Former Merrill Lynch CEO quits Bank of America
Posted January 22, 2009 12:59 p.m. EST
Updated January 22, 2009 1:24 p.m. EST
John Thain, former chief executive officer of Merrill Lynch & Co., resigned from Bank of America Thursday morning, the Wall Street Journal reported. Bank of America later confirmed Thain's departure.
Thain quit after a "brief" meeting with Bank of America Chief Executive Officer Kenneth Lewis, a "person familiar with the matter" told the Journal.
The company, which is based in Charlotte, N.C., has given no reason for Thain's departure, but it follows news that Merrill Lynch had moved up its year-end bonuses, doling out cash just days before it was officially acquired by Bank of America on Jan. 1.
A company spokesman issued a short 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."
Thain was heading a wealth management division of the two firms' merged businesses. He went to Merrill Lynch after leading the New York Stock Exchange and before that, serving as chief operating officer at Goldman Sachs.
Merrill, which reported a $15.45 billion fourth-quarter loss, was acquired by Bank of America in a government-brokered deal the same day the Lehman Brothers Holdings Inc. collapsed.
According to the Journal, Bank of America "lost confidence" in Thain after Lewis "learned about mounting fourth-quarter losses" at Merrill Lynch from a transition team involved in the Merrill-Bank of America merger, not Thain.
CNBC and The Journal both reported Thain's departure, which followed news that Merrill had moved up its year-end bonuses, doling out cash just days before the merger was completed.
Bank of America has increasingly come under criticism in recent weeks for its acquisition of Merrill Lynch. The deal forced Bank of America to ask for a second multibillion dollar investment from the government as it absorbed the mounting losses at the New York-based investment bank.
On Thursday, Bank of America said it knew of Merrill's plans to more up the bonuses.
"Merrill was an independent company until Jan. 1 of 2009," said Bank of America spokesman Scott Silvestri. "John Thain decided to pay year-end incentives in December, as opposed to their normal date in January. Bank of America was informed of his decision."
Bonuses were not paid, though, to Thain and four other top executives - President and COO Greg Fleming, Chief Financial Officer Nelson Chai, President of Global Wealth Management Robert McCann, and General Counsel Rosemary Berkery - who requested they not receive additional compensation.
Shares of Bank of America tumbled 93 cents, or 13.9 percent, to $5.75 in late morning trading as the overall market also fell sharply. Bank of America's loss was steeper than most other major financial stocks.
Bank of America last week struck a deal with the government to receive an additional $20 billion in funds as part of the Treasury Department's bank investment program. The government also agreed to backstop losses on additional assets. The investment comes after Bank of America already received an initial $25 billion as part of the program.