BofA hands out retention cash to Merrill reps

Bank of America Corp. of Charlotte, N.C., yesterday made good on the retention bonuses it promised Merrill Lynch brokers, sources said.
Many observers were wondering whether the retention deal, estimated to be worth $3 billion to $4 billion, would be scrapped, what with Merrill Lynch & Co. Inc. of New York reporting $15 billion in unexpected losses in the fourth quarter, forcing Bank of America to go to the U.S. government for an additional $20 billion in aid to help finance the Merrill purchase.
The cash came in as John Thain, the former Merrill chief executive who was running Bank of America’s retail-brokerage and investment-banking divisions, was fired yesterday by Bank of America chief executive Ken Lewis, who was reportedly upset at being surprised by Merrill’s most recent losses.
One Merrill broker, who asked not to be identified, said he was relieved to receive the cash.
“It’s a question of fairness,” this rep said.
Merrill brokers were promised the deal and made career plans based on the bank’s coming through on the promise, he said.
The retention package paid $1 million, and higher producers 75% of their annual production upfront, with another 25% deferred.
Reps doing $750,000 to $1 million got 50% upfront and 25% deferred.
The upfront portion is structured as a seven-year forgivable loan.
Merrill reps producing less than $500,000 got, at most, 20% of production, but that amount is deferred for three years.
Spokespeople for Merrill Lynch and Bank of America did not immediately respond to inquiries.