Bonuses May Spur Exodus From Merrill
Other banks won't be put off by a candidate whose Merrill bonus created more motivation to leave than stay, says recruiter Ken Murray, president of Mercury Partners, a Wall Street-focused executive search firm. "If bonuses are down significantly, it (Merrill Lynch) will be a very fertile field for recruiting from," he says.
Of course, opportunities at other banks will be scarce compared with six months or a year ago. Many are reducing U.S. headcounts, amid continued asset write-downs and mushrooming indications the nation's economy is verging on, or already in, recession. There are reports that Merrill itself will soon eliminate hundreds of jobs, although the company thus far has denied any such plans.
Back in mid-December, CNBC reported that Merrill Lynch was set to dole out smaller bonuses than 2006 across a range of business areas, including some whose profits weren't damaged by turmoil in the credit markets. Average payouts for investment bankers, equity traders and private wealth managers would decline as much as 10 percent from a year earlier, according to CNBC. Meanwhile, Bloomberg reported that fixed-income professionals at Merrill would be paid 40 percent less than 2006, on average, with mortgage-backed and credit derivatives specialists getting 80 percent less than 2006.
Even if those figures hold, bonuses won't fall across the board. Select individuals whom Merrill aims to keep will receive more than a year ago, Murray says. And he believes those who get a smaller bonus won't suffer any stigma as a result.
As the third-largest U.S. securities firm by market value prepares to release full-year financial results Jan. 17, its new management team, under Chief Executive John Thain, is gradually taking shape. Thain, the former New York Stock Exchange chief executive and Goldman Sachs co-president who joined Merrill on Dec. 1, has said he plans to move its management culture away from a competition-based star system toward Goldman's teamwork-driven model.
Murray believes that Thain's stellar track record will help him recruit top people to Merrill despite the bank's well-known problems. He's widely credited with rehabilitating the NYSE's reputation and leading it into the electronic trading era. His experience there and at Goldman "make him a very desirable person to work for," for any senior executive who might be dissatisfied at Goldman or elsewhere, according to Murray.
While there has been much speculation that Thain will install ex-Goldman people in key roles, most high-profile appointments so far have either come out of the NYSE's parent or from within Merrill itself. They include CFO Nelson Chai and communications and public affairs head Margaret Tutwiler, both from NYSE Euronext, and Daniel Sontag, a 30-year Merrill Lynch veteran named this week as head of Americas Wealth Management, the largest segment within the bank's core brokerage division. Sontag replaces McIntyre "Mac" Gardner (a loyalist of ousted CEO Stan O'Neal). He will oversee the U.S. brokerage force, private banking, and the clearing business.
Another internal appointment of sorts was the return of Jeffrey Kronthal as a consultant for sub-prime and other mortgage holdings. Kronthal was among a group of senior fixed-income executives whom O'Neal pushed out in 2006 after they reportedly argued against ramping up sub-prime mortgage exposure.
Merrill is reported to be wooing ex-Goldman Sachs executive Thomas Montag to lead its global markets division. Montag retired as global co-head of securities at Goldman in December.