The chief executives of Merrill Lynch & Co. and Morgan Stanley reportedly will forgo year-end bonuses amid a dire economic climate.
Merrill Lynch CEO John Thain will not receive a $10 million bonus as he requested just two months after receiving $10 billion in bailout money from the federal government, the Wall Street Journal reports.
Thain, who has been with the investment bank since December 2007 and earned a sign-on bonus of $15 million that year, had recently suggested to Merill directors that he received a 2008 bonus of as much as $10 million. Thain was initially resistant to the prospect of not getting a bonus, people familiar with the matter told the Journal.
Earlier Monday, Senate Majority Leader Harry Reid slammed Thain for requesting the bonus -- subsidized by taxpayers -- and called on the company to reject the request.
"The TARP program, from which Merrill Lynch has taken billions of taxpayer dollars, was designed explicitly to limit executive compensation, bonuses and golden parachutes." Reid said in a written statement.
"While American families struggle to keep their jobs and their homes, I question the chutzpah of asking for a $10 million taxpayer-subsidized bonus. Americans deciding which bills to pay this month just to make ends meet do not want their hard-earned money even indirectly spent rewarding executives from banks that are largely responsible for the economic crisis," he said.
On Oct. 14, the faltering investment bank received $10 billion from the Troubled Asset Relief Program to save itself from falling into bankruptcy.
Morgan Stanley CEO John Mack is also giving up his bonus -- for the second straight year -- amid a climate of bank failures, thousands of layoffs and an economic recession, the Associated Press reports.
Mack said in a memo Monday to employees obtained by The Associated Press that he and the firm's two presidents, James Gorman and Walid Chammah, informed their board's compensation committee of their decision to forgo 2008 bonuses, and the committee accepted.
He also said the company is planning to make further changes to year-end compensation for other employees.
Mack did not receive a bonus for 2007, either.
The Associated Press contributed to this report.