Merrill Lynch & Co. Inc. "secretly" moved up the date it awarded bonuses for last year, New York Attorney General Andrew Cuomo said Wednesday.
In a letter to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, Mr. Cuomo wrote that Merrill, despite its billions of dollars in losses, awarded $3.6 billion in bonuses to more than 39,000 employees on the eve of its sale to Bank of America Corp. last year, giving more than $121 million combined to four top executives. Nearly 700 employees received bonuses of more than $1 million each, he said.
Mr. Cuomo, who is probing executive compensation issues at firms that received or were set to receive money under the government's Troubled Asset Relief Program, said he has been seeking information about what 2008 bonuses Merrill intended to award to executives since late October.
"Rather, in a surprising fit of corporate responsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives," he said. "Merrill Lynch has never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth quarter earnings announcement and before the planned takeover of Merrill by Bank of America."
Last month the attorney general sent subpoenas to John Thain, Merrill's former chief executive, and J. Steele Alphin, Bank of America's chief administrative officer.
Merrill's decision to award bonuses "prematurely" and Bank of America's apparent complicity, the attorney general wrote in his letter, raise "serious and disturbing questions." In his review of the bonus payments, the attorney general said he found that 696 individuals at Merrill received more than $1 million in bonuses, with 28 individuals receiving a combined $499 million.
Ken Lewis, Bank of America's chief executive, told the House Financial Services Committee Wednesday that he had no control over Merrill's bonuses before B of A took over in January. He implied that B of A had asked Merrill to lower the bonuses, but couldn't force them.
Mr. Lewis was among eight bank chief executives testifying in Washington Wednesday about how they are deploying money they have received under the government's bailout program.