Granted we have had many blows to the integrity of the financial services industry to date but the newly disclosed actions of John Thain go way beyond simple greed, corruption and questionable judgment.
Let's start with this: Thain should have known better. After all, he replaced a CEO who embodied the corruption and excesses of the time - Richard Grasso. Grasso, you may remember, got the boot because he approved his stunning pay package - a whopping $187.5 million a year.
But Thain did him one better. In December, before Bank of America could complete its acquisition of Merrill Lynch, Thain hurriedly pushed through gigantic bonuses (somewhere around $4 BILLION!) for himself and his executive cronies. The bonuses are usually paid in January but he forced them to be paid in December. Why before the BofA acquisition? One can only speculate that BofA probably would not have approved of them, given their shock at the fact that the brokerage had lost $15 BILLION in the fourth quarter and more that $27 Billion for the year.
Perhaps it was Thain's end-of-year vacation in Vail that got people up in arms even as his soon-to-be boss at BofA, Ken Lewis, recommended against it.
But no, the icing on the cake? Thain's decision to spend $1.2 MILLION decorating his Manhattan office -- this as Merrill Lynch was hemorrhaging money and layoffs were pending. How nice that he has volunteered to pay for these extravagances, stating, "They were a mistake in the light of the world we live in today. I will therefore reimburse the company for all of the costs incurred." Ya think???
The era of entitlement at financial companies must change if we are to see any real change for the better. If not, I fear we will read more stories similar to this one. And to Mr. Thain, all I can say is:
May you rot in an exceptionally hot place.
Yours in better times in 2009.
Technorati Tags: John Thain, Merrill Lynch, corruption,
Posted January 26, 2009 11:00 AM
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