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John Thain Wants His Golden Parachute

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Top Merrill exec says he's earned his keep.

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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.

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No positions in stocks mentioned.
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