Merrill Lynch's sale of itself to Bank of America (BAC) for almost $50 billion is shaping up to be the deal of the century. As we now know, when Ken Lewis was fooled into thinking if he didn't buy Merrill at a huge premium over the market price, he'd lose it forever, Merrill was actually worth zero. And getting $50 billion for something that's worth zero is no mean feat.
Merrrill had to reward itself for its cunning, of course, and it had to do it before Ken Lewis took over, because Ken Lewis is known to frown on over-the-top dynastic investment-banking compensation (and also because he's probably secretly steamed about being taken to the cleaners). So, three days before the BAC deal closed, shortly after informing Ken Lewis that his new prize would book more than $10 billion of losses in Q4, Merrill accelerated its firm-wide bonus payments by a month.
Just another welcome gift from the CEO of the Year, John Thain:
FT: BofA said: "Merrill Lynch was an independent company until January 1 2009. John Thain (Merrill's chief executive) decided to pay year-end incentives in December as opposed to their normal date in January. BofA was informed of his decision."...
Nancy Bush, an analyst with NAB Research, described the size of the 2008 Merrill bonus payments [$15 billion, only 6% lower than 2007] as "ridiculous".
Oh, and that $15 billion came from you, of course. U.S. taxpayers just handed Ken Lewis $20 billion so he could save his own bank from going to zero. Three-quarters of it is now in the pockets of Merrill Lynch executives.
rest http://clusterstock.alleyinsider.com/2009/1/merrill-gives-itself-huge-bonus-for-snookering-ken-lewis-and-bofa-bac
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