Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

John Thain Wants His Golden Parachute


Top Merrill exec says he's earned his keep.

John Thain, Merrill Lynch's (MER) CEO, reportedly says he should get as much as a $10 million bonus this year.

But members for the company's compensation board are resisting, The Wall Street Journal reports.

The 94-year-old Wall Street firm has lost about $11.7 billion this year and will soon be taken over by Bank of America (BAC).

Thain says he saved Merrill Lynch from bankruptcy and possible oblivion, and negotiated a much better price for the brokerage house than the price JPMorgan Chase (JPM) paid for Bear Stearns.

Thain called Ken Lewis, Bank of America's CEO, after Lehman Brothers filed for bankruptcy protection in an effort to avoid a similar fate for Merrill. Thain won't be a member of Bank of America's board of directors when the deal closes.

Bonuses might be a public relations disaster for Merrill Lynch because the public scorns them during the economic downturn. However, Merrill Lynch says it won't take federal money recently made available to Wall Street.

Bank of America has no comment on the proposed bonus for Thain and other top executives because Merrill Lynch is still an independent company.

Goldman Sachs (GS), another top Wall Street firm, isn't giving bonuses to its top executives - and its performance this year is far better than Merrill's.

Many top Wall Street traders and investment bankers work for a base salary of about $250,000, with the rest of their pay determined by a performance-based bonus. In the boom years, Wall Street bonuses were a bonanza for the tax man, and drove high-end real estate prices in the metropolitan area even higher.

Thain received a base salary of about $750,000. Initially, some in the company proposed rewarding him with a bonus of about $30 million. That's since been cut, and Thain recently suggested a bonus of $10 million better fits current conditions.

Thain is an extremely talented manager. He served as president of Goldman Sachs and was a partner when the company successfully launched an IPO in 1999. In 2004, he left Goldman Sachs to become head of the New York Stock Exchange (NYX).

Thain won't starve, and he'll find another job if Bank of America wants its own person to run Merrill Lynch.

But faux populism shouldn't punish Thain for his success. He almost certainly saved stockholders billions in value by holding the company together and lining up its sale to Bank of America - though it's a good bet that thousands will be fired following Bank of America's takeover.

For more on money for nothing, check out Hoofy and Boo's always astute report.

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos