Mary Altaffer/AP Photo
John Thain. Mary Altaffer/AP Photo
John Thain, the controversial former head of Merrill Lynch who helped make that company's acquisition by Bank of America happen but was forced out soon afterwards, has been named chief executive of CIT.
Thain became a symbol of Wall Street's excesses because of his demand, later dropped, for a $10 million bonus in 2008 during a time when Merrill was imploding. Then there was his rushing through of about $4 billion in bonuses to Merrill executives before the completion Bank of America's completion of the Merrill acquisition at a time when Merrill was booking huge losses.
And as if that weren't enough, Thain really stepped into it with the $1.2 million refurbishing of his offices, including a $35,000 commode, a fancy word for a toilet. Thain later apologized for what he called a lapse in judgment.
Even so, Thain has long been viewed as one of the sharpest minds on Wall Street, which helps explain why CIT has turned to him with a compensation package valued at $6 million — $500,000 in cash and $5.5 million in stock.
CIT, a lender to small and medium sized business, has been operating under bankruptcy court protection.
As the Associated Press reported:
Investors reacted positively to the announcement that Thain will take the helm of the lender, which is based in New York. Its shares rose $1.25, or 5.7 percent, to $32 in premarket trading.
CIT will pay Thain an annual cash salary of $500,000. He will also receive $5.5 million in stock annually, of which $2.5 million will be subject to a one-year holding period. The remaining $3 million cannot be sold for three years.
Thain could also receive up to $1.5 million in bonuses based on the performance of the company. The board of directors will determine whether to award the performance-based bonuses.