Fuld to step down as CEO of bankrupt Lehman

By Martha Graybow

NEW YORK (Reuters) - Richard Fuld, the chief executive of Lehman Brothers Holdings Inc, will step down by year's end, and not receive any bonus or severance when he leaves, a company spokesman said on Wednesday.

Fuld, awarded $22 million in compensation in fiscal 2007, has been widely criticized for having done little to save the company from collapse.

The famously gruff CEO came under fire last month from lawmakers over the downfall of the 158-year-old investment bank and the size of his past pay packages.

Lehman (LEHMQ.PK), weighed down by bad assets, filed the largest-ever U.S. bankruptcy case on Sept. 15 after it was unable to find a buyer to come to its rescue.

Fuld will continue as nonmanagement chairman of the board after leaving as CEO, according to Lehman spokesman Jonathan Doorley. Fuld could not immediately be reached for comment. A phone message left with his lawyer, Patricia Hynes, was not immediately returned.

Lehman is now in the process of unwinding its businesses.

A new CEO was not named.

Fuld does not appear in a document that outlines the company's new organizational structure. Instead, Bryan Marsal of restructuring firm Alvarez & Marsal heads the organizational chart as chief restructuring officer, according to a written presentation to creditors dated Nov. 3.

While Fuld offered his resignation as CEO immediately after the sale of Lehman's core U.S. assets to Barclays PLC (BARC.L) in September, "Bryan Marsal asked him to stay for a reasonable transition period" through the end of 2008, Doorley said.

"For the record, Mr. Fuld offered to provide this transition cooperation without any claim to severance or other bonus payment at the end of his employment," an offer that was accepted by the bankrupt Lehman entity, Doorley said.

The spokesman said Fuld has helped the Lehman restructuring team better understand the assets and liabilities of the legacy entity.

Separately, the New York state comptroller has asked the U.S. Bankruptcy Court in Manhattan to replace Fuld and the Lehman board with a court-appointed trustee, saying Fuld "drove the company toward ruin."

"Mr. Fuld and his hand-selected board, many members of which lack experience relevant to the exotic financial instruments and complex structured assets central to the debtors' cases, should be replaced," Comptroller Thomas DiNapoli wrote in court documents.

DiNapoli is trustee of the New York State Common Retirement Fund, a party of interest in the Lehman bankruptcy. He asked U.S. Bankruptcy Judge James Peck to appoint a trustee with experience in bankruptcy to supervise administration of the firm's estate.

In a hearing in Washington last month, U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, said Fuld's compensation in prior years did not seem fair, given that Lehman had collapsed, wiping out all shareholder value.