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On Second Thought, Merrill CEO Will Forgo Yearly Bonus
That didn't take long.
Yesterday, as we noted, the Wall Street Journal reported that Merrill Lynch CEO John Thain was seeking an annual bonus of as much as $10 million -- after seeing his company lose over $11 billion this year.
New York Attorney General Andrew Cuomo and Senate Majority Leader Harry Reid were both quick to express their outrage, noting that Bank of America, which has completed a deal to buy Merrill, received $15 billion from the bailout fund this fall. And Merrill's board appeared reluctant to go along.
And sure enough, at the company's board meeting yesterday afternoon, Thain announced that he, along with other senior execs, would forgo bonuses this year, "given current economic and market conditions."
Given the level of outrage that Thain's request had provoked so quickly, the board's apparent opposition, and the broader public mood against excessive CEO pay, Thain may have seen the writing on the wall.
And given that he got a $15 million bonus when he joined the firm last fall, we think he should be fine.
Josh
Zachary
I hope that last sentence is supposed to be millions not billions!!
December 9, 2008 9:19 AM | Reply | Permalink
I was just about to ask if that was a typo. I think Zach has bailout on the brain.
December 9, 2008 9:41 AM | Reply | Permalink
Thain announced ... would forgo bonuses this year, "given current economic and market conditions."
Liar. Without the public outrage he would have salted away the ten million with a warm feeling of entitlement. JMHO.
December 9, 2008 9:45 AM | Reply | Permalink
Yeah, I was so pissed at seeing that that I took down five ML email addys and emailed them my thoughts on their CEO.
I doubt my voice contributed at all to any decision of theirs, but I just wanted something/someone to vent at. Poor kids who have their email addresses on their website listed.
December 9, 2008 11:04 AM | Reply | Permalink
If any financial CEO deserves a bounus this year it was Thain. First of all, it's completely unfair to say he saw "his company lose over $11 billion this year" with the implication it was his fault. He came onto Merrill after Prince was ousted because of all the terrible toxic debt Merrill had on taken on under Prince's tenureship.
The 11 million dollar loss had nothing to do with Thain. Thain basically took over the Titanic after the ship had already hit the iceberg. Yes the ship went down, but he got all the investors onto the lifeboats. Think about it, Bear Stearns investors got $10 a share (and only after the outrage over the $2 share original agreement) and Lehman shareholders got nothing. I forget the exact figure but I think Thain got Merril shareholders something like $30 a share. He saved his shareholders millions and millions of dollars recognizing that Merril could not survive and recognizing it time to get it sold to B of A at a decent price. I don't know how much he deserves, but I actually think it's fair that he get rewarded for a job well done.
December 9, 2008 10:23 AM | Reply | Permalink
You must be joking. The man made owned over two million shares of Merrill stock, now converted to B of A stock. He saved himself "millions and millions of dollars." Also, he's said he doesn't want to use any TARP funds for lending, but keep it as a cushion, which would seem to include quite a bit for himself.
If he can successfully steer the remains of Merrill, the B of A investment banking division, back to profitability over the next few years, then he should be rewarded. But not now, with taxpayer dollars that he won't even use for their intended purpose.
December 9, 2008 10:53 AM | Reply | Permalink
What happened to just getting paid for the job that you are getting paid to do. Do they ask for a de-bonus (salary money back) after a poor year?
How much does John Thain already get paid? If you want to use monetary motivation as a tool, then let it be that if executives don't do a good job, their next position or contract renegotiation/extension will offer them less money.
Sounds crazy, but I obviously believe bonuses could be better applied back into a companies or its lower level employees (let it rain trick-down economics!).
December 9, 2008 11:09 AM | Reply | Permalink
If Thain got $15 billion (sic), then he could personally bail out the Big Three in Detroit, right?
December 9, 2008 12:15 PM | Reply | Permalink
The word "scumbucket" leaps to mind.
December 9, 2008 12:53 PM | Reply | Permalink