Monday, February 2, 2009

Thain's Gains Or Losses

John Thain took the reigns as CEO of Merrill Lynch less than one year ago. He oversaw the company as its stock dropped nearly 70% and a deal was eventually struck to sell the company to Bank of America. Thain lobbied for a $10 million bonus following the takeover, but withdrew his request when there was a public outcry. Then, when the media sensationalized his office purchases, Thain reported that he would pay the firm back for the excessive purchases which "shouldn't have been made". Smart move, lest he be vilified like his fellow former CEO Richard Fuld, whom we discussed here.

Reviewing the list of items Thain purchased for his office definitely lends itself to some shock for the reader. When Thain purchased these, perhaps they seemed to make sense since it was the office that was footing the bill. In retrospect though, now that Thain is paying for these himself, he must also be wondering what he was thinking:
  • Area Rug $87,784
  • Mahogany Pedestal Table $25,713
  • 19th Century Credenza $68,179
  • Pendant Light Furniture $19,751
  • 4 Pairs of Curtains $28,091
  • Pair of Guest Chairs $87,784
  • George IV Chair $18,468
  • 6 Wall Sconces $2,741
  • Parchment Waste Can $1,405
  • Roman Shade Fabric $10,967
  • Roman Shades $7,315
  • Coffee Table $5,852
  • Commode on Legs $35,115
If attracting intelligent CEOs requires allowing these types of expenses, maybe it's in the best interests of shareholders to allow this to take place: they are desperate for a manager that can pull them out of this mess. But on the other hand, it seems paradoxical that a competent management would see it fit to spend over $1400 on a garbage can, whether the company is tanking or not.

Spending of this nature would make our friends at Early Retirement Extreme cringe!

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