Your tax dollars at work
Why does a BK company need someone in charge of a growth-and-acquisitions strategy?
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Merrill's Kraus Gets a Buyout Bonanza
By AARON LUCCHETTI and SUSANNE CRAIG
As Merrill Lynch & Co. thins its ranks by thousands of jobs as part of the securities firm's takeover by Bank of America Corp., one recent hire is likely to leave with more than $10 million in compensation, according to people familiar with the situation.
Peter Kraus, head of strategy at Merrill, won't be included in a broader announcement expected as soon as this week about which top executives are staying once the purchase is completed by year end, these people said. As a result of the takeover, terms of Mr. Kraus's contract have changed and will trigger the exit payment. Mr. Kraus was owed this money and would have collected it eventually had he stayed with Merrill, one person familiar with the contract said. He could leave with as much as $25 million.
[Peter Kraus] Bloomberg News/Landov
Peter Kraus, head of strategy at Merrill, could leave the firm with as much as $25 million as a result of the takeover by Bank of America.
Mr. Kraus, a former Goldman Sachs Group Inc. executive who started at Merrill in early September, was recruited by John Thain, the CEO of Merrill. Put in charge of growth-and-acquisitions strategy, Mr. Kraus wound up advising Mr. Thain on gloomier options as Merrill was battered by market turmoil. This included a possible sale of a piece of Merrill to Goldman Sachs and the firm's eventual sale to Bank of America, based in Charlotte, N.C.
Through a Merrill spokesman, Mr. Kraus declined to comment. He isn't affected by a provision in the government's rescue plan that curbs executive compensation, a person familiar with the situation said. Those restrictions cover the CEO, chief financial officer and three other highest-paid executives of the firm.
Of the 61,000 employees at Merrill, thousands are likely to lose their jobs as part of the deal with Bank of America, which has said it expects to wring about $4 billion in annual cost savings from the combined company, or $7 billion on a pretax basis. About 20% of the cuts will come from reduced personnel costs and elimination of duplicate corporate and administrative functions.
Mr. Thain is joining Bank of America as president of the combined company's global banking, securities and wealth-management units.
Meanwhile, Barclays PLC is preparing to cut at least 3,000 jobs from its payroll in the U.S., which includes former operations of Lehman Brothers Holdings Inc., according to a person familiar with the matter. The U.K. bank bought those businesses shortly after Lehman filed for bankruptcy protection last month, inheriting almost 10,000 employees. Barclays had 4,000 to 5,000 employees in the U.S. before the Lehman purchase.
The coming cuts are part of a steep retrenchment on Wall Street as it reels from massive write-downs and losses that are forcing firms to retool and downsize many businesses. Employment figures released by securities firms and government officials show relatively small declines so far, but job losses are expected to surge.
Separately, hedge fund Citadel Investment Group LLC said it hired former Merrill sales and trading executive Rohit D'Souza to run its capital-markets business.
—David Enrich contributed to this article.
Write to Aaron Lucchetti at aaron.lucchetti@wsj.com and Susanne Craig at susanne.craig@wsj.com |
