The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Mon, 20 Apr 2026 13:53:40 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Merrill Bonuses Raised Issues in Merger with Bank of America – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Merrill Bonuses Raised Issues in Merger with Bank of America https://corpgov.law.harvard.edu/2009/11/07/merrill-bonuses-raised-issues-in-merger-with-bank-of-america/?utm_source=rss&utm_medium=rss&utm_campaign=merrill-bonuses-raised-issues-in-merger-with-bank-of-america https://corpgov.law.harvard.edu/2009/11/07/merrill-bonuses-raised-issues-in-merger-with-bank-of-america/#respond Sat, 07 Nov 2009 16:21:17 +0000 http://blogs.law.harvard.edu/corpgov/?p=5123?d=20150120143500EST Posted by Joseph E. Bachelder III, Law Offices of Joseph E. Bachelder, on Saturday, November 7, 2009
Editor's Note:

This post comes is based on an article that first appeared in the New York Law Journal.

On Jan. 1, 2009, Merrill Lynch & Co. Inc. (“Merrill”) merged with Bank of America Corporation (“BofA”). [1] At the end of 2008, prior to the close of the merger, Merrill awarded approximately $3.6 billion in bonuses to its employees. The payment of these bonuses has been the subject of numerous investigations and lawsuits. This column discusses (i) the background to the payment of these bonuses and (ii) a pending lawsuit charging BofA with not furnishing adequate information to its shareholders in connection with their vote on Dec. 5, 2008, in which they approved the merger. [2]

Background

In the one-week period beginning Sept. 13 and ending Sept. 19, 2008, crises erupted at a number of major financial firms. The investment firm of Lehman Brothers filed for bankruptcy. The insurance conglomerate AIG received a pre-TARP bailout of $85 billion (giving the Federal Reserve a 79.9 percent stockholder position; additional amounts subsequently were provided with the total bailout amounting to approximately $170 billion). A third firm facing a financial crisis was Merrill. [3]

On Saturday, Sept. 13, 2008, Kenneth Lewis, the chief executive officer of BofA, met with John Thain, the chief executive officer of Merrill. They discussed the possible acquisition by BofA of Merrill. Merrill’s losses were turning out to be significantly greater than anticipated earlier in the year. Merrill’s losses, the deepening crisis on Wall Street and the precipitous drop in Merrill’s stock price threatened its survival.

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