Reality bites: No bonuses for Merrill, Morgan execs

The top executives at Merrill Lynch & Co. Inc. and Morgan Stanley announced yesterday that they would not take bonuses for 2008, following an abysmal year of losses.
Merrill chairman and chief executive John Thain declined a bonus after a Wall Street Journal report yesterday that stated that he would ask for up to $10 million in compensation — a report that was swiftly denounced by New York State Attorney General Andrew Cuomo, who called such a request “nothing less than shocking” InvestmentNewsDec. 8.
Mr. Thain was joined by president and chief operating officer Greg Fleming; Nelson Chai, the company’s chief financial officer; Robert McCann, the president of Global Wealth Management; and General Counsel Rosemary Berkery in asking that they receive no pay beyond their base salaries.
The occupants of the company’s executive suite said they “believe this is the appropriate recommendation to the board for the Merrill Lynch shareholders and Merrill Lynch employees, given current economic and market conditions,” according to a statement from the New York-based company.
“The board accepted Mr. Thain and his management team’s request and applauded the Thain-led management team’s superb performance in an exceptionally challenging environment,” John D. Finnegan, chairman of the Merrill Lynch board’s management, compensation and development cmmittee said in the statement.
Merrill is in the midst of being acquired by Bank of America of Charlotte, N.C.
Morgan Stanley of New York chief executive John Mack and co-presidents James Gorman and Walid Chammah have also asked not to receive bonuses for this year, after the company reported a 41% decline in profit during the first nine months of the year.
Additionally, Mr. Mack announced that the company will change its compensation structure to tie it more closely to long-term performance.
“Our entire bonus pool will be down dramatically this year, reflecting the difficult market conditions, stock price performance and our full-year revenues in this challenging environment,” Mr. Mack said in a memo to employees.
In November, Lloyd Blankfein, chief executive of New York-based The Goldman Sachs Group Inc., and six of its top executives wrote a letter to the company’s board asking not to receive bonuses this year.
In Europe, executives at Barclays PLC of London and UBS AG of Zurich, Switzerland, made similar announcements last month.