Despite $15 billion in losses, former Merrill Lynch CEO John Thain approved $4 billion in bonuses for top executives and $565 million in dividends to shareholders. All this happened at a time when the company should have been “building up cash.”
From Business Week:
“On Nov. 13, just three weeks before Merrill shareholders voted to approve the merger with BofA, Merrill’s former board approved the payment of 35 cent-a-share dividend to all common stockholders. The payout drained another $565 million from Merrill’s coffers at a time when the firm should have been building up cash, instead of spreading it around.
Now sure, one could argue that if Merrill had slashed the dividend to the bone, the brokerage’s stockholders may not have voted for the merger with BofA. But Merrill’s dividend payout came just weeks after Bofa announced on Oct. 6 it was slashing its dividend in half to 32 cents-a-share–a move the bank said would save it some $1.4 billion in cash each quarter. (The bank has since cut the dividend to a penny-a-share).”