New ML Comp Plan Out on Newswire

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Dec 17, 2008 8:33 pm

ML'ers received an email yesterday warning us not to post on chat rooms, electronic bulletin boards, etc., information about ML.  Therefore, if you want to see the new Comp Plan, you need to check the story that was broken a little after 5 EST on Dow Jones News Retrieval- or perhaps someone else here can post it.


The penalty boxes, grid, and LOS "bonuses" are all in the story.  It will be released officially at 4:15 tomorrow.
 
Dec 17, 2008 8:50 pm

Here you go for anybody interested....



By Annie Gasparro
   A DOW JONES NEWSWIRES COLUMN

  NEW YORK (Dow Jones)--Merrill Lynch & Co. (MER) is likely to push out many of
its lower-producing brokers with its 2009 broker compensation plan, according
to people familiar with the new grid.
  Executives at Merrill released the payout plan to branch managers Wednesday
afternoon and are set to announce it to the 16,000-plus brokers on a conference
call Thursday.
  A Merrill spokeswoman could not confirm the plan because it has not been
released to employees.
  The plan cuts the payout for brokers who have been in business six years or
longer to 20% of production if they generate less than $200,000 in production,
and 25% of production if they generate $200,000-$299,999.
  The "penalty box," as some brokers call this category, also includes brokers
who have been in the business for 10 or more years and produce
$300,000-$399,999. They will receive a 35% payout.
  "This is a huge cut for these people. Anyone who's in this penalty box is
going to leave," one Merrill broker said. "But I guess we're all bankers now."
  Some brokers blame the major changes in the pay plan on Bank of America
Corp.'s (BAC) acquisition of Merrill, which was approved by shareholders this
month.
  But the changes also come at a time when other firms are cutting pay for
similar categories of low-producing brokers. Brokerage analysts say that
overall, the industry is trending toward high producers.
  The 2009 Merrill compensation grid is also a big change in that it includes
one payout rate regardless of product type or ticket size. For example, it used
to offer different percentage payouts for insurance sales or managed accounts.
  The basic cash payout for brokers not included in the categories mentioned
above will be as follows:
  $0-199,000 will receive 36% of production.
  $200,000-299,000=37%
  $300,000-399,000=38%
  $400,000-599,000=40%
  $600,000-799,000=41%
  $800,000-999,000=42%
  $1-1.49 million=43%
  $1.5-1.99 million=46%
  $2-2.99 million=47%
  $3-4.99 million=48%
  $5 million and more=50%
  This new pay plan will be a step up for the high-end brokers bringing in $1.5
million or more in production.
  With additional bonus opportunities, it could mean a pay increase for other
brokers, too.
  There is also longevity award that provides brokers who have been with the
firm for five or six years and have at least $500,000 in production a bonus of
1% of production.
  For seven-, eight- and nine-year brokers there is a 1.25% bonus if they bring
in at least $750,000.
  For brokers with 10 to 14 years at Merrill doing at least $1 million in
production, the award is 1.5%. And for those with 15 years or more and $1.75
million in production, there is a 2% bonus.
  Other bonus opportunities on the new plan include an award for bringing in new
clients with at least $250,000 in household assets.
  It also offers brokers awards for doing more fee-based business as opposed to
commission-based business.
  Similar new-client and fee-based account bonus opportunities were offered on
this year.
  Households in the U.S. must reach $100,000 in assets for a broker to receive
to get paid for business done with the client.
  The new plan goes into effect at the start of 2009.

Dec 17, 2008 8:52 pm

Thanks C.B.!

 
This reporter, Annie Gasparro, has nailed everything at ML.
Dec 17, 2008 9:05 pm

Seems like a fair comp plan to me.

Dec 17, 2008 9:07 pm

My first impressions is that it really isn't that bad of a comp plan after all if you're ten years in and you're not writing 400,000 in production and you work for mighty Merrill...something is wrong

Dec 17, 2008 9:44 pm

I'm confused with how the plan is good for those only 2-5 years in the business.  It sounds like very low comp for those unless they are true rainmakers.

--WM

Dec 17, 2008 9:58 pm
WealthManager:

I'm confused with how the plan is good for those only 2-5 years in the business.  It sounds like very low comp for those unless they are true rainmakers.

--WM


Looks to me like anynone under 5 years is guaranteed at least a 36% payout...that isnt too bad IMO

Dec 17, 2008 9:58 pm

Payout isn't terrible for 2-5 years(if I am reading the wire correctly) it seems they are lumped in with everyone else, so depending on their production level worse payout is 36%

Dec 17, 2008 10:04 pm

Previously, how where new brokers expected to build their business at ML?

Dec 17, 2008 10:08 pm

Not a bad comp plan if your under six years. I am wondering if the firm will now go by PC's and not revenue for clubs, incentives, ect. Not covered in the wire.

Dec 17, 2008 10:13 pm

The payout for POA (not PMD) remains at 50 through the program and for the first 5 years.

Dec 17, 2008 10:33 pm

Well, I have to say the biggest mouth in my office is going to bitching up a storm if this is true.  Looks like he just took about a 37% reduction in pay. 


 
Tomorrow shall be interesting!
Dec 17, 2008 11:46 pm
ThatGuyML:

The payout for POA (not PMD) remains at 50 through the program and for the first 5 years.





You sure about that?!?!

Dec 18, 2008 12:35 am

The current POA grid drops to 42% at 36 months and then drops down again at 48 months.  Something like this.  Been a while since I was in the program.

Dec 18, 2008 7:53 am
ThatGuyML:

The payout for POA (not PMD) remains at 50 through the program and for the first 5 years.



I thought that it was only 2 years but I love it if what you say is true!  Will find out details at 4:15.

--WM

Dec 18, 2008 10:41 am
Charlie Brown:

My first impressions is that it really isn't that bad of a comp plan after all if you're ten years in and you're not writing 400,000 in production and you work for mighty Merrill...something is wrong

 
That line of thought might be right if we are talking 400 at the end of 2007 but a person doing 400 at year end was probably doing 550 or more in 07 given how difficult the market has been.