March 5 (Bloomberg) -- Lehman Brothers Holdings Inc. paid Chief Executive Officer Richard Fuld $40 million for 2007 after the largest U.S. underwriter of mortgage bonds posted record profit and limited subprime losses.

Fuld, 61, received a $4.3 million cash bonus, $35 million in restricted stock and $750,000 in salary, according to a filing today with the U.S. Securities and Exchange Commission. He was paid $40.5 million for 2006. The New York-based firm disclosed most of his 2007 compensation in December.

Lehman, the fourth-biggest U.S. securities firm, earned $4.2 billion in 2007, while Wall Street rivals Morgan Stanley and Bear Stearns Cos. saw their profit drop by more than half and Merrill Lynch & Co. reported a record loss on mortgage- related writedowns. Goldman Sachs Group Inc., the biggest U.S. securities firm by market value, posted record earnings last year and awarded CEO Lloyd Blankfein a $67.9 million bonus, the most ever paid to the head of a Wall Street firm.

Net income at Lehman is expected to slump in the first quarter as the firm takes more writedowns, with the subprime market collapse spreading to commercial mortgages, Alt-A loans and leveraged commitments, according to analyst estimates compiled by Bloomberg.

Lehman President Joe Gregory was paid $34 million last year, according to today's filing. Gregory had received $33 million in 2006. Vice Chairman Tom Russo received $14 million, down from $18 million the year before.

Chief Risk Officer Chris O'Meara, who was finance chief until December, and Chief Administrative Officer Ian Lowitt each got $9.5 million. O'Meara was paid $6 million last year. Lowitt wasn't listed in last year's filing.

Lehman shares have been the worst performer among the five biggest U.S. securities firms this year, falling 27 percent.

Fuld has run Lehman since its 1994 spinoff from American Express Co.

To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net.

Last Updated: March 5, 2008 18:01 EST