Merrill Lynch

(MER)

announced late Monday it will take a charge of about $1.2 billion due to newly adopted accounting rules for stock-based employee compensation and changes to retirement eligibility requirements for stock awards.

The combined one-time, noncash net charge in the first quarter of 2006 will be approximately $1.8 billion pretax, and $1.2 billion aftertax -- $850 million more than previously estimated in Merrill's 2005 10-K filing.

The New York-based financial services company, which has offices in 36 countries and territories and total client assets of approximately $1.8 trillion, changed its compensation policy in response to new accounting rules that make it mandatory for companies to recognize stock compensation expenses when shares are awarded and not when they vest.

To help implement the stricter future requirements, the terms of most outstanding stock awards previously granted to employees, including certain executive officers, were modified to permit employees to be immediately eligible for retirement with respect to those earlier awards.

According to the company, the one-time noncash compensation expenses in the first quarter of 2006 are "solely timing differences and are not expected to result in any substantive change in the ultimate cost of these stock-based compensation awards."

Shares of Merrill Lynch closed the regular session up 52 cents to $79.28.