Lehman Brothers Holdings Inc. creditors have legal grounds to retrieve pay given chief executive officer Richard Fuld, who took home $34.4 million in 2007, bankruptcy lawyers said.

"Bankruptcy law allows recovery of compensation paid to insiders if the company didn't receive reasonably equivalent value," said Lynn LoPucki, a bankruptcy law professor who teaches at Harvard University and the University of California.

After record profit, Lehman's compensation spending rose 9.5% last year, to $9.5 billion, including bonuses estimated at $5.7 billion. The top five executives — the most vulnerable to creditor claims of excessive pay — got $81 million, according to a March 5 proxy statement.

Lehman was the fourth-largest U.S. investment bank before it filed on Sept. 15 for the biggest bankruptcy in U.S. history.

A 2005 change in U.S. bankruptcy law made it easier for creditors to recover past compensation. The amendment came after Enron Corp. creditors failed to recoup more than $120 million paid to executives in the month before the energy trader's 2001 bankruptcy, Ms. LoPucki said.

"I tie the Lehman bankruptcy directly to excessive executive compensation," said Stuart Grant, a partner of Grant & Ensenhofer, a Wilmington, Del., firm that specializes in executive-pay lawsuits. "The way Wall Street compensation is set up cries out for executives to take excessive risk and leverage," he said.

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