(AFP) – Dec 8, 2008
WASHINGTON (AFP) — The chairman and chief executive of troubled Wall Street bank Merrill Lynch, which has taken 10 billion dollars in federal aid, is seeking a 10-million-dollar bonus this year, a US newspaper reported Monday.
John Thain, who took the reins of Merrill Lynch a year ago, has suggested to its directors that he be payed the multimillion-dollar 2008 bonus but the company's compensation committee is resisting, according to The Wall Street Journal.
Citing unnamed sources familiar with the situation, the newspaper said the committee and full board were to meet Monday to hear Thain's bonus requests for himself and other top executives of the firm that suffered billions of dollars in losses this year and narrowly avoided collapse by selling itself to Bank of America.
The differences over Thain's bonus highlights the swirling broader debate on Wall Street over bonus payouts and giant salaries for executives amid a global financial crisis and a credit crunch that has been blamed in part on Wall Street firms.
Senate Majority Leader Harry Reid condemned Thain's bonus request, noting the company had received 10 billion taxpayer dollars from the Treasury's emergency Troubled Asset Relief Program (TARP) on October 14.
The 700-billion-dollar TARP, launched to shore up the collapsing financial sector amid a global credit crisis, was designed explicitly to limit executive compensation, bonuses and golden parachutes, the Democratic Senate leader said. "While American families struggle to keep their jobs and their homes, I question the chutzpah of asking for a 10-million-dollar taxpayer-subsidized bonus," Reid said.
"Americans deciding which bills to pay this month just to make ends meet do not want their hard-earned money even indirectly spent rewarding executives from banks that are largely responsible for the economic crisis. I sincerely hope that Merrill Lynch rejects this request."
Merrill Lynch was forced to sell itself after making huge losses following the meltdown in the subprime, or higher risk, US mortgage market.
The acquisition of Merrill by Bank of America for 50 billion dollars averted a possible collapse of the 94-year-old company, saving shareholders billions of dollars and saving many jobs, according to the Journal.
The newspaper reported a proposal had been sent to Merrill's compensation committee a few months ago for Thain to be paid more than 30 million dollars for the year including bonuses, but that figure has since been pared down.
On Friday, during a vote to approve Bank of America's takeover of Merrill Lynch, Merrill shareholders criticized the company's board.
"This is the story of failed leadership and the failure of a board of directors to understand what was happening to this great company, and its failure to take action soon enough," Winthrop Smith Jr, the son of one of the company's founding partners, was quoted as saying.
Merrill stock has plummeted since trading above 50 dollars when Thain took over in late 2007. Merrill was up 12.50 percent at 14.67 in afternoon trade.
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