[Reader-list] Merrill Lynch top brass to share $200 million for less than a year's worth of work

[Vivek Narayanan]

Amazing, isn't it?

This might also be a good time to revive the classic song by The Coup, 
"Five Million Ways to Kill a CEO":
http://www.youtube.com/watch?v=RQthFDpYCys
Lyrics here: 
http://www.ohhla.com/anonymous/coup_the/p_music/5million.cou.txt ("We 
could let him change that tire / or we could all at once retire.")


Banking crisis: Merrill Lynch top brass set to share $200m
Even by Wall Street standards, the sums are unusually high for such a 
short period of employment

* Andrew Clark in New York
* guardian.co.uk,
* Wednesday September 17 2008 18:27 BST


Merrill Lynch's newly recruited chief executive, John Thain, stands to 
share a $200m (£111.4m) payout with two senior lieutenants for less than 
a year's work which culminated this week in the bank surrendering its 
94-year-old independence.

The Wall Street bank known as the "thundering herd" agreed to a $50bn 
takeover by Bank of America on Monday after a hasty 48 hours of 
negotiation. The talks were prompted by fears over banking stability 
arising from the collapse of Lehman Brothers.

Thain, who was previously the head of the New York Stock Exchange, 
joined Merrill in December with a mandate to steer the bank out of 
financial trouble. When he arrived, he was given a $15m signing on 
bonus. If he leaves in Bank of America's takeover, he stands to get a 
further $11m in accelerated stock payouts.

Two former Goldman Sachs executives hired by Thain are likely to do even 
better. Merrill's head of global trading, Thomas Montag, who joined in 
August, has already received a $39m bonus. Together with stock options 
accelerated by a buyout, he could end the year with $76m. The bank's 
head of strategy, Peter Kraus, was given a $95m package including 
bonuses and stock awards to replace his generous compensation at Goldman 
when he joined in May, according to figures obtained by Bloomberg News.

It is yet to be determined whether any of the trio will have a role at 
Bank of America. Even by the standards of Wall Street payouts, the sums 
are unusually high for such a short period of employment.

Steven Hall, a New York-based executive remuneration expert, told the 
Guardian that Merrill had little choice but to honour the contracts: "At 
the time they were recruiting [Thain], a negotiation took place and he 
would have told them this is what his price was. You can't go back and 
change things now — it's almost a kind of buyer's remorse we may be seeing."

Thain, 53, is a leading fundraiser for the Republican presidential 
candidate John McCain. A doctor's son, he is an amateur beekeeper who 
used to keep hives in his back garden. He bought a two-bedroom apartment 
on New York's Park Avenue two years ago which had an asking price of 
$27.5m. He was hired by Merrill to steady the ship after huge losses on 
the credit markets which were run up under the leadership of ousted 
chief executive Stan O'Neal.

At a press conference this week to announce the buyout by Bank of 
America, Thain admitted that selling Merrill was not the original plan: 
"This isn't necessarily the outcome I would have expected when I took 
the job."

He insisted that he had made progress in tidying up Merrill: "We've been 
consistently cleaning up the balance sheet, repairing the damage that 
had been done over the last two or three years."

Thain reportedly fought back tears at a meeting to brief staff on 
Merrill's buyout this week. Analysts say that Merrill's liabilities were 
greater than he could have anticipated when he joined — and some have 
praised his decision to sell.

Defenders of Wall Street's controversial pay packages generally argue 
that although bankers do well during good times, they hold insecure jobs 
which are vulnerable during downturns.

"What we do see is that when times get tough, people lose their jobs — 
and that's the ultimate in pay cuts," said Hall.

A Merrill Lynch spokesman said the bank would not comment on executive 
compensation beyond the statutory disclosures required in filings with 
regulators.


* guardian.co.uk © Guardian News and Media Limited 2008