Monday, December 08, 2008
CEO watch: How do you know when you are in trouble?
If you are a chief executive officer, you have to think your days are numbered when your own board's compensation committee is talking to the press off the record and behind your back about whether or not it will award your bonus.
MORE: On the substance, John Thain probably does deserve a bonus for getting a deal done with Bank of America. But -- and this is a big one -- somebody is bound to argue that the bonus came from BofA's TARP infusion. And, obviously, Thain's days are "numbered" in any case. None of that, however, is justification for a director to flap his or her gums to the press behind his back.
4 Comments:
By 
JPMcT, at
Mon Dec 08, 07:37:00 AM:
Extraordinary people deserve extraordinary compensation, and the present politically correct atmosphese should not deter the board from "business as usual" as long as Thain is worth it.
It will be a sad day when our business communities become infested with the aura of silly but symbolic appearances that makes CEO's do things like ride from Detroit to Washington in hybrid cars.
I would have refused to waste my valuable time on such foolishness...but I guess that's why I'm a work-a-day grunt and not a CEO.
Well, at least my "to-do" list doesn't include trying to impress Barney Frank!
By 
, at
Mon Dec 08, 10:01:00 AM:
I think it says more about the insecurities of the Merrill board in today's environment than anything about Thain. After all, Thain is as "proven" a crisis leader now as anyone in the Financial Services industry, while the Merrill board sat by for years watching Stan-the-man try to figure out what exactly an investment bank does for a living.
After the debacles of board malfeasance at National City Bank, Merrill and AIG, and especially the complete sham of board oversight of Robert Rubin at Citibank, one wonders whether the role of the outside board isn't going to go through lots of forced change, and soon.
By Escort81, at
Mon Dec 08, 01:02:00 PM:
Thain was brought in when ML was already in some difficulty, although perhaps nobody fully understood the extent of the problems, or that it would be a near-death experience. Without knowing the particulars of how he managed the crisis and how quickly he was able to dig through and find and quantify the problem areas, it's hard to know what kind of bonus he is due, if any -- I don't think (though obviously I don't know) that he tried kick the can down the road and understate the problems facing the firm.
It is not uncommon for a work out guy to come in and get a success fee if a deal gets done (even on harsh terms such that the equity is radically hair cut) -- he is being paid because something was saved from the undertaker. Thain, I believe, did go to ML as a work out, same as he went into the NYSE from GS. I suspect the bonus money either way won't alter his lifestyle.
The director speaking to the press is just a CYA thing in the current political environment.
Pick the leaker:
ML Management Development & Compensation Committee
Armando M. Codina
Virgis W. Colbert
John D. Finnegan (chair)
Aulana L. Peters
By , at
Mon Dec 08, 02:26:00 PM:
Pretty soon, there won't be a press to leak to.
