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JOHN THAIN’S BONUS….The Wall Street Journal reports on the latest in the bonus soap opera:

Merrill Lynch & Co. chief John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered securities firm’s compensation committee is resisting his request, according to people familiar with the situation.

….A few months ago, when the board began seriously considering 2008 bonuses, a proposal was presented to the compensation committee by Merrill that Mr. Thain should be paid in excess of $30 million, according to people familiar with the matter. That number has since come down in recent talks with various board members and Mr. Thain has recently indicated to committee members that $5 million to $10 million is more reasonable.

Well, that’s mighty big of him, isn’t it? Especially for a guy who got a $15 million bonus just for signing on at Merrill a year ago.

But garden variety outrage isn’t what I’m after here. What I want to know is: what was Thain’s bonus plan when he was hired? According to the Journal, “Merrill shares were trading above $50 when he was hired, and his pay package was structured heavily toward his ability to increase the price by another $40 or more. Merrill’s shares have fallen steadily this year, closing Friday at $13.04 in 4 p.m. New York Stock Exchange composite trading.”

Look: the plan he signed is the plan he signed. If his bonus was based on increasing Merrill’s stock price, and instead their stock collapsed, then he shouldn’t get a bonus. Instead of just saying so, though, Thain and the compensation committee will apparently go through something that’s become standard American CEO kabuki, in which the comp plan is essentially rewritten if “bad luck” reduces bonuses below a level that’s tolerable to our titans of industry. In this case, Thain’s argument is that he saved Merrill by selling it off to Bank of America, a deal that BofA had been lusting over for ages and that required, according to news reports, little more than a couple of days to put together.

This isn’t a matter of outrage toward John Thain personally. For all I know he did the best he could with the hand he was dealt. But that doesn’t matter. He’s getting paid plenty of money for showing up to work, and arranging a shotgun marriage after presiding over a historic collapse hardly seems deserving of special attention. If he doesn’t have the horse sense to figure that out on his own, BofA might want to think twice about keeping him aboard.

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