So now it’s John Thain’s turn to wave the knife.
The Financial Times leads its page one this morning with a report that Bank of America officials were involved with Merrill Lynch’s now-infamous bonuses before they were enacted and paid.
However, a person familiar with Mr Thain’s actions said the ousted chief had at least two conversations with BofA’s chief administrative officer, J. Steele Alphin, one of the bank’s most senior executives, before a December 8 board meeting at which Merrill’s bonus payments were approved.
This person said Mr Alphin recommended, and Mr Thain accepted, a proposal to change Merrill’s incentive compensation mix – 60 per cent cash and 40 per cent stock – to conform with BofA’s system of 70 per cent cash and 30 per cent stock. The stock portion of the payouts was made January 2, the day after the deal closed, in BofA stock.
It looks like Thain has hired some top-notch crisis-management PR folks. Not only is he firing back quickly, he’s defending (however weakly) his bonus moves by saying they were down 41 percent from the previous year, according to Dow Jones Newswires. He’s also defending the $21 billion in losses his company developed suddenly last month.
Probably more importantly, he’s decided to take a $1.2 million hit for that over-the-top Pimp My Office spree he went on as Merrill’s new CEO.
“The expenses were incurred over a year ago in a very different environment,” he said, but he called them a mistake in light of the current conditions.
Sure, Ken Lewis of B of A was trying to save his own skin by scapegoating Thain last week, but Thain made it easy for him by putting on the horns and bleating.
Time for them both to be put out to pasture.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum.