Wow. Bank of America is going to give the top Merrill Lynch brokers bonuses equal to 100% of the fees they generate, according to Bloomberg.
Of course, they aren’t actually getting the whole thing at once. The bonuses will be paid out over seven years. That means the brokers will lose the time value of that money. And they’ll be wearing golden handcuffs, chained to the firm they can’t leave without losing their bonus.
Still, it’s great news for the brokers. Here’s Bloomberg:
Bank of America Corp. is offering Merrill Lynch & Co. brokers in the U.S. bonuses of as much as 100 per cent of the annual revenue they bring in, to keep them from defecting after the firms merge, people briefed on the plan said.
Brokers who generate at least $1 million of fees and commissions are eligible to receive the full amount over seven years, according to the people, who declined to be identified because the incentives haven’t been disclosed. The Charlotte, North Carolina-based bank is offering smaller bonuses to Merrill brokers who produce at least $500,000 and rolling out a separate retention program for its own brokerage force.
Bank of America Chief Executive Officer Kenneth Lewis is trying to prevent attrition in Merrill’s brokerage ranks after agreeing last month to buy the New York-based securities firm in an all-stock deal valued then at $50 billion. The 16,850-broker unit has outperformed Merrill’s investment-banking and money- losing trading businesses this year and Lewis, 61, has called the brokerage the “crown jewel” of Merrill’s franchise.
Retention awards will help ensure “that the full long-term value of this combination is realised,” Robert McCann, chief of Merrill’s brokerage division, said in a statement. “It is important for clients, shareholders and the future of the combined company to retain top-performing advisers.”
McCann, 50, was named earlier this week to head the combined firms’ brokerage units following the takeover.
“Merrill brokers are getting pummelled with recruiting calls, even more than usual,” said Biff Robillard, who left Merrill in May after 24 years to start his own investment advisory firm, Bannerstone Capital Management LLC in Deephaven, Minnesota. “Merrill has to say, ‘Here’s a retention package to compete against the opportunity to go across the street or go independent.”’