Yesterday the fixed income group at Lehman gathered in an auditorium at their midtown headquarters for a “town hall meeting,” according to two people who attended the meeting. Most of the meeting was filled with the kind of rah-rah talk that has become common on Wall Street as firms try to boost morale amid layoffs and loss-making quarters. But one bullet point on the presentation stuck out to those at the meeting. It asked a simple question: “How Are We Going To Get Paid?”
It’s an important question at Lehman Brothers. Historically, the compensation expenses at Lehman Brothers has varied by a few decimal points around 50% of net revenues. And although Lehman’s compensation ratio has typically been higher than it’s Wall Street rivals, it’s now at historically unprecedented–and financially unsustainable–levels. Lehman paid out $2.3 billion in the second quarter of this year, up from $1.8 billion for the same period last year. Revenues, as everyone knows, went into negative territory, with Lehman booking a negative $700 million.
At the end of the meeting one of the attendees pointed out that the bullet point question about how Lehman will be able to pay it’s employees was never really answered.
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Carney – why are you and Bess posting all these Debby Downer stories today on this mildly humid Friday?? Only to lead us into the weekend with frown plagued faces…
negative nancies
SWF money. That’ll pay LEH. Maybe they’ll give enough for Fuld to get his bonus which he has refused. Then Fuld can use the proceeds to buy a sweet apartment in 15 Central Park West and move in closer to Erin Callan. And Blankfein. And Stan O’Neil.
The answer is simple 50% of Zero is Zero. They can’t afford to pay bonuses. They are struggling to pay salaries. That is why any employees that can find alternate employment will leave before year end in the hopes to get another firm to guar
cont’d from 3:04
guarntee their year end bonus.
This why Lehman is doomed.
Uh, Carney, are you sure that REVENUES went into negative territory?? Sure sounds like a BK story to me if that’s the case.
It’s only a matter of time for Lehman. The vultures are beginning to circle…
yes. revenues went negative. that is what happens when you slap a 3.5 billion trading loss on top of your other revenues
uh 3:08, from Lehman’s 2Q press release:
“The Firm reported net revenues (total revenues less interest expense) for the second quarter of fiscal 2008 of negative ($0.7) billion”
Yes negative reveinues eventualy equals outof business. You don’t need a Harvard MBA to figure that out!
They are getting paid in one (or a combination of) the following:
1. 6′ers of Mikes
2. Vat of Mayo
3. Hours of foot worship
oh, okay or you could resort to looking up the press release i guess that works too
I think we are speaking of 700 million in losses not -700 million in revenues.
Tomato – Tomatoe Whatever
Same shit they are fucked!!
@ 3:15
And who will be providing the hours of foot worship?
This should cheer everyone up..
http://theshermanfoundation.blogspot.com/2008/06/some-loser-douchbags-phone-messages-to.html
@ 3:18
Junior (male) members of the DB staff will be worshiping mayo dipped feet.
@ 3:20 could be hot minus the mayo
dammit… it was just a matter of time before the feet showed up over here too…
BlackSwan-
Feet are everywhere look around you!
Smell them…touch them…lick them…embrace your inner foot fetish.
@3:16. jesus, no. there is negative revenue. then there is also op expense, which as you may or may not know depending if this is your first day on the job is netted against revenue.
if the net loss was only 700mm we wouldnt even be talking about it today
The ship be sinking.
already sunkeded
Bottom line is they are fucked spin it, debate it, chew on it any way you want.
ALL ROADS LEAD TO EXTINCTION FOR LEHMAN.
now feet in mayo, with an ice cold MHL … now THAT is something worth talking about
@3:13 that’s Negative NET revenues, not negative revenues as Carney said.
bonus will just be all stock. i hope marquee accepts LEH for bottles.
Can we stop re-arranging deck chairs on the Titanic and start coming to terms with the fact that our dear friend Lehman is soon to be departed?
3:31 you are obviously new to financials if this is so confusing to you.
bank_teller hahah thats awesome
I love greed as much as any normal heartless capitalist bastard,but there’s something all too “government” about how these people use baseline budgeting for their p/l and payout ratios.It seems like they take a cut to mean reduction in the growth trajectory line of payouts, sort of like changes in the yield curve.It’s steeping, it’s flat…but does it ever invert?
lehman must merge with slick vik to survive!
hard to pay salaries/bonuses when you don’t make any money
Time to join hands and sing Kumbaya!
-mrp
Can’t we join feet instead? More erotic!
@ bank_teller. They didn’t accept BSC shares. Might as well get ready to use LEH in like manner, for kindling.
Seriously, can the feet and fricking mayo fucks go away.
Seriously do you think LEH is done and if so how can i profit off of their misery? Short LEh is obvious. As is long the SKF. Anyone else have any idea’s about WTF to do to make money in this market. There seems to be many Ivy League people on the site and some who are just plain clever – IDEA’s please!
ps – mayo guy GO BACK TO CNBC!
mayo guy lives
mayo mayo mayo
Stuntin like my daddy
A second bank failure! Then we are all truly fucked
4:04 dude you are just sad. please leave finance before you embarass yourself.
we’ve reached a new low, maturity wise. Congratulations to all, sorry that I couldn’t do my part, sigh…
Sell May-09 Mayo Calls
Long MHL
Long Feet
Put that trade on and ride the curve!
I guess the employees should forgo their paychecks, not only bonuses, since Lehman is taking an even bigger step: as if screwing up (royally) on Wall St was not enough, they need to go get their asses kicked in Trin & Tobag???
(PRN) Jun 27 2008 16:13:16 – Lehman Brothers Confirms Interest in Being Anchor Tenant in the Trinidad & Tobago International Finance Center (TTIFC)
Bberg link: NSN K351I43T6SQP
-Clueless
Lehman needs to merge with ValueStockTip guy to survive.
mayo? Lehman had some success ’99-’06 but if you look at it, they probably spent 40 of the last 80 years nearly going under.
Long Mayo Calls
Short Suavemente
LEH & C should merge!
@3:36 — Maybe I was being a stickler for detail . . . as below, total revenues of $6,240; NET revenues of ($668). They’re still generating client activity, and probably 50% of the principal transaction loss is mark-to-market crap anyway.
Revenues:
Principal transactions $ (3,534)
Investment banking 858
Commissions 639
Interest and dividends 7,771
Asset management and other 506
Total revenues 6,240
Interest expense 6,908
Net revenues (668)
There are two “it’s” in that story that ought to be “its.”
The Roving Grammarian
They aren’t the best in the business for no reason!
More relatives … Arnie Agony, Barney Bummer,Cathy CraneCollapse, Debby Downer
Eddie E-Coli, Frank Foreclosure,Gregory Grief, Heidi Horrific, Ilene Imploding … Marty Meltdown,
yeah right, why should we count interest expense for a FINANCIAL company
toolbox.
@7:50 — Saying they didn’t generate revenues is misleading, plain and simple. Have you even looked at their press release? Do you understand mark to market? Do you understand cash flows? Also, do you have any capacity to maintain a civilized dialogue? I have a feeling you wouldn’t call ANYONE a toolbox to their face, cause you know you’d get your teeth knocked out. So knock it off.