Top Lehman officers slated for $400 million in bonuses

Top executives and money managers at Lehman Bros. Holdings Inc. will get retention bonuses valued at $400 million when the firm is sold to Bain Capital Partners L.L.C. and Hellman & Friedman L.L.C.

The bonuses, which a U.S. bankruptcy judge must approve, were proposed even as House lawmakers were faulting Lehman chief executive officer Richard S. Fuld Jr.'s compensation - $484 million since 2000.

Under 2005 bankruptcy laws, creditors could try to recover the bonuses, said Lynn LoPucki, who teaches bankruptcy law at Harvard University and the University of California at Los Angeles.

"Fuld took huge bonuses while running a highly risky business," he said, "and these executives are taking their money after the end came."

Lehman was the fourth-largest investment bank before it filed for bankruptcy Sept. 15.

Two Lehman executives in line to receive bonuses are George Walker, global head of money management, who the firm said would be CEO of the new $230-billion-asset Neuberger Investment Management, and Joseph V. Amato, who will run Neuberger Berman.

Names of money managers have not been disclosed.

Bain and Hellman agreed Sept. 29 to buy most of the asset-management unit in a deal that values the business at $2.15 billion. They will deduct employee awards from the purchase price, Lehman's attorneys said in a court filing.

If the purchase fails, Bain and Hellman will get a termination fee of $70 million, plus reimbursement of $35 million under the proposal.

Meanwhile, Lehman, which has fired about 4,000 workers since March, notified some former employees that severance was cut off.

"Lehman Bros. is unfortunately no longer able to provide the salary continuation or other payments," the firm told former workers in a letter dated Sept. 30, according to people with copies of it.

It was not clear how many ex-Lehman employees were affected. Spokesman Nat Garnick declined to comment.

Workers may be able to seek the remainder of the payments by filing claims with the Bankruptcy Court, the letter said.

In another development, the U.S. Justice Department has subpoenaed Lehman and other financial companies to determine if the bank misled investors before its bankruptcy filing, according to people familiar with the matter.

Subpoenas also went to Ernst & Young L.L.P., Lehman's auditor; United Kingdom-based Barclays P.L.C., which bought Lehman's North American brokerage; and the New Jersey Division of Investments, which runs a pension fund that lost $115.6 million on a $180 million investment in a $6 billion stock offering by the bank in June, the people said.