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Why Merrill CEO Wants $10 Million Bonus
December 08, 2008 12:59 PM
ABC News’ Daniel Arnall reports: With the financial sector in its steepest dive since the Great Depression, reports that Merrill Lynch CEO John Thain is asking for a $10 million bonus this year is raising the ire of many people.
But 53-year-old Thain, once the CEO of the New York Stock Exchange and COO/CFO/president of Goldman Sachs, is likely making a compelling case to the company’s compensation committee.
What could he possibly be saying to justify the eight-figure bonus in a year when the Merrill shareholders have lost 35 percent of their investment and have seen the firm report a loss of $5.1 billion in the latest quarter?
- I’ve been very good at cleaning up a mess that was here when I started.
Thain took the reins of the firm in November 2007 after the global financial crisis had already started to take hold. During Thain's tenure, Merrill Lynch has been dealing with the investment in bad loans fairly successfully. At the last quarterly report, the firm said it had jettisoned 98 percent of its Alt-A mortgage exposure and other risky investments by 15 percent.
“We continue to reduce exposures and de-leverage the balance sheet prior to the closing of the Bank of America deal,” Thain said in the company’s latest earnings release.
- I’ve raised money in one of the worst markets in history.
Despite the stock market terror that has hit since October 2007, Thain has persuaded investors to plow an additional $10 billion in cash into the company through a stock offering and got an additional $4.5 billion by selling the company’s stake in financial info giant Bloomberg. That extra money gave it the “runway” it needed to come to a resolution other than bankruptcy or collapse.
- I sold the company instead of letting it collapse like Lehman Bros or Bear Stearns.
We’ve certainly seen what has happened to other big investment banks. In March, Merrill competitor Bear Stearns was victim to a government-engineered fire sale to competitor JPMorgan. In September, Lehman Bros. was allowed to fail, leaving investors and bond holders with nothing.
Thain did not allow Merrill to share their fate, instead pulling together a $50 billion merger with Bank of America. It has been a success story at a time when most of the news from the financial service sector has been unbelievably bad.
“As the landscape for financial services firms continues to change and our transition teams make good progress, we believe even more that the transaction will create an unparalleled global company with pre-eminent scale, earnings power and breadth,” said Thain.
While the board of directors is likely going to turn Thain down -- I imagine there would be a pitchfork-and-torches crowd in front of their New York headquarters if it didn’t -- Thain likely won’t have anything to worry about in the long term. He has been offered the top job at Bank of America’s new global banking, securities and wealth management division. I’m sure the salary and other compensation is pretty rich.
December 8, 2008 | Permalink | User Comments (124)
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Not to mention that he didn't use any of his sick days!!
Posted by: Terri | Dec 8, 2008 1:19:55 PM
I am all for bonuses, but I can't think of anything that is worth 10 million...
Posted by: mel | Dec 8, 2008 1:21:09 PM
Sounds like the man did his job but still, asking for a bouns now is like the big three auto makers comeing to Washington asking for help in their private jets. Just stupid. At least the taxpayers did not have to bail these guys out. Thank you very much.
Posted by: Jenny Rome Ga | Dec 8, 2008 1:22:35 PM
Republican John Thain needs to be shipped to rural America for a while to see how real people live and a dose of reality.
Probably could also use something for his delusions of grandeur.
Posted by: John | Dec 8, 2008 1:26:12 PM
Tell you what John, we'll let you keep your job and pay you a salary 30 times your lowest paid employee. You might as well forget the bonus since no one else is getting one.
Posted by: Investor | Dec 8, 2008 1:26:30 PM
It shows poor character when one asks for a yearly bonus. Quite greedy. I'd deny him just for asking, even if I was going to give him one anyway. Or, spend the couple hundred dollars to give him 10 million in Monoply money. He didn't specify which currency.
Posted by: Lawrence | Dec 8, 2008 1:27:11 PM
Do not give the free blank check to become bonus from the taxpayer's money. The bailout aren't for bonus.
Posted by: rrr | Dec 8, 2008 1:29:12 PM
$ 10 Million ?????
Just for doing your job?
What planet are you on ?
You should be ASHAMED !!
Wake up !!
Posted by: Alfred E Poggi | Dec 8, 2008 1:29:19 PM
He needs to quietly move on to his new job and thank God he has one. Half a million folks lost theirs last month. Who does he think he is?!
Posted by: hang | Dec 8, 2008 1:29:56 PM
SOUNDS LIKE HE WAS DOING THE JOB HE WAS HIRED TO DO IN THE FIRST PLACE LIKE EVERY OTHER GOOD EMPLOYEE. SINCE WHEN DO WE GET EXTRA BONUSES FOR EARNING OUR SALARY? WHICH BRINGS TO MIND, HOW MUCH WAS HIS ANNUAL SALARY? I WOULD BET IT WAS BETTER THAN MOST TO ASK FOR A $10MIL BONUS!!!
Posted by: MIKE | Dec 8, 2008 1:31:49 PM
Since when do employees ask their boss for a bonus? Isn't it the company that decides if you deserve one?
Posted by: Lee | Dec 8, 2008 1:32:32 PM
I dunno, do you suppose he is SMOKING CRACK?
Posted by: It's Your Call | Dec 8, 2008 1:32:36 PM
This guy is an idiot! This guy should be fired! Its obvious what kind of thief this is! This narcissitic self centered egomaniac should give up some of the money he stole!!! Some people think that they can do no wrong!!!
Posted by: brannigon1 | Dec 8, 2008 1:33:16 PM
Why should anyone need to be paid extra for doing their job? I am always perplexed when I hear that a baseball player gets a bonus for making the all-Star team. But isn't their regular (high) salary signed with the expectations that they will be one ofthe better ballplayers?
Posted by: Not an Idiot | Dec 8, 2008 1:33:16 PM
Why should anyone need to be paid extra for doing their job? I am always perplexed when I hear that a baseball player gets a bonus for making the all-Star team. But isn't their regular (high) salary signed with the expectations that they will be one ofthe better ballplayers?
Posted by: Not an Idiot | Dec 8, 2008 1:33:22 PM
I will be closing that account and probably my B of A as well, idiot.
Posted by: ashleyskee | Dec 8, 2008 1:35:14 PM
This story made me laugh. I don't know of anyone who is worth a $10 million dollar bonus. Maybe all these CEO's, COO's, need a good dose of reality and be made to live like the average Joe for awhile so that they will be thankful for what they have and that they don't have to count pennies to be able to put food on their tables, or decide if they pay their bills or buy their medicines this month. With more people without jobs or just getting by this is a slap in the face. People like him make me sick quit tooting your own horn and stick it up you A$$.
Posted by: JH | Dec 8, 2008 1:39:35 PM
It's a shame that the people who have really important jobs like teachers, policemen & firemen can't even get fair pay & this guy is asking for a $10 million dollar bonus on top of what I'm sure is a high six figure salary at the very least. The careers I mentioned above affect all of us. What Thain does affects only a handful of people. Merrill Lynch probably laid people off & this guy's whining about a multi-million bonus for simply doing what he was hired to do. This is what's wrong with our country, GREED!!!!
Posted by: Dee Tee Gee | Dec 8, 2008 1:40:16 PM
He needs to grow up, he's lucky to have a job that's your bonus.
Posted by: Hege! | Dec 8, 2008 1:40:58 PM
So much for hard-hitting, objective journalism. ABC News' Daniel Arnall does his best to act as a cheerleader for this outrageous push by Merrill Lynch CEO John Thain.
As the post below from N.Y. mag's "Daily Intel" explains, Thain has seemed more interested in spin when it comes to discussing Merrill Lynch's financial position with real candor. [http://nymag.com/daily/intel/2008/07/merrill_lynch_ceo_has_billions.html]
Why did Arnall leave out of this blog post any reference to Thain's compensation in 2007? He was the highest-paid CEO -- $83 million. In fact, as MarketWatch reports, Thain was paid 50% more than the 4th-highest paid CEO in the world. Thain earned DOUBLE what Morgan Stanley's CEO earned in 2007.
The man is not only filthy rich, but he is filthy rich to an extent that is way, way out of proportion for the financial-investment sector in which he works.
At a time when most Americans are taking it on the chin for a financial-economic crisis they didn't create, it's outrageous that Merrill Lynch would even entertain the idea of paying a $10 million bonus to Thain.
Posted by: Matt J. | Dec 8, 2008 1:41:17 PM
Sure - give him a bonus - and while you are at it - can someone please pay to send my kids to college - yeah - I lost most of their money - it was invested with Merrill Lynch. SO sick of the total lack of character these CEO's have. Seriously - do they sleep well - I imagine the must - on their 10,000 count cotton sheets.
Posted by: maria | Dec 8, 2008 1:42:35 PM
Fire Him! And Forget ANY Bonus!
Posted by: Ken Topham | Dec 8, 2008 1:44:50 PM
He can have his BBBBONUS if he can find a million people to give him a buck!
Posted by: Susan | Dec 8, 2008 1:46:15 PM
I second the motion. No bonus but big fat reality check for this guy. Ship out to middle America where he needs to hold down two jobs to make ends meet. Regardless of the "good" job he did, he should be embarassed and ashame to be asking to $10 million when so many people are out of work. Or, maybe he has plans to give most of it away to those in need and just not telling anyone until Christmas morning.
Posted by: JBS | Dec 8, 2008 1:48:14 PM
Give him a kick in the butt.. 10M for what.. for doing his job. All the free drinks, company resorts, overnight free-bees private jet etc etc.. he wants more on top of that.. give him a kick in the butt and other between his legs..
Joe Kansas
Posted by: Joe Galvez | Dec 8, 2008 1:52:31 PM
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