Jump to content

John Thain

From Alfawiki
John Thain
Born (1955-05-26) May 26, 1955 (age 71)
Antioch, Illinois, U.S.
Occupation(s)Investment banker, financial executive
Years active1985–present
Known forCEO of Merrill Lynch & Co., CEO of New York Stock Exchange, president and co-COO of Goldman Sachs

John Alexander Thain (born May 26, 1955) is a prominent American investment banker and financial executive. He held the positions of president and co-chief operating officer at Goldman Sachs before becoming the CEO of the New York Stock Exchange. Thain was the final chairman and CEO of Merrill Lynch & Co. prior to its acquisition by Bank of America. Although he was expected to assume the role of president overseeing global banking, securities, and wealth management within the merged entity, he stepped down on January 22, 2009, amid controversies involving underestimated losses at Merrill Lynch and substantial executive bonuses. Subsequently, Thain took on the role of chairman and CEO at the CIT Group. Since 2017, he has served on the board of directors for Uber.

Early life

Born in Antioch, Illinois, Thain’s father, Alan, practiced medicine and later passed his medical practice to Thain’s two brothers, Dennis and Robert, who both became general practitioners. Thain completed his undergraduate studies in electrical engineering at MIT in 1977 and earned an MBA from Harvard Business School in 1979. During his time at MIT, he was a member of the Delta Upsilon fraternity.

Career

Thain’s tenure at Goldman Sachs included leadership of the mortgage securities division from 1985 until 1990. He advanced to serve as president and co-chief operating officer between 1999 and 2004.

Following Goldman Sachs, Thain was appointed CEO of the New York Stock Exchange, a position he held from January 2004 through December 2007. His annual compensation was approximately $4 million, notably without the extensive retirement benefits that his predecessor had received.

Merrill Lynch

Prior to assuming the CEO role at Merrill Lynch, Thain was a contender for the CEO position at Citigroup. Both Merrill Lynch and Citigroup were searching for new leadership after disappointing third-quarter results in 2007 amid the ongoing subprime mortgage crisis. Nelson Chai, who had served as CFO of the NYSE under Thain’s leadership, joined Merrill Lynch as CFO following him.

Thain engineered Merrill Lynch’s acquisition by Bank of America at $29 per share—a premium of roughly 70%—which valued Merrill Lynch around $50 billion. He was intended to lead Bank of America’s combined global banking, securities, and wealth management division.

Upon joining Merrill Lynch, Thain received a signing bonus amounting to $15 million. His total earnings for 2007 reached $83.8 million, encompassing salary, bonuses, stock awards, and options, placing him among the top earners in S&P 500 companies.

In 2008, Thain requested a bonus up to $10 million as recognition for "saving Merrill" through orchestrating its sale; however, after being declined by the compensation committee, he retracted this request.

In early 2009, reports surfaced that Thain had spent $1.22 million of corporate funds on refurbishing his office with luxury items. He issued an apology and repaid Merrill Lynch in full.

Shortly before Bank of America’s acquisition of Merrill Lynch, Thain approved about $4 billion in employee bonuses. While this payout complied with merger agreements, it prompted speculation regarding potential use of funds from the TARP. During a financial crisis meeting, FDIC chair Sheila Bair noted that Thain questioned whether TARP would impact his compensation.

Separation from Bank of America

On January 16, 2009, Bank of America disclosed that Merrill Lynch had incurred an unforeseen $15 billion loss during the fourth quarter of 2008. CEO Ken Lewis indicated that without the injection of $138 billion in government assistance—including a $20 billion federal capital infusion—he would have reconsidered the $28 billion acquisition of Merrill, which shareholders had approved in December. The substantial loss strained the relationship between Lewis and Merrill CEO John Thain, and Lewis faced reproach for hastily finalizing the deal with limited due diligence.

By January 22, 2009, CNBC's The Call reported that Thain was in discussions with Lewis amid growing uncertainty about his position at Bank of America. It also emerged that Thain had authorized $1.22 million for office renovations shortly after assuming the Merrill CEO role in January 2008, when Merrill was still operating independently. Despite Wall Street’s widespread difficulties, some analysts anticipated a potential recovery under Thain’s leadership.

Tensions culminated on January 22 when Lewis traveled to New York for a brief encounter with Thain, who subsequently agreed to step down. Nelson Chai, who served as Merrill’s final CFO before the merger and was initially slated to lead Bank of America's Asia operations, departed from Bank of America in February soon after Thain’s exit. He was succeeded by Ki-Myung Hong. After these departures, Tom Montag remained the sole member of Merrill’s original management team within the merged company, overseeing sales and trading functions.

Controversy over high compensation

On January 23, 2009, President Obama publicly criticized Thain for companies receiving federal bailout funds yet allocating resources to office refurbishments and bonuses instead of prudent financial management. White House press secretary Robert Gibbs underscored that government aid should not be used to "enrich executives" at financially troubled banks.

On January 29, 2009, Obama condemned Wall Street executives for distributing $20 billion in bonuses while simultaneously seeking government assistance during economic turmoil. He described this conduct as "the height of irresponsibility" and called for greater restraint and accountability from those benefiting from taxpayer support. Vice President Joe Biden also voiced strong opposition to these bonus payouts.

On January 27, 2009, New York Attorney General Andrew Cuomo issued a subpoena to Thain as part of an investigation into bonus payments made shortly before Bank of America's acquisition of Merrill Lynch. Under the provisions of the 1921 Martin Act, criminal fraud charges may be filed against executives who receive unlawful compensation.

CIT Group

On February 7, 2010, CIT Group announced Thain’s appointment as CEO, succeeding interim leader Peter Tobin. By 2013, CIT compensated Thain with $8.25 million. On October 21, 2015, CIT declared that Thain would retire as CEO effective March 31, 2016; however, he remained chairman thereafter. Ellen R. Alemany, formerly head of Royal Bank of Scotland’s Americas division, was named his successor as CEO.

Affiliations

Thain is affiliated with multiple prominent organizations:

Personal life

Thain is engaged in philanthropic efforts and served as co-chair for a Publicolor gala held in New York City, which recognized Rick Segal, the organization's former board chairman.

He and his spouse are parents to two daughters and two sons. Thain possesses 25 acres of land spread across three townships in New York State: Rye, Harrison, and Rye Brook. Additionally, he maintains a home on North Captiva Island located in southwest Florida. In 2018, his apartment at 740 Park Avenue was put on the market.

Political contributions

In 2015, Thain donated $205,000 to the pro-Jeb Bush Super PAC Right to Rise and contributed $5,400 to Rob Portman. Over time, he has made substantial donations to candidates from both the Democratic and Republican parties.

External links

Retrieved from "https://www.alfawiki.org/index.php?title=John_Thain&oldid=19581"