Bank of America had a role in the payment of bonuses worth $4 billion that Merrill Lynch approved for its executives ahead of the brokerage's sale to BofA, the Financial Times reported Sunday.
We never said we didn't talk with them about it. But, in the end, it was their decision and they informed us of it, Bank of America is quoted as saying according to the FT report.
The newspaper says that before the bonus payments were approved in a board meeting on December 8, Merrill Lynch's Chief Executive John Thain talked at least twice with J. Steele Alphin, Bank of America's chief administrative officer.
During the talks, Alphin recommended, and Thain accepted, to change Merrill's compensation mix of 60 percent cash and 40 percent stock, to conform with Bank of America's system of 70 percent cash and 30 percent stock, a person familiar with Thain's actions told the Financial Times.
The bonuses paid for 2008 were down 41 percent from the previous year, were all determined together with Bank of America, Thain said in a memo dated Sunday to top Merrill executives, according to Bloomberg.
Merrill paid an estimated $4 billion in bonuses in December just days before its sale to Bank of America was completed. The bank usually pays the bonuses in January or February.
The move raised controversy after Merrill reported an unexpected loss of $15.31 billion in the fourth quarter, pressuring BofA to ask for further financial aid from the government's bailout fund to absorb the debt.
Bank of Americas' shareholders are filing lawsuits claiming they weren't told about the true financial condition of Merrill Lynch before the firms merged in December.