Merrill Gave $1 Million Each to 700 of Its StaffMerrill Lynch & Co. "secretly" m

[dhilipkumar]

Merrill Lynch & Co. "secretly" moved up the date it awarded bonuses for 2008 and richly rewarded its executives despite billions of dollars in losses, giving bonuses of $1 million or more apiece to nearly 700 employees, New York Attorney General Andrew Cuomo said.

In a letter to House Financial Service Committee Chairman Barney Frank, (D., Mass.), Mr. Cuomo said the Wall Street firm awarded $3.6 billion in bonuses to more than 39,000 employees before its Jan. 1 purchase by Bank of America Corp., including more than $121 million to four top executives.


Mr. Cuomo, who is probing compensation practices at financial firms, said he was told by Merrill's board in November that any bonuses to be paid would be "based upon a combination of performance and retention needs."

"Rather, in a surprising fit of corporate irresponsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives," Mr. Cuomo wrote in his letter.

The move to "secretly and prematurely award" the bonuses and "Bank of America's apparent complicity ... raise serious and disturbing questions," Mr. Cuomo added.

Scott Silvestri, a Bank of America spokesman, said Merrill's management proposed the bonuses, which were approved by the compensation committee of Merrill's board.

"Bank of America did urge the bonuses be reduced, including those at the high end," Mr. Silvestri said. "Although we had a right of consultation, it was their ultimate decision to make. In addition, a substantial amount of the Merrill bonuses were contractually guaranteed."

A spokesman for John Thain, the former Merrill chief executive who was pushed out of the combined company last month, declined to comment.

Mr. Thain has previously said that the size of the bonus pool, its mix of cash and stock, and the timing of bonus payments "were all determined together with Bank of America" and approved by Merrill's compensation committee and board.

The merger agreement also specified that Merrill pay regular bonuses. Since the company was going to cease to exist at the end of 2008, that meant, by definition, that the bonuses had to be paid before year's end. Details about the discretionary bonus pool were included in a nonpublic schedule as part of the publicly filed merger agreement between Bank of America and Merrill.

The private bonus agreement showed the companies agreed that the bonus pool exceed $5.8 billion and that 60% of it should be awarded in cash and 40% should be awarded in equity or long-term cash.

In his review of the bonus payments, Mr. Cuomo said he found that 696 individuals at Merrill received more than $1 million in bonuses, with 14 individuals receiving a combined $249 million.