John Thain, the chief executive of Merrill Lynch, agreed to forgo a bonus this year, after news that he had requested $10m (£6.7m) sparked a public outcry.
Andrew Cuomo, the New York State attorney general who is investigating Wall Street pay, fired off an angry letter to Merrill's compensation committee saying a "performance bonus" for Mr Thain and other executives would be "oxymoronic".
The leak of details about the private to-and-fro between the chief executive and the committee sparked a debate across Wall Street yesterday about Mr Thain's worth.
The former Goldman Sachs executive had earlier suggested that he should be paid $5m- $10m for effectively saving Merrill from oblivion, but he faced opposition from members of the committee. In the end, he backed down and did not ultimately request any money. He and four other members of the senior executive team will not have a bonus this year.
On the day that Lehman Brothers filed for bankruptcy, he agreed to sell Merrill to Bank of America to avoid becoming the next corporate victim of September's financial panic.
However, Merrill and Bank of America are recipients of $25bn from the US taxpayer as part of the Wall Street bailout plan, and Mr Cuomo said that paying Mr Thain $10m would be "shocking". He wrote: "Paying executives at Merrill millions each in 'performance' bonuses in this context would be oxymoronic, to say the least, and certainly a thumb in the eye to taxpayers ... In terms of performance, Merrill has reported losses for every quarter this year and has lost more than $11bn for the year as a whole."
Rival investment banks, led by Goldman Sachs, have axed bonuses for senior executives this year, and John Mack, Morgan Stanley's chief executive, agreed yesterday to forgo his bonus, too. Across Wall Street, there are deep cuts in pay this year, and thousands of staff are losing their jobs as the industry retrenches. Merrill itself – which will continue to be run by Mr Thain after the takeover by BofA closes – is expected to lay off between 10,000 and 30,000 people.Reuse content