Merrill Lynch CEO set to top executive pay again

NEW YORK - Merrill Lynch chief executive officer Stanley O'Neal is poised to remain Wall Street's highest paid CEO after being paid US$20.2 million ($29.4 million) in stock for last year.

A filing with the US Securities and Exchange Commission yesterday shows O'Neal, 54, was paid 280,167 Merrill shares. Any additional compensation in cash, stock options or benefits will be disclosed in Merrill's 2005 proxy statement in March.

A record year on Wall Street has seen huge bonuses all round and Merrill, the world's largest securities firm, awarded ONeal's top seven lieutenants a total of US$78.5 million.

At present, Goldman Sachs' chief Henry Paulson, 59, is the highest paid for last year receiving US$37 million in shares and stock options for the fiscal year that ended in November but that could change in March. Lehman Bros' boss Richard Fuld, 59, received US$14.9 million in stock and 350,000 options.

"We're not worried about these guys being under-compensated, obviously," said Jannice Koors, a managing director at compensation consultant Pearl Meyer & Partners in New York.

"In a year of record performance, you would expect that their compensation would reflect that."

O'Neal, in his third year as Merrill's CEO, guided the firm to record earnings of US$5.22 billion, up 18 per cent from 2004. Others to benefit at Merrill were Dow Kim, 43, co-head of investment banking, who got about US$14.8 million in stock, up from US$11 million last year. His counterpart, Gregory Fleming, 42, got US$11.8 million. Chief administrative officer Ahmass Fakahany was paid US$10.6 million in stock, up 41 per cent from 2004. Robert McCann, 47, who oversees Merrill's 15,160 brokers, received a 17 per cent increase to US$8.8 million in stock. Robert Doll, 51, head of money management, was awarded US$6.1 million.

O'Neal's total package of about US$32 million last year was more than Paulson, Fuld, Morgan Stanley's Philip Purcell or Bear Stearns CEO James Cayne.

Bear Stearns gave Cayne, 71, US$10.3 million in stock for 2005. John Mack, 61, who replaced Purcell as Morgan Stanley's CEO in June, limited his bonus to US$11.5 million as he had been with the firm for only five months when the award was granted.

Together, Merrill, Goldman, Lehman, Morgan Stanley and Bear Stearns had net income of US$19.8 billion in 2005, the highest ever.

Merrill said it was changing the way it calculated stock bonuses to incorporate targets set by the management development and compensation committee of its board of directors.

The initial goal under the so-called managing partner incentive programme is to boost the firm's return on equity during the next three years.

Merrill's ROE - a measure of how effectively a company reinvests earnings on behalf of shareholders - was 18 per cent last quarter, the highest in five years. Goldman and Morgan Stanley each posted a fourth-quarter ROE of 25.2 per cent. Lehman's was 20.9 per cent and Bear Stearns 17.7 per cent.

In an effort to boost ROE, O'Neal has authorised US$8 billion of stock buybacks since February 2004.

- BLOOMBERG