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John Thain and Hot Water

I had posted about the self-centred leadership style of John Thain here. Looks like his latest antics to get some undeserved bonuses out the door before the new owners moved in may have backfired:

NEW YORK (Reuters) – New York’s attorney general issued a subpoena to former Merrill Lynch Chief Executive John Thain on Tuesday in a probe into bonuses paid to the firm’s employees just days before its takeover by Bank of America Corp.

“The fact that Merrill Lynch appears to have moved up the timetable to pay bonuses before its merger with Bank of America is troubling to say the least and warrants further investigation,” Attorney General Andrew Cuomo said in a statement.

Bank of America spokesman Scott Silvestri declined to comment.

Cuomo said his office issued a subpoena seeking testimony from Thain, who was ousted from Bank of America on January 22. Also subpoenaed was Bank of America Chief Administrative Officer J. Steele Alphin, Cuomo said.

Cuomo said his office is conducting its ongoing inquiry into executive compensation practices at companies taking part in the $700 billion financial bailout fund together with the special inspector general of the federal aid program.

Via.

John Thain’s $87,000 Rug

News of another layoff of sorts hit the streets today.

Former Merrill Lynch CEO John Thain resigned from Bank of America. John was good enough to ensure that Merrill moved up its yearend bonuses, paying them just before the Bank of America had completed its acquisition of Merrill.

Bank of America gave no reason for Thain’s departure. The company issued a terse statement: “Ken Lewis flew to New York today to talk to John Thain. And it was mutually agreed that his situation was not working out and he would resign.”

Interestingly enough, the bonuses were paid out just as the company was getting ready to report a $15.45 billion fourth-quarter loss. The U.S. Government provided bailout money to both Merrill and BoA.

To get a flavor of the quality of leadership in large financial services organizations in the United States — or perhaps John Thain was just an exception — consider the following brilliant act of financial management during tough times:

In early 2008, just as Merrill Lynch CEO John Thain was preparing to slash expenses, cut thousands of jobs and exit businesses to fix the ailing securities firm, he was also spending company money on himself, senior people at the firm say.

According to documents reviewed by The Daily Beast, Thain spent $1.22 million of company money to refurbish his office at Merrill Lynch headquarters in lower Manhattan. The biggest piece of the spending spree: $800,000 to hire famed celebrity designer Michael Smith…

The other big ticket items Thain purchased include: $87,000 for an area rug in Thain’s conference room and another area rug for $44,000; a “mahogany pedestal table” for $25,000; a “19th Century Credenza” in Thain’s office for $68,000; a sofa for $15,000; four pairs of curtains for $28,000; a pair of guest chairs for $87,000; a “George IV Desk” for $18,000; six wall sconces for $2,700; six chairs in his private dining room for $37,000; a mirror in his private dining room for $5,000; a chandelier in the private dining room for $13,000; fabric for a “Roman Shade” for $11,000; a “custom coffee table” for $16,000; something called a “commode on legs” for $35,000; a “Regency Chairs” for $24,000; “40 yards of fabric for wall panels,” for $5,000 and a “parchment waste can” for $1,400.

Via.

I wonder if the extreme makeover of his office and the accelerated bonus payout had anything to do with his sudden departure?

Well. At least he didn’t leave poor. In 2007, John Thain made the news as the highest paid CEO in the S&P 500. His income that year? A mere $83.1 million.

Manage Your Money

I was watching the business report on Canada AM this morning. Doom and gloom as the financial markets continue to implode.

What caught me by surprise was a parting comment by the business reporter. As the story closed, the Canada AM hosts were trying to be positive and they asked the business reporter what people should do. He told them that people should not panic. And then he said something very, very odd.

“This is why you should let the professionals manage your money.”

Hopefully not the same professionals who were leading Bear Stearns, Lehman Brothers and Merrill Lynch.