John Thain-- Some Thoughts from NYSD

Discussion in 'Wall St. News' started by marketsurfer, Feb 3, 2009.


    by Alexandra Lebenthal

    • Area Rug, $87,784
    • Mahogany Pedestal Table, $25,713
    • 19th Century Credenza, $68,179
    • Pendant Light Furniture, $19,751
    • 4 Pairs of Curtains, $28,091
    • Pair of Guest Chairs, $87,784
    • George IV Chair, $18,468
    • 6 Wall Sconces, $2,741
    • Parchment Waste Can, $1,405
    • Roman Shade Fabric, $10,967
    • Roman Shades, $7,315
    • Coffee Table, $5,852
    • Commode on Legs, $35,115
    • Decorator Services, $800,000

    The $1.2 million spent on decorating the Merrill Lynch office of John Thain has gripped everyone as yet another symbol of Wall Street’s disconnect from the values of everyone else. His termination from new owner, Bank of America, was clearly tied more to multibillion dollar losses at Merrill in the 4th quarter, seemingly ill-timed bonuses to Merrill employees prior to the closing of the deal with the Bank as well as a hefty dose of corporate political maneuvering.

    Shocking as it was, extravagant expenditures would not have brought a second glance in the media in prior years. I’ve been in more than one executive office suite of powerful men. I have taken the elevator only reserved for the “C Suite” and their guests. Each time I always felt a sense of being Willy Wonka in the great glass elevator, always baffled as to why mere mortals were not allowed such close promixity to the titans who ran the company. Is it that mere mortals aren’t good enough to be close, or is it that those titans are so supremely busy that even a few extra seconds to stop at other floors might delay the important business at hand?

    I have been led down the welcome area to the private dining rooms where meals are served on fine, delicate china. There is a feeling that you are in the halls of money and power and brilliance. A potential for any wish you have to be granted, but really just a feeling that you are lucky to be there even if you leave empty handed.

    Anything you want to eat or drink is readily available though there is always a printed special menu for the day. I’ve noted that the men (as if it weren’t obvious, there aren’t many women and even fewer now), usually order off the menu in a strange demonstration of “power” -- as if to show even the waiter that one always must be on his toes with the leaders of the company. “

    "The creamed oatmeal Sir?"

    "... No, I think I’ll have the steel cut today."

    Ironically most of these offices are interchangeable, showing little differences save the sterling silver framed pictures of spouse, graduations and a prerequisite corporate fishing or golf trip with a few close colleagues; Chippendale is the furniture designer of choice, silk window treatments cover the curtains beyond which are views of the Manhattan skyline, and there are antique maps on the walls. They rarely show a sense of personality and style, and most likely were the concept of corporate decorators and the executive’s spouse.

    John Thain has since argued that when the office was redone he thought the company would do much better and no one doubts that this was true. But when he arrived on November 2007, the company had already billions in losses making layoffs inevitable, if not already well underway.

    When layoffs -- excuse me, Reductions In Force (RIF’s) -- happen, they are across the board in different departments and come with little warning though people usually sense a “today is the day.” Among those in the RIF, some may be directly responsible for generating actual revenue, and some are “merely overhead.” But these are the people that ride the regular elevators and who rarely, if ever, glimpse the executive floor. They are people with their own careers, families, hopes and dreams. The difference they make to the firm’s profitability usually exceeds the cost of a Louis XVI commode or an Aubusson rug.

    Let us look at the $1.2 million in cost and describe a few fictional employees who might have been on the list whose compensation in total equals that amount.

    John “Johnny G” Gianfarra, 47. Municipal Trading Desk, Assistant Vice President. Base Salary: $125,000. Target Bonus: $45,000. Benefits: 17%. TOTAL COMPENSATION: $198,900.

  2. Eileen J “EJ” McGonagall, 39. Equity Trading Institutional Support Staff. Base Salary: $75,000. Target Bonus: $12,000. Benefits: 17%. TOTAL COMPENSATION: $101,790.

    EJ brings in a dozen Krispy Kremes every Friday, never forgets anyone’s birthday, but above all makes sure the six institutional salespeople she supports have everything they need to handle some of the largest equity buyers in the world.

    She is the first one to pick up the direct wire to the major institutional accounts, never leaves without all trade errors and commissions corrected.

    With equity business down, the other sales assistant on the desk will now be covering all 12 salesmen. Her husband worked in Compliance at Bear Stearns and thankfully was able to get a position after the sale last March at JP Morgan.

    Hopefully his salary will cover them while she looks for another job. After years of trying to have children two years ago they finally had twins using in vitro fertilization.

    The cost wasn’t covered by insurance and they are still in debt from that and the larger house in New Dorp, Staten Island, but Ryan and Kevin are reminders every day of how good God has been to them.