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November 3, 2008
LET 'EM EAT CAKE
BOFA'S BARE-BONES BONUSES MAY SPUR MERRILL EXODUS
The
honeymoon that followed the Vegas-style marriage of
Merrill Lynch and Bank of America appears to be over.
According to people familiar with the matter, a culture
clash between the two banks has reared its head as some
of Merrill's brokers balk at the retention bonuses BofA
is offering to keep them on board.
The
dissatisfaction has reached such a fever pitch that
between 20 percent and 30 percent of the 16,800-strong
brokerage force - Merrill's crown jewel - might jump
ship, according to some Merrill brokers and Wall Street
observers. Merrill officials estimate the departures
will amount to no more than 15 percent of staff, sources
said.
Some
brokers said they're unhappy with the amounts they've
been offered to stay on - especially among those earning
under $1 million a year.
Other
brokers said they're nervous about conditions attached
to the bonuses, such as one that some contend forbids
them to communicate with clients if they leave BofA.
Merrill
officials deny its brokers will be prohibited from
traditionally accepted levels of contact with clients
when they leave, saying "suggestions to the contrary are
likely the product of those who want to recruit our
financial advisers to other firms."
Whatever the case, the mutterings raise fresh concerns
that Merrill's employees may not fit in with the
traditional, scrappier banking culture of their new
parent company.
The
brokerage firm, which agreed to be bought by BofA in
September, long had a reputation for nurturing employees
and treating them like gold, hence the nickname, "Mother
Merrill."
"Of
course, people are disappointed, but Bank of America is
known for not being very generous," said one Merrill
broker, who's dissatisfied with her bonus.
Officials declined to comment on criticisms of its bonus
pool, but a person close to the situation told The Post
the bulk of the bitterness is coming from the
lowest-producing advisers - a group Merrill is looking
to shed.
Indeed,
some brokers have been offered zilch to stay on board
the combined team, while those who have been offered
bonuses - just 50 percent of the work force - represent
nearly 80 percent of Merrill's broker business, this
person said.
"Where
are [these brokers] going to go?" this person said,
noting competitors like UBS and Morgan Stanley "have had
their own problems."
Nevertheless, competitors like Morgan and UBS are
aggressively recruiting, sometimes promising double what
the Merrill brokers are being offered in retention
bonuses.
And
given the turmoil from the merger, "everyone's targeting
Merrill," said an official from a competing firm.
"Definitely anyone that has a significant
book of business or a significant client base is very
valuable and it would not be hard for them to find
another home," said
Stuart D.
Meissner,
a securities lawyer who's been fielding calls from
Merrill brokers over the retention bonuses.
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