John Thain et al - Masters or Servants?

News of John Thain's absolutely audacious behavior just keeps coming in. This is from Businessweek's Matthew Goldstein:

When your company is staring at a $15 billion loss in the face, every dollar saved through cost-cutting and scrimping counts. That’s a big reason there’s so much outrage over the news that former Merrill Lynch CEO John Thain signed off on some $4 billion in bonuses for top executives on the eve of the brokerage’s merger with Bank of America earlier this month. (My italics.)

What?  Someone on Wall Street was signing off on bonuses just a couple of weeks ago?  And $4 billion dollars worth?  

For at least a couple of months now, the word 'bonus' has become the a new taboo, uttered only in disgusted (or regretful) whispers in the back alleys of Manhattan (and beyond), rivaling in notoriety some of the worst racial epithets.  Thousands in the country are suffering job losses, company closings, home foreclosures, etc. and John Thain has the gall to sign off on $4 billion dollars in bonuses to his top executives (likely including himself)?  

How much of that was out of taxpayer bailout dollars from the TARP?

Thain completely lost sight (as many Wall St. CEOs have done) of the fact that as CEO he was a steward of Merrill Lynch -- invested with authority by a collective of stockholders to be responsible and prudent in leading their company -- and not King of All He Surveys, free to do whatever he pleases.  

If there is any lesson to be learned from all this, it's that it's the CEOs who are supposed to be the Servants, and the stockholding public the Master, not the other way around.   

CEO John Thain, Redecorating Office and Skiing in Vail during Economic Crisis

Merrill Lynch CEO John Thain, an uber-Marie Antoinette, has finally gotten the ax from his new boss Kenneth D. Lewis, chief executive of Bank of America (who bought Merrill Lynch in the fall and is now experiencing a form of M&A food poisoning).  

This is good news, given how self-indulgent and out-of-touch Mr. Thain has revealed himself to be in the last couple of months.  Check this out from yesterday's New York Times:

Mr. Thain, who is 53, drew criticism from both outside and inside Merrill Lynch for suggesting in October that he be paid a large annual bonus, said by individuals briefed on the matter to be $30 million to $40 million. In December, the individuals said, the figure dwindled to $10 million and in the end, he received no bonus at all. He later denied having asked for one.

When Merrill Lynch alerted Bank of America in mid-December that its losses were ballooning, Mr. Lewis did not hear the news from Mr. Thain, who around that time left for a skiing trip at his second home in Vail, Colo.

Recent reports that Mr. Thain had spent $1.2 million to redecorate his office caused Mr. Lewis to further question Mr. Thain’s judgment, according to a person close to Mr. Lewis.

Correct me if I'm wrong, but even the thickest person should be able to deduce that:

a) it's a very bad idea to ask for ANY bonus, much less a seven-figure bonus as the rest of the country is calling for your head on a platter 

b) it's not appropriate to go skiing in Vail when your company's losses are ballooning, and you're the CEO

c) you don't redecorate your office for $1.2 million when you're entire industry is asking for billion-dollar handouts from Washington

Come to think of it, this tally causes one to wonder what in the world motivated Lewis to keep Thain on for this long.

Honor amongst thieves?

Our First Marie Antoinette

GM CEO Bob Lutz gives us a prime example of tone-deaf, PR-challenged, Marie-Antoinette types we'll be collecting here.  This quote was sent to me by my friend The Eclecticist today:

I’ve never quite been in this situation before of getting a massive pay cut, no bonus, no longer allowed to stay in decent hotels, no corporate airplane. I have to stand in line at the Northwest counter. I’ve never quite experienced this before. I’ll let you know a year from now what it’s like.

I find it appropriate to kick off this blog with Mr. Lutz's priceless comment.