Senior MF Global Holdings Ltd. (MFGLQ) executives still working at the bankrupt firm will not receive bonuses, the company’s trustee told lawmakers.
Louis Freeh, the former Federal Bureau of Investigation director serving as trustee for the New York-based firm, committed to lawmakers that he would not award bonuses to current or former employees in the wake of reports that compensation packages for Chief Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri J. Steenkamp, were being prepared.
“It was never my intention” to pay out bonus money to executives from the firm, Freeh told members of the Senate Banking Committee at a hearing today. Freeh committed to lawmakers that he would not distribute bonus money to current or former MF Global employees.
MF Global Holdings, once run by Jon S. Corzine, a Democrat who served in the Senate before serving as New Jersey’s governor, filed the eighth-largest U.S. bankruptcy on Oct. 31 after getting margin calls and bank demands for money at its brokerage unit, MF Global Inc. While the holding company is returning funds to creditors under Freeh in a Chapter 11 bankruptcy, the brokerage unit is returning funds to customers. That unit has a separate trustee, James Giddens, appointed under the Securities Investor Protection Act.
U.S. lawmakers seized on the bonus issue last month, citing the estimated $1.6 billion shortfall between the brokerage’s assets and what it owes customers as a reason that the distribution of any bonus money should be blocked. The Senate adopted a non-binding resolution objecting to the distribution of bonus money last month.
Bonuses ‘Not Acceptable’
“It is not acceptable for MF Global executives to be given bonuses when customers have not recovered funds improperly taken from them by MF Global,” Senator Tim Johnson, the chairman of the Senate Banking Committee, said today.
Freeh, in his prepared remarks, said his team employs 15 non-executives, most of whom were former MF Global employees, along with the senior executives. Freeh said he has considered “a retention program” for them and added that “no formal program was ever created for senior executives, nor was any motion ever filed with the court for approval in connection with any retention program for senior executives.”
The firm employees working for the trustee are on salary and, should they need to be retained in the future, Freeh said he would negotiate “fair and competitive salaries.”