Merrill Lynch's CEO Thain seeking 2008 bonus

[The Grim Squeaker]

(Reuters) - Merrill Lynch & Co Chief Executive John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company's compensation committee is resisting his request, the Wall Street Journal said, citing people familiar with the situation.

The compensation committee has not reached a decision, but is leaning toward denying Thain and other senior executives bonuses for this year, the people told the paper.

Merrill could not be immediately reached for comment.

Shareholders on Friday approved Bank of America Corp's takeover of Merrill, a deal fraught with risk but one that would create a banking giant with a leading position in almost every major area of the financial system.

Merrill was arguably saved from extinction when it agreed to merge on September 15, an hour before Lehman Brothers Holdings Inc filed for bankruptcy. The fear was that Merrill could be next if shareholders and trading partners fled, as many did at Lehman and the former Bear Stearns Cos.

Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, people familiar with his thinking told the WSJ.

Members of Merrill's compensation committee agree with Thain that the takeover is in shareholders' best interest, but believe it would be foolish to ignore strong public sentiment against large compensation packages, the paper said, citing people familiar with their thinking.

Committee members are also weighing the fact that other Wall Street firms, including Goldman Sachs Group Inc, which did better than Merrill this year, are not giving out bonuses to top executives, the paper said.

Thain, who became Merrill's chief executive after losses in mortgage-related investments led to the October 2007 ouster of Stanley O'Neal, has also run NYSE Euronext, after a long career at Goldman.

After the Bank of America-Merrill deal is completed, he will run the merged company's global banking, securities and wealth management businesses. Thain will not be joining Bank of America's board.

(Reporting by Pratish Narayanan in Bangalore; Editing by Kazunori Takada)

Posted without further comment. Thoughts?

[PeZook]

Well, my thought is that nobody deserves effin' 10 million bucks as a goddamned Christmas bonus.

Then again, his argument is a viable one. If the crisis was not his fault, and really did help avert a bigger one, and it's in line with company policies...then he has a point.

[Kodiak]

Well, my thought is that nobody deserves effin' 10 million bucks as a goddamned Christmas bonus.

Then again, his argument is a viable one. If the crisis was not his fault, and really did help avert a bigger one, and it's in line with company policies...then he has a point.

It seems that if they reach some sort of "middle-ground" so that the company can say "We aren't giving huge bonuses! We cut his in HALF" then this guy can still be rewarded for mollifying the financial burden on his company.

[Darth Wong]

Do CEOs also pay millions of dollars their own money back to the company if they fuck up? Of course not. They get unlimited compensation for anything they do right, even if it's only a mitigating decision in the face of a disaster they helped create, but they have no liability for their mistakes.

[Ypoknons]

A little too arrogant there, Thain. Maybe in some other environment an act like negotiating the sale of your firm to save it would get you a big payout, but right now in a financial crisis it is hardly prudent, especially since Blankfein and others at Goldman have already foregone their bonuses.

[Admiral Valdemar]

In Germany, the average salary of executives has gone up over 400% or so since the '60s. Is anyone here of the mind that their output in productivity has gone up by anywhere near that level?

Didn't think so.

[Ender]

"I screwed you, but not as badly as I could have! Pay up!"

Fuck this guy.

[Grandmaster Jogurt]

In Germany, the average salary of executives has gone up over 400% or so since the '60s.

Out of curiosity, is that before or after taking into account inflation?

[Admiral Valdemar]

Out of curiosity, is that before or after taking into account inflation?

I'm going to bet on the latter, else it makes no sense. I can't even remember the source, think it was Der Spiegel.

[The Kernel]

Let's face it, it's pretty easy to see why CEO's get such incredibly high levels of compensation. Their job performance is tied to the stock price and even a small success can mean billions of dollars of increases in shareholder valuation in a company as big as Merryl is/was. Compared to that, a few million dollars is a drop in the bucket.

That being said, it's a pretty piss poor time to be handing out these kind of bonuses. Also, I don't buy Thain's argument that he saved the company as it was the toxic loans that got Merryl into this in the first place. The fact that the whole industry ate these things up is not an excuse.

[Darth Wong]

Some people are so insulated from reality that they honestly think something like this is perfectly reasonable, and cannot fathom why anyone would think otherwise.

Every era has its Marie Antoinette. This is why the French invented the guillotine.

[Ender]

Ok, serious post time. You guys do know that there is a difference between Stanley O'Neal and John Thain, right? O'Neal is the one who did all the shady shitty deals and ran the company into the ground. Thain was hired after the damage was done and started selling subsidiaries and de-leveraging the company to the point where they could actually be sold to Bank of America. Unlike Dick Fuld (the best comparison because the situation was identical except for CEO performance) this guy saved his company without a thin shiny dime from the government, preserving a major portion of investor's money (including god only knows how many 401ks).

Is this worth 10 mil? Probably not. Doesn't stop him from deserving something though - he is pretty much the gold standard among the current crop of CEOs.

[Samuel]

Some people are so insulated from reality that they honestly think something like this is perfectly reasonable, and cannot fathom why anyone would think otherwise.

Every era has its Marie Antoinette. This is why the French invented the guillotine.

Actually, that is why they invented revolutionary justice. The guillotine just made the process more humane and efficient, as was its designers goal. To be fair, his idea that it was better compared to hanging is probably accurate.

Ok, serious post time. You guys do know that there is a difference between Stanley O'Neal and John Thain, right? O'Neal is the one who did all the shady shitty deals and ran the company into the ground. Thain was hired after the damage was done and started selling subsidiaries and de-leveraging the company to the point where they could actually be sold to Bank of America. Unlike Dick Fuld (the best comparison because the situation was identical except for CEO performance) this guy saved his company without a thin shiny dime from the government, preserving a major portion of investor's money (including god only knows how many 401ks).

Impressive. He does deserve the money than? However, to do so now generally gets people pissed due to the unfairness in the situation. There have been previous cases where asking for large bonuses and had them canceled due to the public outcry. He should have tried a bit more tact and waited until after the crisis was over.

[Darth Wong]

Ok, serious post time. You guys do know that there is a difference between Stanley O'Neal and John Thain, right? O'Neal is the one who did all the shady shitty deals and ran the company into the ground. Thain was hired after the damage was done and started selling subsidiaries and de-leveraging the company to the point where they could actually be sold to Bank of America. Unlike Dick Fuld (the best comparison because the situation was identical except for CEO performance) this guy saved his company without a thin shiny dime from the government, preserving a major portion of investor's money (including god only knows how many 401ks).

Is this worth 10 mil? Probably not. Doesn't stop him from deserving something though - he is pretty much the gold standard among the current crop of CEOs.

So he deserves a huge bonus for doing what he was hired to do? I wish I could get a job like that, where performance of my job function gives me a Christmas bonus many times my entire annual salary.

[Ender]

So he deserves a huge bonus for doing what he was hired to do? I wish I could get a job like that, where performance of my job function gives me a Christmas bonus many times my entire annual salary.

Does he deserve a bonus? Undoubtedly. Does he deserve one that big? As I said, probably not. I don't know how to evaluate the total worth of what he did, beyond pointing to the fact that he did far better than his peers. I can't say what he does deserve, from what I can find online his salary for the position was $4 million, which is below industry average. So there is a base point if anyone knows a good way to judge what is appropriate.

[Darth Wong]

This is what bugs me about CEO bonuses; they are typically gigantic; five, ten, or even a hundred times their annual salary. Can you imagine if an ordinary employee who saved the company's bacon (which happens more often than people realize) was awarded a Christmas bonus of ten times his annual salary? Of course not; companies don't do such things. That's one of those perks (like golden parachutes) which is reserved exclusively for CEOs.

If the CEO does a good job, he gets a bonus of ten times his annual salary or more. If some guy in the Assembly department notices a design omission and prevents a catastrophic failure, he gets a pat on the back.

[Dominus Atheos]

If the CEO does a good job, he gets a bonus of ten times his annual salary or more. If some guy in the Assembly department notices a design omission and prevents a catastrophic failure, he gets a pat on the back.

It's not even "do a good job", it's every year the company doesn't go under. Even if they do a terrible job, so long as the company is still around at the end of the year, the CEO gets a bonus of several times his supposed salary.

[Big Orange]

It is even worse when a CEO gets obscene amounts of money when he is fucking everything up. Are these heavily insulated and decadent fools intentionally provoking mutiny?!

[General Zod]

It is even worse when a CEO gets obscene amounts of money when he is fucking everything up. Are these heavily insulated and decadent fools intentionally provoking mutiny?!

Mutiny from who? It's not like they'd really care anyway, they still get their golden parachutes.

[Stark]

This is what bugs me about CEO bonuses; they are typically gigantic; five, ten, or even a hundred times their annual salary. Can you imagine if an ordinary employee who saved the company's bacon (which happens more often than people realize) was awarded a Christmas bonus of ten times his annual salary? Of course not; companies don't do such things. That's one of those perks (like golden parachutes) which is reserved exclusively for CEOs.

If the CEO does a good job, he gets a bonus of ten times his annual salary or more. If some guy in the Assembly department notices a design omission and prevents a catastrophic failure, he gets a pat on the back.

Turns out when the power to allocate bonuses is in the hands of a small group, they get gigantic bonuses. Who could have guessed?

As you say, if an IT goon prevents a nationwide problem developing that could cripple operations and have every department bleeding money and damage the corp's credibility, that's just doing your job and it's even seen as appallingly unprofessional to seek a bonus. If a CEO warms a seat, well, that's different, even in an economic disaster zone and when you're ASKING. Different because it's way, way more visible to the back-slapping people who make bonus decisions, that is.

[Thanas]

In Germany, the average salary of executives has gone up over 400% or so since the '60s. Is anyone here of the mind that their output in productivity has gone up by anywhere near that level?

Didn't think so.

To be honest, that increase came only after the 90s merger craze, when a lot of german companies either bought american ones or were bought by them. Then, they decided that they deserved the same pay as their american counterparts.

This is a nice summary of the money. Note that the fourth and the fifth slot are the mean executive pay for 2004 and 2003 respectively.

This is the one for 2008, note that while some jumped enormously, others took over 35% paycuts compared to the previous year.

This article claims that the median income of a german manager is 351.000 EUR, with 421.000 EUR being the mean bonus pay. However, this figure is somewhat distorted, since DAX companies pay about twice the bonuses compared to non-dax companies.

Are any figures available for the USA so that we can compare the two?

[Kodiak]

If the CEO does a good job, he gets a bonus of ten times his annual salary or more. If some guy in the Assembly department notices a design omission and prevents a catastrophic failure, he gets a pat on the back.

This is what gets me about tech work. I do a LOT of cost reduction on designs here at work, and since I've started here 18 months ago I've cut part costs by over $250k. That's not $250.00, that's TWO HUNDRED AND FIFTY THOUSAND DOLLARS! A lot of these were done by going through pages and pages of part drawings and searching databases on my lunch hour and extra time put in. I don't even get so much as a "good job" or a "we appreciate it", let alone a minuscule bonus of .5% ($1250) which would be like a bonus 2-weeks pay. While our stock price has plummeted in the last 18 months from ~$35 to $11 per share, and our CEO manages to clear is 8 figure salary/bonuses/options package for the year

Should people get bonuses for hard work? Absolutely. Should they be commensurate with actual work done, benefit TO the company, and sensitive to the current economic situation. No doubt.

[Alyeska]

Wow, my CEO appreciated our efforts to further the company this year. We got a $25 gift card. Its the maximum they could give us tax free...

[Big Orange]

Mutiny from who? It's not like they'd really care anyway, they still get their golden parachutes.

For a start their employees who lost their jobs and pensions mostly because of these brainless pigs? Greedy leaders who no longer have much pragmatic use and just keep on fucking are just asking to be violently turned on by their followers. In Iceland, its normally placcid people are as mad as hell and can't take it anymore.

[Murazor]

For a start their employees who lost their jobs and pensions mostly because of these brainless pigs? Greedy leaders who no longer have much pragmatic use and just keep on fucking are just asking to be violently turned on by their followers. In Iceland, its normally placcid people are as mad as hell and can't take it anymore.

While the protests in Iceland are undeniable reality, I find myself considering how valid can be the analysis done in a webpage that mentions a Russian source that predicts the impending break-up of the USA in six or more states. With Russia possibly retaking Alaska.

I'm all for justified doom and gloom, but I think that we should try to use reliable sources.