Merrill's Thain Backs Off $10M Request

However, the timing of Thain's request has raised more than a few eyebrows. It comes amid a slew of layoffs and bonus reductions for companies across the financial sector. In the past month, Credit Suisse (CS), Citigroup (C) and others have implemented substantial reductions in headcount.

Bank of America itself is gearing up to shed 30,000 employees as it merges with Merrill, cuts that will likely impact thousands of Merrill workers.

Thain's $10 million request has attracted the attention of many Wall Street observers, including that of New York Attorney General Andrew Cuomo. In a letter sent Monday to Merrill's board, Cuomo called reports of Thain's request "nothing less than shocking."

"He should not get a bonus. None of them should. Full stop," says Carter Burgess, managing director and head of board recruiting practice of RSR Partners, of Thain and other Merrill brass.

Burgess says that former Merrill CEO Stan O'Neal was responsible for much of the firm's current troubles, yet he left with a compensation package worth more than $150 million. He said that the board should be held accountable for its former mistakes, and that he hopes it will deny Thain the bonus.

"He's already rich beyond anybody's imagination," says Burgess. "What is this for?"

Dave Schmidt, senior consultant at James F. Reda, a compensation consulting firm, says he can't think of any top Wall Street execs who deserve bonuses.

"Even if someone did deserve a bonus, the guy on Main Street is not going to get it. Why would you put your company in the public eye unnecessarily?" He says that in light of this, Merrill's board almost had no choice but to refuse Thain's proposal.

As to Thain's argument that he saved the company from more dire consequences, Schmidt points out that "it was in his own self-interest to salvage what he could." Thain's substantial equity position in Merrill -- he held 747,268 shares as of Dec. 1, according to a recent regulatory filing -- could have become worthless if he hadn't struck a deal, says Schmidt.

"I think he did act in the best interest of the shareholders, of which he was one," he says. "So good for him."

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