Bonuses at Merryl Lynch to drop 40%

December 17, 2007, 6:24 am

Merrill Lynch swings bonus ax

The mortgage mess keeps wreaking havoc on Wall Street. Fixed-income bonuses at Merrill Lynch (MER) will drop 40 percent from a year ago on average, Bloomberg reported Monday, as new CEO John Thain seeks to steer the firm past this fall’s bond market meltdown. The bonus cuts will be steepest for traders in mortgage bonds and collateralized debt obligations, the risky debt whose collapse led to an $8 billion writedown at Merrill last quarter and cost former chief Stan O’Neal his job. Corporate bond and interest rate traders will see their bonuses cut as well, the report indicates.

The move comes as Goldman Sachs (GS), which has been the one firm on Wall Street to clean up on the mortgage mess, prepares to report fourth-quarter numbers Tuesday. It’s widely expected that the firm will report another slate of eye-popping profits, even as rivals such as Morgan Stanley (MS) and Bear Stearns (BSC) — whose fourth-quarter numbers are due out Wednesday and Thursday — struggle to contain the damage. It’s a good bet that Merrill’s bad news on the bonus front won’t be the last for the once-highflying CDO crowd.

http://dailybriefing.blogs.fortune.cnn.com/2007/12/17/merrill-lynch-swings-bonus-ax/

 

Something had to pay for Stanley O'Neal's severance package. (well into 9 figures)