eight would keep the money from themselves." Eric Felder, head of Fixed Income, was singled out as a scrupulous and fair man.
"Finally," says my source "There is talk that Barclays -- among others, including Nomura -- wants to buy Lehman London. So, yes, the idea of $2.5 billion bonus pot will add insult to injury in the UK, but London employees there would be smart to stop whining -- and show up to work. After all, the value of the business is in the people. If they're not there, there's nothing to buy."