You’d think that making the move from Morgan Stanley to Lehman Brothers in 2008 would be up there as one of the stupidiest moves ever. But if a former gas and power trader wins his lawsuit against Barclays, it might end up as one of the best trades of the year.
Pat Fitzgerald at Bankruptcy Beat explains:
Maximilian Coreth, who joined Lehman in 2008 as head of the firm’s North America gas and power trading unit, says Barclays owes him the cash because it took on some $2.5 billion in severance obligations when it scooped up Lehman’s broker-dealer business shortly after the investment bank collapsed in September.
The trader, who left his job as a managing director at Morgan Stanley to take the position at Lehman, says his employment contract specified he’d receive the $19.6 million if he was terminated before February of this year.
Coreth’s contract entitled him to a salary of $220,000 and a $9.8 million yearly cash bonus, plus stock.
It puts a nice underline on the kind of incentive pay Wall Street offered during the boom: take insane risks and get huge bonuses if they work out. If they don’t, and your firm gets crushed, you wind up with a huge severance.