I'm filing this one under careers. At least the guy has chutzpa. Merrill Lynch, one the largest brokerage firm in the world, lost billions in his one year in office, and was quickly sold off to Bank of America, but the Wall Street Journal is reporting that CEO John Thain still requested a $10,000,000 bonus. Hmmm.
Curious about this, I called a compensation expert to her take on it. She told me that often executive compensation contracts do include provisions for bonuses despite corporate performance. "They're just part of how the salary is structured." But she also added that "it goes against compensation based philosophy. A bonus should be based on success and what has been achieved to warrant the bonus."
So let's give Thain the benefit of the doubt and assume that the bonus was written into his contract. Maybe he even had a $20 million bonus coming due and is only requesting $10,000.000. It still brings up two other points:
1. In the book Good to Great, the business book by Jim Collins that analyzes the traits of successful executives and companies, he identifies a categorizes executive manageent on a 1-5 scale. Level 5 executives are the best and the ones that consistently produce value. According to the book, a Level 5 executive would not accept a $10,000,000 bonus in a year when his or her company is doing so poorly. It would go against their personal ethos of leadership, sacrifice, and company first.
2. John Thain must have a tin ear if in the midst of the greatest financial crisis since the Great Depression, at a time when his company needed to be bailed out, he is asking for $10,000,000. And once again, what does that say about his management skill?
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