NEW YORK (Dow Jones)--Merrill Lynch & Co. (MER) Chairman and Chief Executive E. Stanley O'Neal received a 16% boost in 2005 compensation to $37 million, the company said Friday in a filing with the Securities and Exchange Commission.
O'Neal, 54, received $700,000 in salary and a bonus of $34.3 million that included $20.2 million in restricted stock. He also was tentatively awarded another $2 million that the company included in his total compensation but which will be awarded only if Merrill hits a targeted profitability goal over the next three years.
In 2004, O'Neal was paid $32 million, all but $700,000 of which was awarded in the form of Merrill stock. O'Neal has been Merrill's CEO since the end of 2002 and its chairman since April 2003.
Like its Wall Street competitors, Merrill is rewarding its top executives for strong results last year. The company's net income in 2005 rose 15% to a record $5.1 billion.
Merrill paid its top five executive officers, including O'Neal, $127 million in 2005 compensation, including a total of $10 million for the bonuses tied to future performance.
O'Neal, who received no cash bonus last year but $31.3 million of deferred stock, owned 882,019 common shares of Merrill Lynch directly as of the end of January, according to an SEC filing last month, and almost 400,000 shares through trusts. At Friday's closing price on the New York Stock Exchange of $77.75, his current liquid holdings are worth $99.7 million.
In January, Merrill unveiled the new incentive plan for about 20 top executives that, beginning in January 2007, will award them additional stock bonuses if the company boosted its return on equity in the previous year.
Return on equity is a key measure of a company's efficiency in using capital and creating return for shareholders. The company's ROE in 2005 was 16.3 compared with almost 21.8% at Goldman Sachs Group Inc. (GS) and 21.6% at Lehman Brothers Holdings Inc. (LEH).
Even in rough periods, Wall Street firms spend almost half their revenue on compensation for top executives, bankers and traders. Merrill Lynch's total compensation expenses last year equaled 47.8% of its $26 billion of net revenue.
Merrill's four other highest-paid executive officers, according to the company's proxy filing Friday, are:
-Dow Kim, co-head of investment banking and trading, who received $28 million; Gregory Fleming, co-head of investment banking and trading, who received $23 million; Chief Administrative Officer Ahmass Fakahany, who was paid $21 million; and Robert J. McCann, head of Merrill's wealth management - or retail brokerage - group, who was awarded $18 million.
Lehman Brothers Chairman and Chief Executive Richard Fuld received $34.5 million for his work in 2005, including stock options it valued at $5.04 million. Excluding the options, the 59-year-old executive saw his compensation jump 38% over 2004 to $29.5 million, all but $750,000 of which included bonuses paid in cash and restricted stock.
Lehman President Joseph Gregory got a 40.8% boost in compensation to $38.3 million in recognition of the company's record net income last year. The firm's profit rose 38% to $3.3 billion in the fiscal year that ended last November, while its compensation expenses equaled 49.3% of net revenue.
Goldman Sachs gave its 59-year-old CEO Henry Paulson a 28% compensation increase to $38.3 million for 2005, including $30.1 million in restricted stock. Goldman's 51-year-old president, Lloyd Blankfein, earned $30.8 million, up 15.4%. The New York company's fiscal-2005 earnings rose 23% over the previous year to $5.6 billion. Its compensation expenses totaled 47.1% of revenue.
Morgan Stanley (MS) awarded Chairman and CEO John Mack $13 million for his five months on the job last year, including $11.5 million of restricted stock. (Mack, 61, also received a signing bonus the previous June of 500,000 restricted tock units that it valued at $26.2 million.)
Net income at Morgan Stanley fell 5% from 2004 to $4.26 billion in its fiscal 2005 year that ended in November. Its compensation, excluding its brokerage and Discover credit card businesses, totaled 45.1% of its revenue last year.
-By Jed Horowitz, Dow Jones Newswires; 201-938-4047; [email protected]
(END) Dow Jones Newswires
