Bailout

Report: Citi To Spend Around $10 Million On New Office For Pandit, Others

Zachary Roth | March 19, 2009, 12:19PM

This should go down well.

Citigroup, which has gotten $45 billion in bailout money, plans to drop around $10 million on constructing new offices for CEO Vikram Pandit and other execs, Bloomberg reports, after examining documents filed with the New York City Department of Buildings.

It sounds like the new offices will be pretty sweet:

Plans and instructions for the bank's contractors, on file with the city, specify the installation of at least one Sub-Zero Inc. refrigerator and icemaker in the renovated space, along with "premium grade" millwork and Madico Inc. "Safety Shield 800" blast-proof window film. The project encompasses 17 private offices, each with space for administrative assistants, as well as two conference rooms and open areas with "soft seating," according to the plans.

Former Merrill CEO John Thain has been widely slammed for spending $1.2 million on a 2007 redecoration of his office suite - the same year his company suffered massive losses and needed to be rescued by Bank of America*.

As for Pandit, in January he canceled an order for a corporate jet after it drew outrage, and later told Congress:

I get the new reality and I'll make sure Citi gets it as well.

* This sentence has been corrected from an earlier version.

Bank of America

Court: B of A Must Reveal Names Of Merrill Bonus Recipients

Zachary Roth | March 19, 2009, 9:52AM

While we've all been focused on those AIG bonuses, there's been a major development in the Wall street bonus saga that seemed, a week ago, like the ultimate in outrageous corporate behavior.

A court ruled yesterday that Bank of America will have to turn over to New York Attorney General Andrew Cuomo the names of the Merrill Lynch employees who received a total of $3-4 billion in bonuses. Bank of America, which since the start of the year has owned Merrill, had been resisting giving Cuomo the information.

Cuomo said he could release the names as soon as today.

Merrill approved the bonuses last December under then-CEO John Thain, on an accelerated schedule, apparently to ensure they went into effect before the firm came under the control of B of A.

Bank of America

B of A: We Care About Privacy (When It Comes To Bonuses, That Is)

Zachary Roth | March 13, 2009, 11:47AM

The judge who will decide whether information about those Merrill Lynch bonuses should be made public has said he'll make a decision within the week, Bloomberg reports.

New York Attorney General Andrew Cuomo is investigating the bonus awards, which reportedly total $3-4 billion. Bank of America, which now owns Merrill Lynch, has refused to disclose to Cuomo which Merrill employees received the awards, and how much each got.

But we particularly liked this argument from B of A's lawyer, Evan Davis, made to Judge Bernard Fried:

Americans care about their privacy. That matters to us because if we don't try to protect it and succeed in protecting it we'll lose them to foreign banks.

Aah yes, Bank of America: famed protector of privacy. When the subject is executive bonuses, that may be true. When its customers' personal information, maybe not so much.

Andrew Cuomo

Cuomo: Merrill Misled Congress On Bonuses

Zachary Roth | March 12, 2009, 11:18AM

It looks like Andrew Cuomo has escalated things in the Merrill Lynch bonus probe.

Cuomo is now accusing the firm of misleading Congress on the matter. In a court filing made yesterday, according to the Wall Street Journal, Cuomo included a November 24th letter, sent by Merrill to a House oversight committee, assuring lawmakers that no decisions on yearly bonuses had yet been made. Cuomo also filed testimony from a Merrill director, saying that on November 11th, the firm's compensation committee had decided that Merrill would pay bonuses in December, rather than January, when bonuses were usually paid (and when the firm would be under the control of Bank of America.)

Cuomo is trying to convince a judge to force Bank of America to disclose information about who got the bonuses -- which the company has so far been refusing to do.

The House Oversight committee, chaired at the time by Rep. Henry Waxman (D-CA), had asked Merrill for information on the bonuses, as part of an effort to ensure that the firm wasn't using bailout money for compensation.

There's another interesting nugget in the Journal's report:

Mr. Cuomo also disclosed that John Thain, Merrill's chairman and chief executive, was told that he would lose any chance of succeeding Kenneth Lewis as CEO of Bank of America if Mr. Thain kept pressing Merrill directors last fall for a 2008 bonus of as much as $40 million.

"He was told very strongly that you should not do that; that you would damage yourself with the Bank of America board if you do that, and if you ever wanted a chance to be in the running for my job, then that would eliminate it," Mr. Lewis said in his testimony last month, according to the filing.

Thain soon lost his chance to succeed Lewis anyway, as he was ousted in mid January amid anger over the bonuses and Merrill's massive fourth quarter losses.

Bank of America

B of A: Revealing Merrill Bonus Info Would Cause "Irreparable Harm"

Zachary Roth | March 6, 2009, 11:07AM

We didn't get to this yesterday afternoon... but it looks like Bank of America is going to the mat to avoid telling Andrew Cuomo's investigation who got those controversial Merill Lynch bonuses.

B of A, reports Bloomberg, filed court documents yesterday claiming that revealing the identities of the lucky bonus recipients would cause "grave and irreparable harm" to the firm, because it would let competitors know which areas of B of A's business the company considers most valuable, and would therefore make it easier to steal B of A's top talent. It would also create "internal dissension and consternation," and could even create security risks for those named.

In other words, if it became known who we gave huge bonuses to in a year when Merrill collapsed, people would be so mad they'd physically attack them.

Does any of this even pass the laugh test?

Former Merrill CEO John Thain has already talked to Cuomo's team about the bonuses, after a judge ordered him to do. But its not clear what he said. B of A CEO Ken Lewis refused last week to turn over a list of who got the bonuses.

Merrill gave out the awards on an accelerated schedule last December, just weeks before the failed firm came under the control of B of A. Thain has since been fired.

Andrew Cuomo

Cuomo Subpoenas More Of Merrill's Top Earners

Zachary Roth | March 5, 2009, 1:45PM

Yesterday, we noted a report in the Wall Street Journal that Merrill Lynch's top ten execs were each paid more than $10 million last year. The ten made slightly more than the top ten earners for 2007, despite the company's collapse last year.

Now, the Journal follows up by reporting that several of those execs have been subpoenaed in New York Attorney General Andrew Cuomo's investigation into Merrill's awarding of billions in bonuses.

Among the group are Andrea Orcel, who was Merrill's top investment banker, Thomas Montag, who led global sales and trading, and Peter Kraus, who ran strategy. They all now work at Bank of America, which took over Merrill after its collapse.

Another of the top ten, former Merrill CEO John Thain, has already spoken to Cuomo's investigators.

Bank of America, whose role in the bonus fiasco is also being scrutinized by Cuomo, filed a court petition yesterday to try to keep the pay information secret. B of A CEO Ken Lewis reportedly refused to answer investigators' questions on the subject when he met with them last week.

Bank of America

Merrill's Top Ten Earners Made More Last Year Than In 07

Zachary Roth | March 4, 2009, 1:23PM

"While Merrill staggered, 11 top executives were paid more than $10 million in cash and stock last year, say people familiar with the situation," reports the Wall Street Journal.

Amazingly, the top ten earners at the company in 2008, according to the paper, made slightly more than the top ten in 2007: $209 million, up from $201 million.

Remember, as you think about that, what happened to Merrill last year. It collapsed -- so wrecked by its investment in toxic mortgage assets that it had to be taken over by Bank of America. Then, even after that deal had been announced, it absorbed such massive fourth quarter losses that B of A needed $20 billion from the Treasury to digest Merrill.

None of that, of course, stopped Merrill, under then-CEO John Thain, from dishing out billions in bonuses late last year -- a decision currently being probed by New York Attorney General Andrew Cuomo.

On that front, the WSJ reports that B of A plans to file a court motion today to try to keep the compensation data from becoming public. But Cuomo will counter with his own motion arguing it should be released.

The paper also has some good thumbnails of these high-rollers:

Thomas Montag: Started as head of global sales and trading at Merrill in August and now heads global markets at Bank of America. He was handed a $39.4 million pay package and Merrill stock awards valued at approximately $50 million. The stock awards were issued to replace stock he held in Goldman Sachs Group Inc., his previous employer.

Andrea Orcel: A top Merrill banker who now heads international corporate and investment banking for Bank of America. He got $33.8 million in 2008, down from approximately $36 million in 2007. His 2007 package included a special $12 million bonus for advising Royal Bank of Scotland Group PLC and other acquirers of ABN Amro Holdings NV, a now-troubled deal.

Peter Kraus: Hired as head of strategy at Merrill in September and was given a $29.4 million contract and Merrill stock to replace his holdings in Goldman, where he used to work. He is now the chief executive officer of investment management firm AllianceBernstein. (Ed note: We wrote about Kraus's $37 million Park Avenue apartment here.)

David Gu: Head of rates at Merrill; now heads global rates and currencies at Bank of America. He made $18.7 million in 2008, down from $19.8 million in 2007.

David Goodman: Co-head of global commodities at Merrill and Bank of America. Got a two-year employment guarantee from Merrill in 2007, paying him $16.5 million in 2007 and another $16.5 million in 2008.