Back-Off on Bonuses at Banks Will Shake Up Ranks of Top-Paid CFOs
CFOs on Wall Street have been walking away from the bonuses that typically made them some of the highest-paid finance officers in the country.
The trend continued Monday, December 8, when Merrill Lynch indicated that finance chief Nelson Chai has elected to forgo his annual bonus payment.
Merrill Lynch said in a statement Monday that Chai, along with CEO John Thain and three other top executives at the company, had requested that Merrill’s board not award them any bonuses for 2008, a year in which the company’s stock price declined by roughly 30 percent. The brokerage was officially acquired by Bank of America on Friday after Merrill and BofA shareholders approved the transaction.
The bonus back-offs at Merrill come after a report in The Wall Street Journal suggested Thain had requested a bonus of as much as a $10 million. The article said Thain thought he deserved a bonus because he helped avert what could have been a much larger crisis at the company.
Either way, total compensation for Merrill Lynch executives this year will be a far cry from what they made last year. Indeed, the brokerage’s top officers earned more than $90 million in combined bonuses, stock and options awards in 2007. Chai, who joined Merrill in December 2007, earned a $1.25 million bonus for 2007, according to the company’s proxy filing.
Meanwhile, executives at Morgan Stanley will receive substantially lower bonuses for 2008, with CEO John Mack and co-presidents Walid Chammah and James Gorman asking the board Monday to forgo their bonuses entirely for the year.
The 14 members of Morgan Stanley’s operating committee—which includes CFO Colm Kelleher, one of Financial Week’s highest-paid CFOs for 2007—will receive total compensation packages that are worth 75 percent less, on average, than their pay last year.
Kelleher was paid $11.7 million in total compensation for 2007, which means he would be in line to take home roughly $2.9 million in total pay for 2008.
Last week it was reported that executives at the bank—including CFO Gary Crittenden—would give up their bonuses. As of yet, however, there has been no formal announcement of the move.
If Citi were to follow its rivals, Crittenden would see his pay dramatically reduced. Nearly three-quarters of his nearly $20 million in compensation last year came from his bonus. Crittenden came in at No. 5 on Financial Week’s list of top-paid finance officers in 2007.
The highest-paid non-bank CFO on the list was Occidental Petroleum’s Stephen Chazen. Of his nearly $30 million in total compensation, Chazen received a bonus of just $633,600.
Filed by Mark Bruno of Financial Week, a sister publication of Workforce Management. To comment, e-mail email@example.com.
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