Merrill Lynch will not pay 2007 bonuses to top executives—including retail brokerage head Bob McCann, the bank announced in an SEC filing Wednesday. Also shorted on their bonuses were Greg Fleming, the bank’s president and chief operating officer, and Vice Chairman and General Counsel Rosemary T. Berkey.
The board did, however, vote to make large “retention” stock-option grants available to the executives, which can’t be exercised until January of 2010.
Merrill posted a $12.1-billion net loss during the second half of 2007 due primarily to write-downs of sub-prime mortgage holdings. Stan O’Neal was ousted as a result, and replaced with new CEO John Thain, who has said that bonuses will be more closely tied to performance in the future.
The bigger issue, according to a story on Dealbreaker.com, is that Thain is shuffling the chain of command at Merrill so that more junior executives report directly to him instead of Fleming. “There has been some talk by insiders that the unwinding of the hierarchical structure that grew under Stan O’Neal has some executives bristling that they are losing rank and authority,” says Dealbreaker.com.