Merrill's Thain asks for no bonus for 2008
NEW YORK |
NEW YORK (Reuters) - Merrill Lynch said on Monday that Chief Executive John Thain, who agreed to sell the brokerage to Bank of America earlier this year, has requested that he not receive a bonus for 2008.
Thain told a board meeting Monday the decision was appropriate "given current economic and market conditions."
The decision by Thain and other senior executives to request that a bonus not be given comes at a time when taxpayer sentiment has turned against Wall Street and its highly paid bankers, as financial companies have received billions of dollars in government money this year.
The other Merrill executives to skip bonuses are President and Chief Operating Officer Greg Fleming, Chief Financial Officer Nelson Chai, President of Global Wealth Management Robert McCann and General Counsel Rosemary Berkery, the company said in a statement.
Morgan Stanley Chief Executive John Mack told employees on Monday he would not get a bonus for a second straight year and said the bank is changing compensation to tie it more closely to Morgan Stanley's long-term performance.
Although Merrill has not directly received any government funds, Bank of America has received $15 billion (10 billion pounds) through the U.S. government's Troubled Asset Relief Plan.
Earlier on Monday, The Wall Street Journal reported that Thain had been seeking a bonus of $5 million to $10 million, citing people familiar with the situation.
A Merrill representative was not immediately available for comment.
The WSJ said Thain felt he deserved a bonus because he helped avert a much larger crisis at the firm by engineering its sale to Bank of America. But the compensation committee leaned toward denying Thain and other senior executives bonuses for this year, the newspaper was told.
Reports that Thain was seeking a bonus drew criticism from New York's Attorney General, Andrew Cuomo, and Senate Majority Leader, Harry Reid, who have spoken out previously against bonuses for executives at firms such as American International Group (AIG.N) that are receiving government funds. AIG's chairman and chief executive last month agreed to a $1 annual salary amid intense government pressure.
The reports "are nothing less than shocking," said Cuomo, in a letter to Merrill's compensation committee on Monday.
"The performance of Merrill's top executives throughout Merrill's abysmal year in no way justifies significant bonuses for its top executives," added Cuomo in the letter.
Reid added to calls for Merrill's board to reject the request.
"I sincerely hope that Merrill Lynch rejects this request," he said on Monday.
Compensation committee members were weighing the fact that other Wall Street firms, including Goldman Sachs Group Inc (GS.N), which did better than Merrill this year, are not giving out bonuses to top executives, the Wall Street Journal said, citing people familiar with the situation.
Goldman Sachs and Morgan Stanley (MS.N) each received $10 billion in TARP funds, while Merrill said in a filing in October it decided not to sell securities to the U.S. government as part of TARP, although it may do so at a later date.
Thain received a $15 million cash bonus after taking the reins of Merrill last December.
After the Bank of America-Merrill deal is completed -- it was approved by shareholders on Friday -- he will run the merged company's global banking, securities and wealth management businesses. Thain will not be joining Bank of America's board.
Merrill shares have fallen 72 percent this year, and since the deal with Bank of America was announced on September 15, they have dropped 31 percent. Shares of Merrill were up nearly 17 percent on Monday, at $15.25.
(Reporting by Elinor Comlay and Phil Wahba; Editing by Christian Wiessner)
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