Richard S. Fuld, Jr.

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Richard S. Fuld, Jr.
Richard S. Fuld, Jr. at World Resources Institute forum.jpg
Fuld speaking at a World Resources Institute forum in January 2007.
Born Richard Severin Fuld, Jr.
(1946-04-26) April 26, 1946 (age 68)
New York City
Nationality United States
Education University of Colorado Boulder (B.A./B.S.)
New York University
(M.B.A.)[1]
Salary $22,030,534 (2007)
Net worth Decrease US$100 million (est.)
(October 2008)[2]
Title Former Chairman & CEO of Lehman Brothers
Board member of
New York-Presbyterian Hospital
Spouse(s) Kathleen Ann Bailey[3][4]
Children Jacqueline, Chrissie, Richie

Richard "Dick" Severin Fuld, Jr. (born April 26, 1946) is an American banker best known as the final Chairman and Chief Executive Officer of Lehman Brothers. Fuld had held this position since the firm's 1994 spinoff from American Express until 2008. Lehman Brothers filed for bankruptcy protection under Chapter 11 on September 15, 2008,[5] and subsequently announced a sale of major operations to parties including Barclays Bank and Nomura Securities.

Fuld was nicknamed the "Gorilla" on Wall Street for his competitiveness.[6] Condé Nast Portfolio ranked Fuld number one on their Worst American CEOs of All Time list, stating he was "belligerent and unrepentant".[7] This perception of Fuld's hyper-competitive sociopathic personality traits can be observed in a revealing internal company video (about short-sellers) "I am soft, I'm lovable but what I really want to do is reach in, rip out their heart and eat it before they die."[8] Fuld was also named in Time magazine's list of "25 People to Blame for the Financial Crisis".[9]

Early life[edit]

Fuld was born in New York City, to Jewish parents, Richard Severin Fuld, Sr. and Elizabeth (Schwab).[10] He is also a second cousin of Tampa Bay Rays outfielder Sam Fuld.[11]

He received both a B.A. and B.S. from the University of Colorado Boulder in 1969 and his M.B.A. from New York University's Stern School of Business[1] in 1973. While attending Colorado, Fuld participated in the Naval Reserve Officer Training Corps program and was president of the school's chapter of the Alpha Tau Omega social fraternity.[12]

Fuld's first career as an Air Force pilot came to an end when he got into a fistfight with a commanding officer. He said he had been defending a young cadet who was being taunted by the senior officer.[13]

Lehman Brothers[edit]

He then began his career with Lehman Brothers in 1969, the year the firm's senior partner Robert Lehman died, and stayed at the company until its bankruptcy. He began as a commercial paper trader and rose rapidly.

Fuld worked for Lehman for nearly 40 years. During this time, Fuld witnessed and participated in the numerous changes which the organization endured, including its merger with Kuhn, Loeb & Co, its acquisition by American Express, its merger with E.F. Hutton, and its ultimate spin-off from American Express in 1994, once again as Lehman Brothers.

Chief Executive Officer[edit]

Having served as CEO from 1994 through the firm's collapse in 2008, Fuld was the longest-tenured CEO on Wall Street at the time of the financial crisis of 2008.[6] Fuld had steered Lehman through the 1997 Asian Financial Crisis, a period where the firm's share price dropped to $22 in 1998. Lehman had a yearly loss of $102 million in 1993, but after Fuld became CEO the firm had fourteen straight years of profits, including one of $4.2 billion in 2007, although in 2008 it reported a Q2 loss of $2.8 billion and filed for bankruptcy later that year.[14] Similar to the fall of Barings Bank this was accomplished by driving up company earnings through excessive leverage and risk.

Fuld had a succession of "number twos" under him, usually titled as President and Chief Operating Officer. T. Christopher Pettit served until November 26, 1996, when he lost a power struggle with his deputies, likely brought about after Pettit had a mistress, which violated Fuld's unwritten rules on marriage and social etiquette.[15] Bradley Jack and Joseph M. Gregory were appointed co-COOs in 2002, however Jack was demoted to the Office of the Chairman in May 2004 and departed in June 2005 with a severance package of $80 million, making Gregory the sole COO and President. Along with CFO Erin Callan,[16] Gregory was demoted on June 12, 2008, and replaced by Bart McDade, who would see Lehman through bankruptcy.[14][15]

In 2006, Institutional Investor magazine named Fuld America's top chief executive in the private sector. That same year in December, Fuld told The Wall Street Journal, "as long as I am alive this firm will never be sold." In March 2008, Fuld appeared in Barron's list of the 30 best CEOs and was dubbed "Mr. Wall Street".

Overall, Fuld received nearly half a billion dollars in total compensation from 1993 to 2007.[17] In 2007, he was paid a total of $22,030,534, which included a base salary of $750,000, a cash bonus of $4,250,000, and stock grants of $16,877,365.[18] According to Bloomberg Businessweek, Fuld "famously demanded loyalty of everyone around him and demonstrated his own by keeping much of his wealth tied up in the firm", even buying Lehman shares on margin, according to a friend.[19]

Bankruptcy and aftermath[edit]

Fuld was initially praised for handling the initial subprime mortgage crisis well, better than any of the other bulge bracket firms, behind Goldman Sachs.[20]

Fuld was said to have underestimated the downturn in the US housing market and its effect on Lehman's mortgage bond underwriting business.[6] Fuld was already the longest tenured CEO on Wall Street and kept his job as the subprime mortgage crisis took hold, while CEOs of rivals like Bear Stearns, Merrill Lynch, and Citigroup were forced to resign.[6] In addition, Lehman's board of directors, which includes retired CEOs like Vodafone's Christopher Gent and IBM's John Akers were reluctant to challenge Fuld as the firm's share price spiraled lower.[6]

Fuld would be criticized for not completing several proposed deals, either a capital injection or a merger, that would have saved Lehman Brothers from bankruptcy. Interested parties had included Warren Buffett[21] and the Korea Development Bank.[22] Fuld was said to have played a game of brinkmanship, refusing to accept offers that could have rescued the firm because they didn't reflect the value he saw in the bank.[6]

However New York Magazine had a different view on Fuld's last three months as CEO before the firm's bankruptcy. Hugh "Skip" McGee III, then-head of the Investment Banking Division, had earlier disagreed with COO Joseph M. Gregory's appointment of one of his subordinates, Erin Callan, as CFO. On June 11, 2008, McGee organized a meeting of the firm's senior bankers which forced Fuld to demote Callan and Gregory. Gregory's replacement as President and COO was Bart McDade. While Fuld remained CEO in title, it has been said that a management coup had taken place and that the one guy in charge was now McDade.[23] NY Mag's account also stated that Fuld was desperately searching for a buyer during the summer and even offering to step aside as CEO to facilitate the sale of the firm, being quoted as saying “We have two priorities, that the Lehman name and brand survive and that as many employees as possible be saved, and you'll notice our priority isn’t price”.[24]

In October 2008, Fuld was among twelve Lehman Brothers executives who received grand jury subpoenas in connection to three criminal investigations led by the United States Attorney's offices in the Eastern and Southern Districts of New York as well as the District of New Jersey, related to the alleged securities fraud associated with the collapse of the firm.[25][26][27]

On October 6, 2008, Fuld testified before the United States House Committee on Oversight and Government Reform regarding the causes and effects of the bankruptcy of Lehman Brothers.[28][29][30] During the testimony, Fuld was asked if he wondered why Lehman Brothers was the only firm that was allowed to fail, to which he responded: "Until the day they put me in the ground, I will wonder."

Soon after Lehman filed for bankruptcy, there was a well circulated rumor - promulgated initially by the satirical financial blog "Dealbreaker" and overly excited reporters - that Fuld was "punched in the face" and/or "knocked out cold" by someone whilst working out in the company gym. According to the man who was gym manager at the time, this never happened.[31]

After Lehman[edit]

On November 10, 2008 Fuld transferred his Florida mansion to his wife Kathleen for $100 in order to protect the house from potential legal actions against him. They had bought it four years earlier for $13.75 million.[32]

In late March 2009, Fuld had an email sent out stating that he joined Matrix Advisors, a New York-based hedge fund.[33]

In May 2010, Fuld was registered by the Financial Industry Regulatory Authority (FINRA) as employed by Legend Securities, a securities brokerage and investment banking firm in New York.[34][35] Fuld left the firm in early 2012.[36]

Accolades and directorships[edit]

In 2006, Fuld was named No. 1 CEO in the Brokers & Asset Managers category, by Institutional Investor magazine.[37] In 2007 he received a $22 million bonus.[38]

Fuld at one time served on the board of directors of the Federal Reserve Bank of New York, a position he ceased holding shortly before the bankruptcy of Lehman Brothers. He is a member of the International Business Council of the World Economic Forum and the Business Council. He also serves on the Board of Trustees of New York-Presbyterian Hospital. He was also on the board of directors of the Robin Hood Foundation but was removed from the Board following the Lehman Brothers bankruptcy.[39]

In December 2008, Fuld was given the "Lex Overpaid CEO" award of the Financial Times for having received $34 million in 2007 and $40.5 million in 2006, the last two years before his bank's failure.[40]

CNN named Fuld as one of the "Ten Most Wanted: Culprits of the Collapse" of the 2008 financial collapse in the United States; he was placed at number 9 on the list.[41]

Condé Nast Portfolio ranked Fuld as the worst American CEO of all time.[42]

In popular culture[edit]

  • In October 2011, a theatrical film titled Margin Call was released, depicting a bank loosely based on Lehman Brothers. Jeremy Irons portrayed "John Tuld", a character inspired by Fuld.[44][45]

References[edit]

  1. ^ a b Peter Robison; Yalman Onaran (September 15, 2008). "Fuld's Subprime Bets Fueled Profit, Undermined Lehman". Bloomberg. Retrieved September 23, 2008. "Fuld earned a BA from the University of Colorado and an MBA from New York University's Stern School of Business." 
  2. ^ Becker, Bernie; White, Ben (October 6, 2008). "Lehman Managers Portrayed as Irresponsible". The New York Times. Retrieved September 6, 2012. 
  3. ^ [1]
  4. ^ Vanity Fair: "Lehman’s Desperate Housewives" By Vicky Ward April 2010
  5. ^ Lehman files for Chapter 11 bankruptcy, TheStreet.com, September 15, 2008
  6. ^ a b c d e f "Lehman CEO Fuld's hubris contributed to meltdown". Reuters. September 14, 2008. 
  7. ^ "Portfolio's Worst American CEOs of All Time: Dick Fuld", portfolio.com, April 30, 2009, retrieved October 6, 2011
  8. ^ "clip of original video as featured in BBC documentary"
  9. ^ "25 People to Blame for the Financial Crisis". Time. February 11, 2009. Retrieved March 28, 2013. 
  10. ^ "nndb.com". nndb.com. Retrieved April 4, 2011. 
  11. ^ "Tampa Bay Rays news and notes". St. Petersburg Times date=February 28, 2011. Retrieved April 4, 2011. 
  12. ^ "Lehman Brothers CEO To Speak At CU-Boulder Graduate School Of Business Commencement" (Press release). University of Colorado Boulder. April 27, 2001. Retrieved September 29, 2008. 
  13. ^ Fuld's Air Force career came to abrupt end after he got into fist fight with commanding officer, The Times, September 16, 2008
  14. ^ a b Fishman, Steve (November 30, 2008). "Burning Down His House". New York.
  15. ^ a b Ward, Vicky (April 2010). "Lehman's Desperate Housewives". Vanity Fair. Retrieved September 29, 2012. 
  16. ^ Ward, Vicky (2010). The Devil's Casino.
  17. ^ Kristof, Nicholas D. (September 18, 2008). "Nicholas D. Kristof: $17,000 an hour. No success required.". International Herald Tribune. Retrieved April 4, 2011. 
  18. ^ "CEO Compensation for Richard S. Fuld Jr", Equilar.com
  19. ^ Green, Joshua (September 12, 2013). "Where Is Dick Fuld Now? Finding Lehman Brothers' Last CEO". Bloomberg Businessweek. 
  20. ^ Anderson, Jenny (October 28, 2007). "The Survivor". The New York Times. 
  21. ^ Susan Antilla. "Top 10 lessons from Lehman Brothers fiasco | The Journal Gazette | Fort Wayne, IN". The Journal Gazette. Retrieved April 4, 2011. 
  22. ^ Jonathan Kennedy (August 22, 2008). "Dick Bove: Lehman (LEH) CEO Fuld Hopeless, Hostile Takeover At $20 Per Share". Businessinsider.com. Retrieved April 4, 2011. 
  23. ^ Ward, Vicky (October 20, 2009 ly). "Lehman's Desperate Housewives". Vanity Fair. Retrieved April 4, 2011. 
  24. ^ http://nymag.com/news/business/52603/
  25. ^ David B. Caruso (October 17, 2008). "Prosecutors subpoena ex-Lehman CEO Richard Fuld". Associated Press via Google. Retrieved October 29, 2008. [dead link]
  26. ^ Emily Anderson, Chuck Hadad (October 17, 2008). "Former Lehman Brothers CEO subpoenaed". CNN. Retrieved October 29, 2008. 
  27. ^ Joe Sabo (October 17, 2008). "Lehman Executives Including Fuld Subpoenaed, New York Post Says". Bloomberg. Retrieved October 29, 2008. 
  28. ^ Committee Holds Hearing on Causes and Effects of the Lehman Brothers Bankruptcy Retrieved October 6, 2008[dead link]
  29. ^ Fuld's testimony (PDF) Retrieved October 6, 2008
  30. ^ Bill Berkrot, Reuters "Lehman's Fuld to testify at congressional hearing" retrieved October 3, 2008.
  31. ^ http://nymag.com/daily/intelligencer/2008/10/about_the_richard_fuld_punchin.html
  32. ^ Adegoke, Yinka (January 26, 2009). "Lehman's Fuld sold Florida mansion to wife for $100". Reuters. Retrieved April 4, 2011. 
  33. ^ "Lehman Brothers' Dick Fuld Has a New Gig". The Wall Street Journal. April 3, 2009. Retrieved June 27, 2010. 
  34. ^ "Dick Fuld Re-Emerges at Legend Securities". TheStreet.com. May 14, 2009. Retrieved July 7, 2010. 
  35. ^ "Dick Fuld's New Friends". TheFinancialInvestigator.com. June 8, 2009. Retrieved July 7, 2010. 
  36. ^ New York Post http://www.nypost.com/p/news/business/fuld_not_built_for_street_life_UHWLoonxK6cAT89He8XhJK |url= missing title (help). 
  37. ^ http://www.iimagazine.com/Article.aspx?articleID=1233833&HideRelated=1&SearchResult=1
  38. ^ Lehman CEO Fuld's hubris contributed to meltdown, Reuters, September 14, 2008
  39. ^ Lehman Chief: Subprime's End-Near; Pain-Not Over, Forbes, April 16, 2008
  40. ^ "Overpaid CEO award". Financial Times: 12. December 22, 2008. 
  41. ^ "Culprits of the Collapse". CNN. October 10, 2008. Retrieved April 4, 2011. 
  42. ^ Portfolio.com staff (30 April 2009). Portfolio's Worst American CEOs of All Time. CNBC
  43. ^ Ebert, Roger (October 13, 2010). "Inside Job". Chicago Sun-Times. Retrieved October 21, 2011. 
  44. ^ "'All That Glitters'". The New Yorker. October 31, 2011. Retrieved October 29, 2011. 
  45. ^ "'Margin Call': A Financial-Crisis Film That's on the Money". The Atlantic. October 31, 2011. Retrieved October 29, 2011. 

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