Posted on 02/11/2009 1:26:04 PM PST by NormsRevenge
WASHINGTON (AFP) – Merrill Lynch quietly paid out at least one million dollars bonus each to about 700 top executive even when the investment house was bleeding with losses last year, a probe has revealed.
They were part of 3.6 billion dollars in the firm's bonus payments in December before the announcement of its fourth quarterly losses and takeover by Bank of America, the investigation by the New York state Attorney General's office showed.
"696 individuals received bonuses of one million dollars or more," New York Attorney General Andrew Cuomo said of the Merrill scandal in a letter to a lawmaker heading the House of Representatives financial services committee.
Cuomo said "these payments and their curious timing raise serious questions as to whether the Merrill Lynch and Bank of America boards of directors were derelict in their duties and violated their fiduciary obligations," according to a copy of the letter.
Bank of America said recently it was aware of the amounts and timing of the bonuses even though previous reports had suggested the top bank was surprised by the payout.
Cuomo said in his letter to Democratic lawmaker Barney Frank that his office was also examining whether senior officials at both companies "violated their own fiduciary obligations to shareholders.
"If they did, this raises additional serious issues with regard to the inappropriate use of taxpayer funds," he said.
"Merrill Lynch's decision to secretly and prematurely award approximately 3.6 billion dollars in bonuses, and Bank of America's apparent complicity in it, raise serious and disturbing questions," he said.
(Excerpt) Read more at news.yahoo.com ...
A man walks out of Merrill Lynch's headquarters in New York in September 2008. Merrill Lynch quietly paid out at least one million dollars bonus each to about 700 top executive even when the investment house was bleeding with losses last year, a probe has revealed. (AFP/File/Nicholas Roberts)
Really shocking.......
Well actually its the US tax payer who’ll end up funding these bonuses because BofA got 25 billion+ in TARP money.
This is where, the ‘Conservative’ attacks the ‘populist’ for getting upset.
But you will still have Economic Anti-Americans saying this is “OK”...just wait
Its bad business to get such payouts when the company is tanking....you see few companies outside of Wall Street that does this
Do any of the recipients feel bad about it? ummm, prolly not.
Thanks for that info, I was wondering about contractual obligations as well.
“Its bad business to get such payouts when the company is tanking....you see few companies outside of Wall Street that does this”
It depends on the nature of the bonuses. In many cases bonuses are sort of like commissions. They’re part of the income you actually earn, part of your agreed upon compensation package. If you do the things that are required of you to earn the bonus, your employer is contractually obligated to pay it.
My wife works for one of these.
These were “retention bonuses” that were paid out to top brokers (not execs, as the article incorrectly states). The concern was that when Merrill Lynch was bought out by BoA that the top brokers would leave Merrill Lynch and take their accounts with them.
This is common practice with investment firms. Brokerage firms will often pay large “signing” bonuses to attract successful salespeople...same as sports teams will do with a talented athlete. When Merrill Lynch bought Advest in 2006, specific Advest brokers were paid similar retention bonuses.
In exchange for accepting the bonus, each broker had to agree to work for Merrill Lynch for the next 7 years. Brokers often work in teams...these bonuses were provided to the head of each team, who often had to split it with other members of the team.
All of this was done BEFORE Bank of America was forced to take any federal money.
It was their money to hand out. Bank of America was aware of it and still proceeded with the Merrill Lynch purchase.
This is NOT a public matter.
But the article tries to stoke the class envy fires.
I don’t know. Maybe they are just giving money out for the heck of it even though they’re struggling to stay afloat. That just doesn’t make much sense. Stranger things have happened though.
Why quibble about millions?
This saved the executives’ bacon. Money well spent.
And who said the bailout wasn’t working.
Thanks! Makes sense.
Of course if their current assets were negative, like owning a house that worth less than what they owe, they're still not millionaires.
That makes sense. What doesn’t make sense is that these businesses that are in trouble would give out all this money just for the heck of it.
Maybe the reason the media calls these people top executives is because most of them probably have the “vice president” title. Merrill Lynch, like many of these companies, confers the “vice president” title on top producing brokers. They’ll have several thousand brokers and several hundred of them will be vice presidents. We had one or two “vice presidents” in the small town Merrill Lynch office I used to work in. They were brokers or “financial consultants” like the rest of us, but they’d been in the business a long time and had built up huge client bases. They had nothing to do with executive decisions though. It’s just a title.
There are divisions within Merrill that showed a profit last year. Shall we punish them?
This class warfare is more than a little sickening.
Good point.
Bank of America has gobbled up a lot of financial entities the last few years, some large, some small.
The ‘probe’ used as a political ploy is nothing new.
“retention bonuses” aren’t bonus’, they’re loans, and are expensed when forgiven. Over a period of time. Not when paid, which was in 2009 anyway. Contractural obligation is the excuse that will be used and is probably valid in some cases, but as heavily weighted as these were to a small number of people, $121 million to 4, $62 million to the next 4, and the top 149 getting $858 million, I suspect Thain was rewarding friends who might soon be unemployed. I doubt that many people had contractural bonus’ with multi million floors in a year where performance essentially drove the firm out of business. However it will be simple to establish, if they’re contractural, they’re on paper.
Too late, no one is going back to review 2008 Bonuses.
Sweet.
Must be nice, wonder if I drive my car into a ditch, if I’ll collect.
And it’s not even called Welfare or the Dole. Their self esteem remains intact.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.