Tuesday, December 9, 2008
Congress / Kotz / Politics Merrill Lynch CEO John Thain Retreats, But Where's the Outcry from Bob Corker?
Posted by Pete Kotz on Tue, Dec 9, 2008 at 4:38 PM
You're at the grocery store. You're broke. You've cobbled together mangled bills from your pocket and loose change from your car to pay for a meager supply of food to get you through the week. Maybe a loaf of discount white bread and those 69-cent packs of hot dogs, made from processed turkey and innards swept from the factory floor.
There's a lady in line ahead of you. She's buying steak, chips and those pre-fab dinners with 17 pounds of packaging that microwave to instant gourmet. You're envious. You wonder if she finds you handsome--at least handsome enough to invite you for dinner.
Then she pays with a food stamp card. Suddenly you're on that escalator of brooding self-pity and anger about the unfairness of the world. I always figured it was moments like this that made people hate welfare.
I was thinking that way today when I read this story about Merrill Lynch CEO John Thain. When we last left Merrill Lynch, it was receiving a $10 billion bailout, its reward for sucking at capitalism. This would logically imply that John Thain isn't very good at his job. One might even argue that he should be reassigned to the mailroom until further notice, which would arrive in 2018...
But John Thain doesn't think that way. In the parallel universe of Wall Street, John Thain believes sucking entitles him to a $10 million bonus. That was his request to Merrill's board as reward for his shining 2008 performance.
Thankfully, the Merrill board declined. Paying John Thain $10 mil probably wouldn't look good should the company see fit to beg again.
Personally, I don't blame Thain. In the culture of Wall Street, rock star CEOs are afflicted with a clinical sense of entitlement, a common disease among the wealthy and benighted. Thain's the suit version of Vince Young, who trades autographs for food around town, believing the peasantry should just be grateful that he deigned to scribble on their napkins. They are children in men's clothes.
But I do blame Congress. Last week, during the Senate hearings on the auto bailout, we heard from fine conservatives like Bob Corker, who demanded autoworkers take cuts in pay. I'm not against this; in broke times, everyone needs to grab a piece of pain.
The problem is that you don't hear Corker demanding that Big 3 executive ranks take pay cuts. You don't hear him squawking at the Treasury Department to ensure that Wall Street welfare requires management sacrifice. His sole concern seems to be that regular people won't get a piece of the Washington giveaway.
I guess that's what pisses me off. How about you?
Comments (5)
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Food stamps, nothing. This is more like standing in line with your ramen noodles and pocket change, and out the corner of your eye you see the bank president slip a couple of pork tenderloins under his coat while the store manager winks at him.
If Corker started hammering CEOs and top brass with enthusiasm—and more importantly, a sincere demand for accountability and the nerve to follow through—he would look (dare I say it?) presidential.
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I've followed Merrill quite closely since a friend of mine started working there 2 years ago, and I just wanted to share a little insight, hope it helps to clarify.
I know on the surface it looks horrible, and I agree with you that he should not get a bonus. But my reason is a little different. You see, *some* of his arrogance is warranted. Or, at least pride. Thain isn't the one who made the mess. Thain was the one brought in to bring the company to accountability and see if he could salvage some of the mess. And in that regard, he did a good job. And it's because of Thain's decisiveness, quick thinking and action, and sense of shared responsibility that Merrill will not go the way of the other giants who folded completely.
Now, yes, he is like a lot of other bigwigs used to ridiculous sums of money, and my guess is he thought he could just pass under the watchful eye of the public and collect what he thought was fair (in an ordinary market, it would be "fair" in comparison to other companies and what everyone is accustomed to getting). But as soon as he heard the outrage begin to rumble, he withdrew his request and requested instead that he not get a bonus.
The reason he shouldn't get one is not that he doesn't "deserve" it from the doomed fate he rescued Merrill from, but rather because in times like this and within his own company, thousands of people are not getting the rewards they deserve for hard work and a job well done either, and it isn't right or fair to reward him while cutting thousands of jobs when the people being cut don't deserve to lose their jobs.
Just thought I'd add my two cents. It was the leadership of Stan Oneal that put Merrill in line for the executioner. Thain managed to sneak into the auction line-up instead. No he doesn't deserve a $10 million dollar bonus, but he doesn't deserve an entirely bad rap either.
That we got to the point where $10 mill could seem like a fair bonus is the problem.
Executive compensation has ballooned so far out of proportion to what is healthy for any company-or fair in any sense of the word-that even the best of these guys at the top can't imagine lowering their pay to amounts that actually are workable.
JS: I hear you that's he's only been on the job 18 months, but he's still shepherding a company that took in a $10 billion welfare package. As Loony points out, there's something disconnected about a guy who just got that much public welfare, but still believes he's entitled to a bonus like this. Especially when the rank and file is taking a beating. I think his arrogance is less warranted than it is a big part of Wall Street's problem. He's arrogant enough to think he deserves a huge bonus--paid by taxpayers--and that everyone else should do the suffering. It's not exactly a buck stops here ethic. It's more like the buck stops with everyone but me.
