The cuts were performance-based, meaning advisers who didn’t meet a certain level of production were let go, reports said.
Merrill Lynch was acquired by Bank of America (BoA) on January 1. The BoA retention package, released last fall, rewarded top-producing brokers, which garnered some criticism about whether BoA would be encouraging up-and-coming brokers (see “BoA, Merrill Retention Package Rewards Top Producers’). Merrill’s compensation plan at the beginning of the year showed a trimming of payout amounts for lower producers (see “Merrill, Smith Barney Change Broker Compensation’).
News of the layoffs comes when BoA is struggling after the Merrill Lynch deal, which led the bank to seek extra federal assistance. The Wall Street Journal reported that BoA is slashing bonuses for its employees and planning to defer pay for others. Meanwhile, former Merrill Chief Executive John Thain is coming under fire by New York Attorney General Andrew Cuomo about bonuses paid to Merrill executives right before the deal took place, as well as whether the scope of Merrill’s losses were properly disclosed to shareholders (see “Thain Receives Subpoena in Merrill Bonuses Probe’).