Letter From A Disgusted Top Firm Employee

'I am a Merrill employee, and I am absolutely disgusted with the behavior of the firm's senior management.

I would like to bring to your attention the unbelievable compensation packages of some of the senior management at this firm - at a time when losses continue to mount and revenues appear to be in a free fall. As we all know, our industry is changing and senior management at many firms have agreed to give-up year-end bonuses. However, take a closer look at Merrill Lynch - among the worst performing firms in the industry.

While the headlines suggest that year-end bonuses will be down 50% on average, a deeper examination highlights that some of Merrill's senior management will still walk off with millions. The brunt of the pain will not be felt by Merrill's senior management, but rather by low-level employees. Much of Merrill's senior management has locked in multi-million dollar guarantees.

CEO John Thain has hired his 'buddies' - many with links to Goldman Sachs - on massive compensation packages this year. Tom Montag, head of securities, was hired at a price tag of reportedly $90m - much of it guaranteed. And Peter Kraus was hired as an EVP in May, also on a reported $90m package. His future at the firm is said to be in doubt, and he is likely to walk-off with a $25m 'golden parachute' for being on the job for just a few months. The fact that John Thain would hire Kraus to head 'strategy' at a price tag of $90m is outrageous. And these Thain 'buddies' have in turn hired many others, many of whom are on huge bonus guarantees.

Hiring these people while the industry is in a free fall, and while the firm is incurring billions in losses, is very hard for many staff to take. While Thain's 'mates' walk away this year with $90m packages, the vast majority of Merrill's employees will take a big bonus hit. Surely everyone needs to share in the pain ? How can it be right that senior management fills its pockets at the expense of employees and shareholders ? This is wrong - plain and simple. Leadership is about demonstrating moral and ethical values too. Our board and senior management need to come out now and prove that they have not lost their moral compass'.


1. 'Although it is difficult to justify these huge payouts (and I think Thain was the highest-paid CEO in the Fortune 500 in 2007 for his one month's work at Merrill last year), the big difference between Thain & Co and executives at other firms like Citi, is that these guys are not to blame from the firm's current problems. They were brought in to turn Merrill around. And Thain's action in negotiating a merger with BofA in September arguably saved the firm going the same way as Lehman'.

2. 'If banks like this find themselves swimming with sharks, it's because they built the pool and dived in'.

3. 'If these guys were hired to turn the firm around, then surely their comp packages should have been structured to reward success ? Another example of what is wrong with our industry'.

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