Merrill Lynch chief executive John Thain and his head of trading could pocket $47 million (£26.1 million) if they leave the bank, or take lesser roles under Bank of America ownership.

Thain, brought in last December after Stan O'Neal was thrown out of the top job, stands to collect about $11 million on the vesting of free shares if he does not stay after the sale.

Trading chief Thomas Montag, recruited by Thain from Goldman Sachs, where the two had been colleagues, would get $30 million in stock awards and at least $6.4 million in options if he is dismissed or his duties are diminished.

While Thain was brought in to save the bank, and has successfully sold it, rather than hit the wall like Lehman Brothers, the company has performed dismally on his watch. Merrill's shares returned more than 13% a year from 2000 to 2006 but have fallen about 70% since Thain's first day.

“Investors will definitely be disappointed,” one Wall Street analyst said. “Thain's claim to fame here is that he kept them from going bankrupt.”
Under the terms of the deal, each Merrill share will be exchanged for 0.8595 of a share of Bank of America. Because the payment is in stock, Merrill shareholders would get less if the share price falls before the deal's closing date, scheduled for the first quarter of next year.

Any payouts triggered by the takeover are on top of a $15 million signing bonus awarded to Thain last December and a guaranteed $39 million bonus Montag is due to get in January.

If Thain leaves the company, he will get 379,637 shares, worth $11 million at the $29 per share offering price, according to Graef Crystal, a California-based compensation consultant.

Montag was also given 1.05 million shares to replace stock grants from his previous employer that he forfeited by joining Merrill. He also has 10-year options on 2.4 million shares of Merrill Lynch stock carrying a strike price of $26.40, Crystal said.

Those options, which would fully vest if he left the combined company, would be worth a minimum of $6.4 million at the $29-a-share offer price, according to Crystal, and could be worth far more.
Merrill declined to comment.