Merrill Lynch Bonuses Were 22 Times the Size Of AIG's

Dennis Kucinich sent out a round of letters to top Treasury officials Monday morning, questioning how much they knew about bonuses paid to Merrill Lynch executives that totaled $3.62 billion, nearly 22 times the total bonuses paid to AIG executives. The payouts made up more that 36 percent of the TARP funds the financial institution received from the Federal government.


Kucinich points out that unlike AIG, the bonuses were not locked in by preexisting contracts and were performance bonuses, as opposed to retention bonuses.

The Merrill bonuses were 22 times larger than those paid by AIG ($3,620 million versus $165 million). They were also very large relative to the TARP monies allocated to Merrill. The Merrill bonuses were the equivalent of 36.2% of TARP monies Treasury allocated to Merrill and awarded to BOA after their merger. The bonuses, awarded mostly as cash, were made only to top management at Merrill. To be eligible for the bonuses, Merrill employees had to have a salary of at least $300,000 and attained the title of Vice President or higher.

The Merrill bonuses were determined by Merrill's Compensation Committee at its meeting of December 8, 2008, shortly after BOA shareholders approved the merger but before financial results for the Fourth Quarter had been determined. This appears to be a departure from normal company practice, since the type of bonus Merrill awarded was a performance bonus that, according to company policy, was supposed to reflect all four quarters of performance and was paid in January or later. In this case, however, the bonuses were awarded in December before Fourth Quarter performance had been determined.

In his letter, Kucinich questions how much information about these bonuses was made available to shareholders, as well as the government.

BOA had knowledge of and influence over Merrill's intent to pay out bonuses even before BOA took control of Merrill. According to the merger agreement of September 15, 2008, Merrill's bonus awards were to be made "in consultation with [Bank of America]." In an undisclosed attachment to the merger agreement, made public only recently by the Attorney General of New York State, Bank of America permitted Merrill the right to award up to $5.8 billion for calendar year 2008 performance.

While prior to the merger BOA knew of Merrill's intent to award billions of dollars in performance bonuses before the Fourth Quarter earnings were calculated, BOA did not disclose the details it possessed about the Merrill bonuses and the unusualness of the timing of those bonuses to its shareholders prior to their vote on the merger.

This raises important questions about what you knew about the Merrill bonuses, and what you did with your knowledge. If ordinary BOA shareholders were ignorant of the details of the Merrill bonus arrangement, was the U.S. government as well.

#story_page_post_article

Understand the importance of honest news ?

So do we.

The past year has been the most arduous of our lives. The Covid-19 pandemic continues to be catastrophic not only to our health - mental and physical - but also to the stability of millions of people. For all of us independent news organizations, it’s no exception.

We’ve covered everything thrown at us this past year and will continue to do so with your support. We’ve always understood the importance of calling out corruption, regardless of political affiliation.

We need your support in this difficult time. Every reader contribution, no matter the amount, makes a difference in allowing our newsroom to bring you the stories that matter, at a time when being informed is more important than ever. Invest with us.

Make a one-time contribution to Alternet All Access, or click here to become a subscriber. Thank you.

Click to donate by check.

DonateDonate by credit card
Donate by Paypal
{{ post.roar_specific_data.api_data.analytics }}

Don't Sit on the Sidelines of History. Join Alternet All Access and Go Ad-Free. Support Honest Journalism.