Greedy Merrill Lynch's Shell Game

TPM and others are all up in arms because Merrill Lynch's former CEO John Thain wants his $10mm bonus, only 30% of what was promised in his contract. TPM and others are outraged because we tax payers have given Bank of America TARP money and they feel it shouldn't be used to pay failed executives' salaries.

Good point BUT the real story has been completely missed. Michelle Leder over at footnoted noted:

But things aren’t all that bleak, judging by a careful reading of some of the recent merger documents. That’s because according to this filing from Nov. 3, MLPFS stands to collect $25 million “payable upon the consummation of the merger”. And who is this MLPFS? Here’s what the filing says:

“MLPFS is an internationally recognized investment banking firm with substantial experience in transactions similar to the merger. Merrill Lynch selected MLPFS as its financial advisor because of MLPFS’s qualifications, expertise and reputation. MLPFS is a wholly owned subsidiary of Merrill Lynch. Certain members of management of MLPFS are also members of management of Merrill Lynch and have interests in the merger that are different from, or in addition to, the interests of stockholders of Merrill Lynch (no shit Sherlock!)
Of course, that was buried on pg. 62 of a fairly lengthy filing, so you definitely would have had to be looking for it. Equally interesting is that while Merrill gives lots of fairness opinions on all sorts of mergers, it doesn’t usually do it under the MLPFS moniker. And, there’s also the fact that Bank of America retained two other companies — Fox-Pitt and J.C. Flowers — to issue fairness opinions, in addition to using their own folks.

There was also this 8K filed by Bank of America on Nov. 21, which provided some further information on the hiring of MLPFS: “MLPFS is a wholly-owned subsidiary of Merrill Lynch, and thus its employees have actual or potential financial interests in the merger, including the prospect of continued employment with the successor entity after the close of the proposed merger.” (I added the emphasis)

So $10mm to a CEO that at least found a merger for the company and preserved some stock value and some jobs (unlike Lehman Brothers) is the BIG outrageous news and $25mm to "management" to supposedly do reduntant work already accomplished by others hired by B of A is completely ignored. Why is TPM and WSJ falling for this shell game? Thain will probably get the bonus and meanwhile the $25mm unnecessary payment will slip through completely unnoticed.

UPDATE:
Now Harry Reid is participating in the shell game:

"The TARP program, from which Merrill Lynch has taken billions of taxpayer dollars, was designed explicitly to limit executive compensation, bonuses and golden parachutes. While American families struggle to keep their jobs and their homes, I question the chutzpah of asking for a $10 million taxpayer-subsidized bonus..."

Ahem -- Harry? What about the $25mm???