John Thain
Encyclopedia
John Alexander Thain is an American businessman, investment banker, and currently chairman and CEO of the CIT Group.
Thain was the last chairman and chief executive officer
of Merrill Lynch
before its merger with Bank of America
. He was designated to become president of global banking, securities, and wealth management
at the newly combined company, but resigned on January 22, 2009. Ken Lewis
, CEO of Bank of America, reportedly forced Thain to step down after several controversies, such as the losses at Merrill Lynch which proved to be far larger than previously estimated, and the award of huge executive bonuses.
Thain has been nicknamed "Superman", due to his facial resemblance to the character's alter-ego Clark Kent
.
from January 2004 to December 2007. He also worked at Goldman Sachs, as head of the mortgage from 1985 to 1990, and president and co-chief operating officer from 1999 to 2004.
Thain reportedly was one of the runners-up to head Citigroup
. Merrill Lynch and Citigroup sought new leaders following the sudden departure of their former CEOs after the disappointing performance in the third quarter of 2007 due to the subprime mortgage crisis
.
Thain arranged the sale of Merrill to Bank of America at $29 per share, a 70 percent premium over the market price. The deal valued the brokerage at $50 billion. Thain was expected to be president of global banking, securities and wealth management, a new division at Bank of America, to oversee its corporate and investment bank and most of wealth management business.
at the New York Stock Exchange
told The Wall Street Journal
that Thain would be paid "a plain vanilla number", about $4 million a year including bonus, with no "strange retirement" program like the one former NYSE CEO Dick Grasso
was given.
Upon joining Merrill Lynch, Thain received a $15 million signing bonus. The firm announced that Thain would receive at least $50 million a year and could be paid as much as $120 million a year, based on the company's stock price. The Associated Press
identified Thain, who received $83.1 million, as one of the best paid executives of S&P 500 companies in 2007. In that year, Thain earned a total compensation of $83,785,021, which included a base salary of $750,000, a cash bonus of $15,000,000, stock grant of $33,013,151, and options grant of $35,017,421.
Thain suggested to the directors that he receive a bonus in 2008 of as much as $10 million, because he "saved Merrill" by selling it off to Bank of America
. After the compensation committee at Merrill refused the request, Thain reportedly dropped it on December 8, 2008.
It was revealed on January 22, 2009 that Thain spent $1.22 million of corporate fund in early 2008 to renovate two conference rooms, a reception area, and his office, spending $131,000 for area rugs, $68,000 for an antique credenza
, $87,000 for guest chairs, $31,000 for a commode
, and $1,100 for a wastebasket. Thain subsequently apologized for his lapse in judgment, and reimbursed the company in full for the costs.
Thain accelerated approximately $4 billion in bonus payment to employees at Merrill just prior to the close of the deal with Bank of America. Bank of America was aware of the payment, as allowing the payment to go through was reportedly one of the conditions under the merger agreement. Speculation mounted that some of TARP
fund was used for the bonus payment, but TARP recipients are yet to disclose how the funds were segregated, or what they were used for.
said that, without $138 billion in government assistance, including the infusion of $20 billion from the federal government, he would have pulled out of the Merrill deal, which had been approved by Bank of America shareholders in early December. People close to Lewis say his relationship with Thain was strained by Merrill's massive fourth quarter loss. Lewis himself faced criticism for rushing to buy Merrill for $28 billion after less than two days of due diligence.
On January 22, 2009, on CNBC's The Call, Charlie Gasparino
said that Thain was going to meet Lewis later in the day. Gasparino added that Thain's future at Bank of America was in doubt, although it was not certain whether he would be leaving. Gasparino then said that Thain spent $1.22 million to refurbish his office, shortly after he had been named as CEO of Merrill in January 2008. Merrill was still an independent firm at the time, and some analysts predicted that, with Thain as new CEO, the company would be back on track for a strong performance in the midst of disappointing results on Wall Street.
The tension between Thain and Lewis had been building since mid-December and culminated on January 22, 2009 when Lewis flew to New York to meet with Thain. After a 15-minute conversation between the two men, Thain agreed to resign.
On January 29, 2009, President Obama publicly criticized the large bonuses such as those handed out by Thain. Obama said: "I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don't provide help that the entire system could come down on top of our heads—that is the height of irresponsibility. It is shameful. And part of what we're going to need is for folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility. The American people understand that we've got a big hole that we've got to dig ourselves out of—but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up." Vice President Joe Biden also said the bonuses "offends the sensibilities. I mean, I'd like to throw these guys in the brig."
issued a subpoena to Thain in a probe into the bonuses he paid and received just days before the Bank of America takeover. Charges of criminal fraud against those involved in the payouts could be brought under the 1921 Martin Act
.
reported that CIT Group had announced that it was hiring Thain to replace interim CEO Peter Tobin immediately.
. His father is a doctor. He earned a bachelor's degree
in electrical engineering from MIT in 1977 and an MBA from Harvard Business School
in 1979. While attending MIT, Thain joined the Delta Upsilon
fraternity. He is active in social work and served as gala co-chair for a Publicolor
event in New York city that honored Rick Segal, Publicolor's former board chair. Thain and his wife, Carmen, have two daughters and two sons.
Thain's 25 acres (101,171.5 m²) property in New York state spans three townships, Rye, Harrison, and Rye Brook.
Thain was the last chairman and chief executive officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
before its merger with Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
. He was designated to become president of global banking, securities, and wealth management
Wealth management
Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services...
at the newly combined company, but resigned on January 22, 2009. Ken Lewis
Ken Lewis (executive)
Kenneth D. "Ken" Lewis is the former CEO, President, and Chairman of Bank of America, the largest bank in the United States and second largest in the world. On September 30th, 2009 Bank of America confirmed that Ken Lewis would be retiring by the end of the year...
, CEO of Bank of America, reportedly forced Thain to step down after several controversies, such as the losses at Merrill Lynch which proved to be far larger than previously estimated, and the award of huge executive bonuses.
Thain has been nicknamed "Superman", due to his facial resemblance to the character's alter-ego Clark Kent
Clark Kent
Clark Kent is a fictional character created by Jerry Siegel and Joe Shuster. Appearing regularly in stories published by DC Comics, he debuted in Action Comics #1 and serves as the civilian and secret identity of the superhero Superman....
.
Career
Before he came to Merrill, Thain had been the CEO of the New York Stock ExchangeNew York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
from January 2004 to December 2007. He also worked at Goldman Sachs, as head of the mortgage from 1985 to 1990, and president and co-chief operating officer from 1999 to 2004.
Thain reportedly was one of the runners-up to head Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
. Merrill Lynch and Citigroup sought new leaders following the sudden departure of their former CEOs after the disappointing performance in the third quarter of 2007 due to the subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
.
Thain arranged the sale of Merrill to Bank of America at $29 per share, a 70 percent premium over the market price. The deal valued the brokerage at $50 billion. Thain was expected to be president of global banking, securities and wealth management, a new division at Bank of America, to oversee its corporate and investment bank and most of wealth management business.
Compensation
In December 2003, interim chairman John ReedJohn S. Reed
John Shepard Reed is the former Chairman of the New York Stock Exchange. He previously served as Chairman and CEO of Citicorp, Citibank, and post-merger, Citigroup. He is currently the Chairman of the Massachusetts Institute of Technology's Office of Corporation. He was born in Chicago, Illinois,...
at the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
told The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
that Thain would be paid "a plain vanilla number", about $4 million a year including bonus, with no "strange retirement" program like the one former NYSE CEO Dick Grasso
Richard Grasso
Richard A. "Dick" Grasso was chairman and chief executive of the New York Stock Exchange from 1995 to 2003, the culmination of a career that began in 1968 when Grasso was hired by the Exchange as a floor clerk...
was given.
Upon joining Merrill Lynch, Thain received a $15 million signing bonus. The firm announced that Thain would receive at least $50 million a year and could be paid as much as $120 million a year, based on the company's stock price. The Associated Press
Associated Press
The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
identified Thain, who received $83.1 million, as one of the best paid executives of S&P 500 companies in 2007. In that year, Thain earned a total compensation of $83,785,021, which included a base salary of $750,000, a cash bonus of $15,000,000, stock grant of $33,013,151, and options grant of $35,017,421.
Thain suggested to the directors that he receive a bonus in 2008 of as much as $10 million, because he "saved Merrill" by selling it off to Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
. After the compensation committee at Merrill refused the request, Thain reportedly dropped it on December 8, 2008.
It was revealed on January 22, 2009 that Thain spent $1.22 million of corporate fund in early 2008 to renovate two conference rooms, a reception area, and his office, spending $131,000 for area rugs, $68,000 for an antique credenza
Credenza
A credenza is a piece of furniture that became very fashionable during the second half of the 19th century. Often made of a burnished and polished wood decorated with marquetry, a central cupboard would be flanked by symmetrical quadrant glass display cabinets...
, $87,000 for guest chairs, $31,000 for a commode
Commode
A commode, commode with legs, or commode on legs is any of several pieces of furniture. The word commode comes from the French word for "convenient" or "suitable", which in turn comes from the Latin adjective commodus, with similar meanings.Originally, in French furniture, a commode introduced...
, and $1,100 for a wastebasket. Thain subsequently apologized for his lapse in judgment, and reimbursed the company in full for the costs.
Thain accelerated approximately $4 billion in bonus payment to employees at Merrill just prior to the close of the deal with Bank of America. Bank of America was aware of the payment, as allowing the payment to go through was reportedly one of the conditions under the merger agreement. Speculation mounted that some of TARP
Troubled Assets Relief Program
The Troubled Asset Relief Program is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector that was signed into law by U.S. President George W. Bush on October 3, 2008...
fund was used for the bonus payment, but TARP recipients are yet to disclose how the funds were segregated, or what they were used for.
Departure from Bank of America
On January 16, 2009, Bank of America announced that Merrill suffered an unexpected loss of $15 billion for the fourth quarter of 2008. Bank of America CEO Ken LewisKen Lewis (executive)
Kenneth D. "Ken" Lewis is the former CEO, President, and Chairman of Bank of America, the largest bank in the United States and second largest in the world. On September 30th, 2009 Bank of America confirmed that Ken Lewis would be retiring by the end of the year...
said that, without $138 billion in government assistance, including the infusion of $20 billion from the federal government, he would have pulled out of the Merrill deal, which had been approved by Bank of America shareholders in early December. People close to Lewis say his relationship with Thain was strained by Merrill's massive fourth quarter loss. Lewis himself faced criticism for rushing to buy Merrill for $28 billion after less than two days of due diligence.
On January 22, 2009, on CNBC's The Call, Charlie Gasparino
Charlie Gasparino
Charles Gasparino is a senior correspondent for the Fox Business Network, where he reports on major developments in the world of finance and politics, as well as a blogger, occasional radio host, New York Times bestselling author, and print journalist. He lives and works in New York City...
said that Thain was going to meet Lewis later in the day. Gasparino added that Thain's future at Bank of America was in doubt, although it was not certain whether he would be leaving. Gasparino then said that Thain spent $1.22 million to refurbish his office, shortly after he had been named as CEO of Merrill in January 2008. Merrill was still an independent firm at the time, and some analysts predicted that, with Thain as new CEO, the company would be back on track for a strong performance in the midst of disappointing results on Wall Street.
The tension between Thain and Lewis had been building since mid-December and culminated on January 22, 2009 when Lewis flew to New York to meet with Thain. After a 15-minute conversation between the two men, Thain agreed to resign.
Obama administration
On January 23, 2009, President Obama referred to John Thain by saying "the reports that we’ve seen over the last couple of days about companies that have received taxpayer assistance then going out and renovating bathrooms or offices or in other ways not managing those dollars appropriately." Obama's press secretary Robert Gibbs also said taxpayer money shouldn't go to "line the pockets of people" who've gotten financial assistance. "The American people need to be greatly assured that their hard-earned money is not going to the bonuses or the remodeling of an office at a bank that’s in trouble," Gibbs said.On January 29, 2009, President Obama publicly criticized the large bonuses such as those handed out by Thain. Obama said: "I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don't provide help that the entire system could come down on top of our heads—that is the height of irresponsibility. It is shameful. And part of what we're going to need is for folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility. The American people understand that we've got a big hole that we've got to dig ourselves out of—but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up." Vice President Joe Biden also said the bonuses "offends the sensibilities. I mean, I'd like to throw these guys in the brig."
Criminal investigation
On January 27, 2009, New York Attorney General Andrew CuomoAndrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...
issued a subpoena to Thain in a probe into the bonuses he paid and received just days before the Bank of America takeover. Charges of criminal fraud against those involved in the payouts could be brought under the 1921 Martin Act
Martin Act
The Martin Act, New York General Business Law article 23-A, sections 352-353,is a 1921 piece of legislation in New York that gives extraordinary powers and discretion to an attorney general fighting financial fraud. People called in for questioning during Martin Act investigations do not have a...
.
Post-Merrill career
On the evening of February 7, 2010, ReutersReuters
Reuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
reported that CIT Group had announced that it was hiring Thain to replace interim CEO Peter Tobin immediately.
Memberships
Thain is a member of the following organizations:- Howard UniversityHoward UniversityHoward University is a federally chartered, non-profit, private, coeducational, nonsectarian, historically black university located in Washington, D.C., United States...
- Board of Trustees - MIT Corporation, Dean's Advisory Council – MIT Sloan School of ManagementMIT Sloan School of ManagementThe MIT Sloan School of Management is the business school of the Massachusetts Institute of Technology, in Cambridge, Massachusetts....
- INSEADINSEADINSEAD is an international graduate business school and research institution. It has campuses in Europe , Asia , and the Middle East , as well as a research center in Israel...
– U.S. National Advisory Board - James Madison Council of the Library of CongressLibrary of CongressThe Library of Congress is the research library of the United States Congress, de facto national library of the United States, and the oldest federal cultural institution in the United States. Located in three buildings in Washington, D.C., it is the largest library in the world by shelf space and...
- Federal Reserve BankFederal Reserve SystemThe Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...
of New York's International Capital Markets Advisory Committee - French-American FoundationFrench-American FoundationThe French-American Foundation is the principal non-governmental organization linking France and the United States at leadership levels and across the full range of the French-American relationship....
- Board of Trustees of the National Urban LeagueNational Urban LeagueThe National Urban League , formerly known as the National League on Urban Conditions Among Negroes, is a nonpartisan civil rights organization based in New York City that advocates on behalf of African Americans and against racial discrimination in the United States. It is the oldest and largest...
- The Trilateral CommissionTrilateral CommissionThe Trilateral Commission is a non-governmental, non-partisan discussion group founded by David Rockefeller in July 1973 to foster closer cooperation among the United States, Europe and Japan.-History:...
- Yale UniversityYale UniversityYale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
- John and Carmen Thain established the "Thain Family Café", which is part of the Yale University Anne T. and Robert M. Bass Library. The Café offers refreshments prepared with organic and local ingredients, secured through the Yale Sustainable Food Project. At the dedication of the Library in November 2007, Thain spoke warmly of Yale’s attention to its undergraduates (his daughter attended the University) and stated, “This was a way for us to give back and contribute to the student experience.” - New York-Presbyterian Foundation - Thain serves as a governor
- Republican PartyRepublican Party (United States)The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
- Thain is a prominent member of the party and a personal friend of Senator John McCainJohn McCainJohn Sidney McCain III is the senior United States Senator from Arizona. He was the Republican nominee for president in the 2008 United States election....
. Thain was a senior economic policy adviser to McCain and was considered a leading candidate to be his Treasury Secretary. In support of McCain's unsuccessful 2008 bid for the presidency, Thain sponsored a number of fundraisers, including a $2,300-a-seat breakfast at The Regency HotelLoews Hotels-About Loews HotelsHotels:Loews Hotels currently owns and/or operates 18 hotels and resorts in the United States and Canada:-United States locations:*Loews Annapolis Hotel - Annapolis, Maryland*Loews Atlanta Hotel - Atlanta, Georgia...
on Park Avenue on December 14, 2007.
Personal life
Thain was born in Antioch, IllinoisAntioch, Illinois
Antioch is a village in the Antioch Township of Lake County, Illinois, United States. The population was 14,430 at the 2010 census. Antioch is part of the Chicago metropolitan area.- Prior to incorporation :...
. His father is a doctor. He earned a bachelor's degree
Bachelor's degree
A bachelor's degree is usually an academic degree awarded for an undergraduate course or major that generally lasts for three or four years, but can range anywhere from two to six years depending on the region of the world...
in electrical engineering from MIT in 1977 and an MBA from Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
in 1979. While attending MIT, Thain joined the Delta Upsilon
Delta Upsilon
Delta Upsilon is the sixth oldest international, all-male, college Greek-letter organization, and is the oldest non-secret fraternity in North America...
fraternity. He is active in social work and served as gala co-chair for a Publicolor
Publicolor
Publicolor is a New York City-based non-profit organization founded in 1996, by Ruth Lande Shuman, an industrial designer with an interest in the psychological effects of color., that aims to improve education in youth by promoting an imaginative use of color in school buildings.Its operations...
event in New York city that honored Rick Segal, Publicolor's former board chair. Thain and his wife, Carmen, have two daughters and two sons.
Thain's 25 acres (101,171.5 m²) property in New York state spans three townships, Rye, Harrison, and Rye Brook.
External links
- Commentary: 'No possible way to justify' bonus request, from CNN
- Bank of America's John Thain should go to jail, Kansas City Star editorial
- Ousted boss John Thain gored Merrill Lynch's bull with a gold-plated office and stealth bonuses, New York Daily News editorial
- Mr.Thain Moves In. The Big Board's new Chief, from The Economist
- Breaking the Bank PBS Frontline documentary with interviews of John Thain and Ken Lewis about the acquisition of Merrill Lynch by Bank of America amidst the 2008 fiscal crisis.