Wednesday, February 6, 2008

Richard S Fuld CEO Lehman Brothers 2008

Richard S. Fuld Jr

Chairman and chief executive officer, Lehman Brothers Holdings

Nationality: American.

Born: April 26, 1946, in New York City, New York (Reference for Business).

Education: University of Colorado, BA, 1969; New York University Stern School of Business, MBA, 1973.

Family: Son of Richard Severin Fuld and Elizabeth Schwab; married Kathleen Ann Bailey; children: three.

Career: Lehman Brothers, 1969–1984, managing director; Shearson Lehman Brothers, 1984–1990, vice chairman; Lehman Brothers, 1990–1993, president and co-CEO; 1993, copresident and co-COO; 1993–1994, president and COO; Lehman Brothers Holdings, 1993–1994, CEO; 1994–, chairman and CEO.

Richard Fuld joined Lehman in 1969 as a commercial-paper trader and earned his reputation running the firm's fixed-income business. In the early 1980s at the age of 37 Fuld became the supervisor of both the fixed-income and the equities divisions, overseeing all trading at Lehman. Fuld had met with great success as a trader.

when he was given managerial responsibilities, Fuld had 22 managers reporting to him in divisions that accounted for two-thirds of the company's profits. Fuld excelled, and in 1982 his divisions generated record profits.

Fuld, who earned his MBA from New York University at night, was considered by many in the industry as one of Wall Street's supreme traders. One Lehman partner said of Fuld in Investment Dealers' Digest, "This is a very smart guy, tough as nails" (August 24, 1992). As reported by Fortune, a notorious temper earned Fuld, a weightlifter, the nickname "gorilla" (December 11, 1995).

After the 1990 operations split, Fuld became co-CEO of the Lehman Brothers division, sharing the title with J. Tomilson Hill.

The company finally reclaimed its independence in 1994—having been spun off from American Express 10 years after it was first acquired by the firm.

Fuld was named chairman in April 1994.

After regaining its independence, Lehman raised its return on equity to nearly 14 percent in 1996, from the low of 3 percent reached just after the firm was spun off from American Express.

Fuld changed the leadership in each of the company's three major operating units—investment banking, equities, and fixed income. He focused the company's investments in high-margin businesses like mergers and acquisitions and also equities by recruiting several expensive hires. In January 1997 Fuld approved $48 million for additional executive compensation—a full $46 million of that was earmarked for the investing, banking, and equities divisions, leaving just $2.4 million for the fixed-income division's recruits. His strategy was crystal clear: move Lehman away from its age-old reliance on fixed income.

Such a shift could not happen overnight and Fuld had to withstand pressure. In addressing analysts at a 1997 meeting Fuld said, "The process of building our high-margin businesses and shifting our overall business mix takes time. It starts with leadership at the top, then at the next level, then the talent needed to meet client needs and produce revenues. Once all that is in place, it takes time to get the resources to work together properly to build or expand relationships, and create revenues" (August 25, 1997).

In 2001, amid the global recession and stock-market collapse, Wall Street firms felt the economic pains most of all. Lehman at least outperformed the industry; Fuld's reward was a 2001 compensation package worth $105 million, making him the fourth-highest-paid chief executive in the United States. Most Wall Street chief executives—including those at Goldman Sachs, Morgan Stanley, and J. P. Morgan Chase—reduced their pay packages at the time.

Fuld was a long-term player and knew that better days were ahead. Lehman's rebound continued in the first few years of the millennium, as the firm earned a reputation for its stellar management through three primary accomplishments: First, the company kept employees' salaries in line with earnings, with the ratio of compensation costs to gross revenues hovering around 51 percent. Second, Lehman maintained a strong focus on U.S. government bonds, global fixed income, and credit derivatives at a time when the equities and investmentbanking markets were losing propositions. Finally, the firm retained its best managers by handing them substantial portions of stock in the firm. In 1994 employees owned 4 percent of Lehman; by 2004 they owned 35 percent. In 2001 the firm allocated $544 million for stock-based pay, accounting for 15.8 percent of its total compensation expenses, as compared with the 6.4 percent allocated for such purposes at Merrill Lynch. Fuld's message to new recruits: If you join us, we promise to make you rich—perhaps seriously rich. And he delivered on that promise—by 2002 the company was teeming with self-made millionaires.

In October 2003, Lehman Brothers seized on an opportunity to expand its business. In 2004 Lehman Brothers acquired Neuberger Berman in a deal valued at $2.63 billion.

For Fuld the Neuberger acquisition was the realization of a strategy he had been espousing since the mid-1990s: to diversify the company's business and lessen its reliance on the bondtrading market. The company expected the acquisition to increase its percentage of fee-based revenues from 13 percent to 21 percent. The move put Fuld's company on equal footing with Morgan Stanley, Merrill Lynch, and Goldman Sachs, all of which had significant money-management businesses. In Neuberger Berman, Lehman had obtained a firm with $63.7 billion under management, a well-regarded cadre of mutual funds, and a slice of the sought-after business of financialservices provision to high-net-worth clients.

In 2003 Daily Deal awarded Lehman Brothers the "Top 5 Global M&A Announcements of 2003 Deal of the Year" for its consultation with Travelers for the company's $16 billion merger agreement with St. Paul Companies. All told Lehman consulted on $99 billion worth of U.S. mergers and acquisitions in 2003, increasing its market share by 6.2 points to 18.9 percent, according to Thomson Financial. That gave the firm the lead in mergers and acquisitions in the industry, over Credit Suisse First Boston, Merrill Lynch, and J. P. Morgan Chase. Among major Wall Street firms, Lehman claimed fourth place in mergers and acquisitions overall, up from ninth in 2002. In 2003 the company raised $314 billion in debt and equity issues for clients, cementing its position as the number-two underwriter of securities in the United States—behind Citigroup—up from the number-four spot in 2002.

Lehman Brothers' success stories were largely a byproduct of Fuld's focus on offering a complete array of financial services, including advisement on corporate merging, raising capital, hedging risk, and making debt payments. Fuld's transformation showed foresight. As the economy picked up, bond insurance was expected to soften; Lehman's investmentbanking operations would be the counterbalance to the expected downturn in bonds. Blaine A. Frantz, the senior credit officer at Moody's Investors, told BusinessWeek, "It is a much more diversified shop than it was five or six years ago, and it operates in an extremely disciplined fashion" (January 19, 2004).

In January 2004 when Institutional Investor ranked Fuld first in its annual Best CEOs in America survey in the Brokers & Asset Managers category.

In overseas operations. The company was ranked fourth in European M&A work in 2002, with a market share of 19 percent, but it fell from number eight to number nine in the global rankings for announced mergers. As of early 2004 one of Fuld's goals was to improve the company's overseas market share, partly by appointing two top executives in Asia and Europe to the company's executive committee.
Fuld's Lecture at Harvard Business School (Reported date 16-10-2006)

In the speech he gave as part of Harvard Business School's Distinguished Speaker Series, Fuld described the five critical qualities he believes every leader must have (HBS, 2006).

"Real leaders earn the right to lead by understanding the business and mechanics of one's own organization," Fuld said, referring to his first quality of leadership. To Fuld, this means doing one's homework, connecting the dots and learning how the pieces fit together. "When you know what you are talking about, others will follow you," Fuld said.

A leader must also be committed to a strategy, and show that commitment. To this end, Fuld believes a leader must pick a strategy and stick with it. However, as he pointed out, if that strategy turns out to be wrong, a leader must have the guts to admit it and come out with a new strategy.

Fuld is quick to share the credit for such successes. The CEO's third quality of leadership, knowing how to leverage teamwork, is central to Lehman Brothers' culture and focuses on the belief that one person cannot deliver the whole Firm.

From the failures of Lehman Fuld realized that the firm suffers when teamwork suffers and as a result, when Fuld became chairman, nearly a decade later, the first thing he did was build the current "One Firm" culture, where teamwork is critical and goals are shared. To do so, he follows a very simple formula: hire great people who will work together, give them the tools and training they need to be successful, hold people accountable, pay them fairly, and expect them to think, act and behave like owners. Fuld backs this last step by paying all employees partly in Lehman Brothers stock, creating a culture of ownership.

Fuld believes so strongly in surrounding himself with the best people that he considers it another critical quality of leadership. According to Fuld, a leader cannot be afraid that he or she might look bad when others look good. "When you want an 'A' job done and when you want to run an 'A' firm, 'B' people are not good enough," said Fuld.

Fuld believes that leaders set the tone, which is why his fifth and final quality of leadership is to lead by example. Fuld said that in addition to his responsibility to the client and to the transaction, he has another responsibility-to teach others. He expects his senior people to do the same throughout the Firm, creating a culture of responsibility and driving results.

Fuld concluded by saying that the reward for a leader lies in others' achievements and that a true leader gets people to perform at a higher, more productive level, benefiting the whole organization.
You can access the speech by Fuld at Leeds Business School in 2006 from the page,585,316,417,2231


Richard S. Fuld, Jr. Named to Barron's "The World's Most Respected CEOs" List

26 March 2007
Chairman and Chief Executive Officer Richard S. Fuld, Jr. was named to Barron's "The World's Most Respected CEOs" list. Dick is one of 13 CEOs in the world who has been named to the list every year since its inception. (Lehman 2007)

In its March 26, 2007, issue, Barron's writes:

• "A Lehman Brothers lifer who joined the firm in 1969, Fuld brings passion and competitiveness that are powerful even by Street standards."
• "Since its spinoff in 1994, Fuld has made the bond specialist into a rival to Goldman Sachs and Morgan Stanley."
• "Lehman's stock is up 20-fold since '94. That's good news for employees, who own 30% of the company."

In compiling its third annual list of 30 top corporate leaders from around the world, Barron’s looked at financial and stock market performance, spoke to investors, and assessed leadership and industry stature.

Basic Sources:

Reference for Business,

HBS 2006,

Lehman 2007,

Other References

Auletta, Ken, Greed and Glory on Wall Street: The Fall of the House of Lehman, New York, N.Y.: Warner Books, 1987.

Cooper, Ron, "Can a Troika Take Lehman Up a Level?" Investment Dealers' Digest, August 24, 1992, p. 16.

Horowitz, Jed, "Does Lehman Finally Have It Right?" Investment Dealers' Digest, August 25, 1997, p. 16.

Kerr, Ian, "Fuld's Pay Sheds Light on Lehman," Financial News, March 25, 2002.

Thomas, Landon, Jr., "Lehman to Buy Neuberger Berman for $2.6 Billion," New York Times, July 23, 2003.

Thornton, Emily, "Lehman's New Street Smarts," BusinessWeek, January 19, 2004, p. 62.

Truell, Peter, "Is Lehman Ready to Take the Plunge?" New York Times, June 3, 1997.

Tully, Shawn, "Can Lehman Survive?" Fortune, December 11, 1995, p. 154.

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