Thain agrees to repay redecorating costs, defends bonuses
John Thain is sorry about spending big bucks to redecorate his office last year -- but not about the bonuses he authorized for Merrill Lynch & Co. employees.
From Bloomberg News:
Former Merrill Lynch & Co. Chief Executive John Thain, ousted last week after his firm posted an unexpectedly large fourth-quarter loss, apologized for paying $1.2 million last year to renovate his office and said he will repay the costs.
"They were a mistake in the light of the world we live in today," Thain said in a memo to top executives dated yesterday. "I will therefore reimburse the company for all of the costs incurred."
Thain got the boot last week from Merrill’s new parent, Bank of America Corp., after the brokerage’s $15-billion fourth-quarter loss forced the bank to ask for another government capital infusion.
Thain also faced a torrent of criticism after he apparently sped-up bonus payments to Merrill employees before BofA took control of the brokerage on Jan. 1.
In the memo, Thain said the size and timing of the bonus payments "were all determined together with Bank of America," and that the bonus pool overall was 41% lower than in 2007, according to Bloomberg.
But Scott Silvestri, a spokesman for Bank of America, told Bloomberg that Merrill made the bonus decisions on its own: "John Thain and the Merrill Lynch compensation committee made the decision on the amount and timing of year-end compensation at Merrill Lynch," Silvestri said. "We had no legal right to challenge it."
On Friday, President Obama warned banks about how they use government capital under the federal bailout program and alluded to Thain.
There has been a "lack of accountability and transparency in how we are managing some of these programs to stabilize the financial system," Obama said. He cited "the reports that we’ve seen over the last couple of days about companies that have received taxpayer assistance then going out and renovating bathrooms or offices or in other ways not managing those dollars appropriately."
But Thain’s office renovation was completed early last year, well before the government began injecting capital into banks and brokerages.
-- Tom Petruno
Photo: John Thain. Credit: Bebeto Matthews / Associated Press