Column
$1 Million Offices, New Corporate Jets and Other FreePassers on Wall Street
Recent headlines hitting the news over the last several days indicate that the FreePasser epidemic is alive and well on Wall Street and in corporate America. However, the scale of some of these abuses amaze even me.
The $1 Million Office
CNBC reporter Charlie Gasparino reported that former Merrill Lynch CEO John Thain spent $1.2 million to redecorate his office and $800,000 to hire an interior designer, the same one currently doing the White House for President Obama and his family for only $100,000, one of the rare times that government got a better deal!. I guess the ex-CEO was probably preoccupied negotiating his bonus.
Accelerated Bonus Payments
Speaking of bonuses, it turns out that bonuses to executives and other senior management at Merrill Lynch were accelerated and paid prior to its sale to Bank of America. This was done while Merrill was experiencing severe financial problems and seeking government assistance to survive. Bank of America was hesitant to complete the deal until it received government assurance of its support.
Considering Merrill’s financial condition, had these bonuses been postponed the funds could have been used to prevent senior executives from jumping ship after the sale. Instead we are hearing about the need to pay additional retention bonuses to keep these people from departing.
A New $50 Million Corporate Jet for Citigroup
According to the New York Post, Citigroup intended to purchased a new $50 million Dassault Falcon 7X corporate jet. This is after receiving billions of dollars in taxpayer funding in order to survive. Citigroup actually has a fleet of corporate jets that are currently flying during this financial crisis. Fortunately, under intense government pressure, they have canceled the purchase.
These are all classic examples of FreePassers who obtain benefits without having to deal with the negative consequences. The interesting thing is that the senior executives responsible all come from Wall Street firms that were originally private partnerships. This behavior would never have been tolerated at these organizations. If similar actions had been taken then, I guarantee you that their careers would have come to an abrupt end.
There are successful firms that have dealt with the FreePasser problem. I will examine one of them in my next entry.
Tags: Citigroup, Merrill Lynch, Wall Street
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