Dennis Kucinich sent out a round of letters to top Treasury officials Monday morning, questioning how much they knew about bonuses paid to Merrill Lynch executives that totaled $3.62 billion, nearly 22 times the total bonuses paid to AIG executives. The payouts made up more that 36 percent of the TARP funds the financial institution received from the Federal government.
Kucinich points out that unlike AIG, the bonuses were not locked in by preexisting contracts and were performance bonuses, as opposed to retention bonuses.
The Merrill bonuses were 22 times larger than those paid by AIG ($3,620 million versus $165 million). They were also very large relative to the TARP monies allocated to Merrill. The Merrill bonuses were the equivalent of 36.2% of TARP monies Treasury allocated to Merrill and awarded to BOA after their merger. The bonuses, awarded mostly as cash, were made only to top management at Merrill. To be eligible for the bonuses, Merrill employees had to have a salary of at least $300,000 and attained the title of Vice President or higher.
The Merrill bonuses were determined by Merrill's Compensation Committee at its meeting of December 8, 2008, shortly after BOA shareholders approved the merger but before financial results for the Fourth Quarter had been determined. This appears to be a departure from normal company practice, since the type of bonus Merrill awarded was a performance bonus that, according to company policy, was supposed to reflect all four quarters of performance and was paid in January or later. In this case, however, the bonuses were awarded in December before Fourth Quarter performance had been determined.
In his letter, Kucinich questions how much information about these bonuses was made available to shareholders, as well as the government.
BOA had knowledge of and influence over Merrill's intent to pay out bonuses even before BOA took control of Merrill. According to the merger agreement of September 15, 2008, Merrill's bonus awards were to be made "in consultation with [Bank of America]." In an undisclosed attachment to the merger agreement, made public only recently by the Attorney General of New York State, Bank of America permitted Merrill the right to award up to $5.8 billion for calendar year 2008 performance.
While prior to the merger BOA knew of Merrill's intent to award billions of dollars in performance bonuses before the Fourth Quarter earnings were calculated, BOA did not disclose the details it possessed about the Merrill bonuses and the unusualness of the timing of those bonuses to its shareholders prior to their vote on the merger.
This raises important questions about what you knew about the Merrill bonuses, and what you did with your knowledge. If ordinary BOA shareholders were ignorant of the details of the Merrill bonus arrangement, was the U.S. government as well?
How to vote
Vote-by-mail ballot request deadline: Varies by state
For the Nov 3 election: States are making it easier for citizens to vote absentee by mail this year due to the coronavirus. Each state has its own rules for mail-in absentee voting. Visit your state election office website to find out if you can vote by mail.Get more information
In-person early voting dates: Varies by state
Sometimes circumstances make it hard or impossible for you to vote on Election Day. But your state may let you vote during a designated early voting period. You don't need an excuse to vote early. Visit your state election office website to find out whether they offer early voting.My Election Office
General Election: Nov 3, 2020
Polling hours on Election Day: Varies by state/localityMy Polling Place