Fallout from the financial crisis claimed another big-name Wall Street executive Thursday when former Merrill Lynch CEO John Thain was forced out of his new job at Bank of America. bac
The departure came after BofA CEO Kenneth Lewis flew to New York to confront Thain about recent developments at Merrill. "They mutually agreed that his situation was not working, and he resigned," BofA spokesman Robert Stickler said.
Last week, Merrill shocked Wall Street when it revealed a $15.3 billion fourth-quarter loss, pushing BofA to go to the U.S. government for an additional $20 billion to complete the merger — on top of the $25 billion in bailout funds it had already received. In its latest deal, the government also agreed to backstop further losses at BofA.
Thain also gave out bonuses to Merrill employees days before the merger closed on Jan. 1. "Merrill Lynch was an independent company until Jan. 1," BofA said in a statement. "John Thain (Merrill's chief executive) decided to pay year-end incentives in December as opposed to their normal date in January. BofA was informed of his decision."
Thursday's news pushed BofA shares down 14.5% to $5.71. Just a day earlier, Thain spent $483,000 to buy 84,600 BofA shares, a Securities and Exchange Commission filing showed. Thain declined comment Thursday.
Thain is the third top Merrill executive to leave in the last few months. Friction was evident in the months leading to the merger, from the departures of Robert McCann, who headed wealth management at Merrill, and Gregory Fleming, head of investment banking.
When Thain was hired at Merrill in December 2007, he got a $15 million signing bonus, on top of an annual salary of $750,000, for giving up the CEO post at the New York Stock Exchange. Thain replaced then-ousted CEO Stan O'Neal, under whose reign Merrill's losses mounted. O'Neal's severance package: $160 million.
Thain was initially praised for helping Merrill avert collapse last year by selling his company to BofA for about $29 a share. Merrill had reported more than $11 billion of losses in the previous three quarters with Thain at the helm.
But Thain came under a barrage of criticism for telling Merrill's board in December that he should get a 2008 bonus of as much as $10 million before he finally agreed to forgo the bonus.
BofA general counsel Brian Moynihan will succeed Thain.