The real bonuses and the phoney profits have been a feature of Merrill Lynch's US operations.
But ex CEO John Thain's actions seem to me to show the moral bankruptcy of Wall Street. Merrill Lynch paid out $15 billion to executives in 2008 which just matched the controversial 4th quarter losses that Bank of America (its purchaser) have complained they were unaware of. Moreover, while Bank of America begged Washington for $20 billion more in handouts, Thain approved an accelerated bonus pool of $4 billion for his executives.
In addition while, in the scheme of things it is trivial, one cannot help wondering how Thain could have approved $1.2 million of shareholder monies for redecorating his office. I think Thain should go to jail. The argument that Thain sold Merrill Lynch to Bank of America for $44 billion and therefore 'saved the business' seems questionable to me. This seems, again, to have been a deception - the $50 billion dollar deal from hell.
I've read for years that executives have to be paid absolutely huge salaries to prevent them leaving. It was 'competition' working. But what's the point of retaining executives who drive firms into bankruptcy and who require bonuses that exceed earnings.
What happened to ethics in all this? Do ethical issues become redundant when you 'allign' executive interests with those of shareholders by suitably cute incentive contracts?
The appalling behaviour of prominent business executives threatens our prosperity by undermining the basic institutions of capitalism.