John Thain’s original bonus request was four times as large as the $10 million request reported by the Wall Street Journal’s Susanne Craig, a reliable source tells us. Later, when it became clear that the board would never accept the astronomically high $40 million request, he revised it down.
The board of Merrill Lynch is concerned that granting any bonus to Thain and other senior executives would cause a public outcry and possibly political backlash. Public surveys reveal strong opposition against executive bonuses at firms that have taken money from government bailout funds. Lawmakers have threatened investigations into bailed out financial companies that grant bonuses. New York Attorney General Andrew Cuomo has said that Thain’s request for $10 billion is “nothing less than shocking.”
Thain’s argument for a bonus is that he has done quite well given the upside down balance sheet he inherited when he took over Merrill. Indeed, Thain was instrumental in arranging the sale to Bank of America, holding off a fate that may have mirrored Lehman Brothers. Thain also convinced outside investors to invest tens of billions into Merrill, arguably staving off a collapse even earlier.
Earlier: Thain Asking For $10 Billion