One of the provisions in Bruce Wasserstein's comp package as CEO of Lazard (LAZ) was a payout of 4.4 million restricted shares in the investment bank upon his death. The shares have been vesting for four years according to a number of media sources. Based on the current price of Lazard's stock, the value of the payment is about $188 million. The money is due 30 days after he dies and will presumably go to his estates and heirs.
The payment highlights Wasserstein's importance to Lazard, but it also shows the gulf in compensation between firms that took federal money during the credit crisis and those, like Lazard, that did not. As the financial markets collapsed, Lazard apparently did fine. Its shares dipped during the March market sell-off, but it was never mentioned as a candidate for aid. As a firm with a primary business of advising M&A and corporate finance clients, its balance sheet never contained assets that would severely compromise its earnings. Lazard's bottom line was affected, but mostly as a result of a drop in its banking fees and income from its asset management business. The company made $41 million in the June quarter.
Because its business is so different from banks and most other investment houses, Lazard is free to compensate its executives as it sees fit.
The Wasserstein payout may seem obscene, and perhaps it is; Lazard's entire market cap is only $3.3 billion. The firm's board, however, had to ask itself what its CEO's contribution to the firm was worth. That answer was clearly that he was worth a great deal.
Douglas A. McIntyre is an editor at 24/7 Wall St.