Merrill Awarded Top Officers Big '02 Bonuses Despite Slump

By SUSANNE CRAIG and DAN LOWREY
Staff Reporters of THE WALL STREET JOURNAL

Merrill Lynch & Co. rewarded both its chairman and its chief executive with $7 million bonuses last year despite the continued stock-market rout that has eaten into many of the firm's key businesses.

Chairman David Komansky's pay in 2002 was $14.4 million, while CEO E. Stanley O'Neal was paid $14.3 million in 2002, the Securities and Exchange Commission filing said. In addition to his $7 million bonus, Mr. Komansky received a base salary of $700,000, restricted stock valued at $4.8 million and stock options the firm valued at $1.9 million on their grant date. Mr. O'Neal received $500,000 in salary, a $7.2 million cash bonus, restricted stock valued at $4.7 million and options valued at $1.9 million.

Their bonuses increased from $1 million the previous year when Merrill Lynch, the country's largest brokerage firm, imposed a limitation on incentive compensation paid in cash to executive and senior officers. Overall, Mr. Komansky's pay fell 11% from the previous year and Mr. O'Neal's dropped by about 33% in 2002, compared to 2001.

Despite one of the worst business environments in years, many Wall Street chiefs continued to pull down big annual paychecks in 2002, many of them topping $10 million. Morgan Stanley's CEO Philip Purcell received a 2002 pay package of $11 million. Goldman Sachs Group Inc.'s Henry Paulson made $12.1 million and Lehman Brothers Holdings Inc.'s Richard Fuld took home a pay package valued at $12.5 million. At Bear Stearns Cos., one of the few securities firms that saw its profit rise in 2002, CEO James Cayne saw his total compensation more than double to $19.6 million last year.

The still-hefty paychecks are drawing fire from certain corners as out of touch with the times as many of these firms have laid off thousands of workers. During 2002, Merrill reduced its ranks by 6,500 employees, bringing its total job cuts to 21,700 since its employment peaked in 2000. The employment level of the securities industry is down almost 10% since peaking in late 2000, according to the U.S. Bureau of Labor Statistics.