John Thain, Merrill Lynch’s Chief Executive, said earlier this week at a speech in Dubai that, of Merrill’s 61,000 employees, thousands would lose their jobs when Merrill is merged into Bank of America. As reported in the Financial Times by Simeon Kerr and Greg Farrell, Mr. Thain said that jobs would be lost in the corporate and service sectors, such as information technology. Mr. Thain expects that Bank of America’s acquisition of Merrill’s investment and wealth planning businesses would be completed by year-end.
New York City is bracing itself for the loss of up to 35,000 jobs in the financial sector, according to estimates from William Thompson, the New York City Comptroller. Many of these job losses were the result of the collapses this year of Bear Stearns and Lehman Brothers. According to Mr. Thompson, New York City will lose as many as 165,000 private sector jobs over the next two years.
Barclay’s is also preparing to cut at least 3,000 jobs from its United States payroll. Barclay’s inherited almost 10,000 Lehman employees when it purchased some of Lehman’s business operations shortly after the firm’s bankruptcy filing.
These expected job losses are part of a steep retrenchment on Wall Street because of the massive write-downs and losses that are forcing firms to retool and downsize many businesses. While the employment figures by securities firms show relatively small decline so far, job losses are expected to surge.
Not all layoffs, however, are created equal. Some who lose their jobs are doing just fine. As reported by Aaron Lucchetti and Susanne Craig of The Wall Street Journal, Peter Kraus, Merrill’s head of strategy, will not be staying on once the Bank of America acquisition is complete. Because of this takeover, the terms of Mr. Kraus’ contract have changed and trigger an exit payment of more than $10 million. He could leave with as much as $25 million. That is not a bad severance for someone who started at Merrill in early September.
Mr. Kraus, a former Goldman Sachs executive, was recruited to join Merrill by John Thain, another Goldman alumnus. Mr. Kraus is not affected by the provision in the Government’s rescue plan that limits executive compensation. Those restrictions cover only the CEO, the Chief Financial Officer, and the three other highest paid executives of the firm.
If you are laid off by a Wall Street firm and are not one of the fortunate few, like Mr. Kraus, who have a sweetheart severance package, you will be on your own in dealing with any severance proposal made by your employer. At such times, assistance of counsel experienced in dealing with brokerage firm employment matters can be invaluable.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. The firm also has an active practice in representing individuals in employment disputes with brokerage firms. The firm is currently involved in representing several brokers in such disputes. For further information, please contact us.