Merrill Lynch Posts Loss as Shareholder Meetings Near

April 18, 2008 08:30 AM
by findingDulcinea Staff
On Thursday, Merrill Lynch announced more than $6.5 billion in write-downs and plans to cut at least 2,900 jobs, to the dismay of shareholders.

30-Second Summary

A write-down, according to Investopedia, is when a company lowers the officially listed value of “an asset because it is overvalued compared to the market value.” Corporations then write this off as a business expense.

Thursday's announcement is just the latest piece of bad news to come from Merrill Lynch, which saw longtime CEO Stan O’Neal resign in October after unveiling the company's worst-ever quarterly report.

Meanwhile, financial downturns, paired with generous executive compensation and severance packages, are causing concern among lower-rung employees and those with retirement funds at stake. As a result, the approach of annual shareholder meetings brings with it the expectation that this year’s investor gatherings will be particularly hostile.

Richard Ferlauto, the pension director at the American Federation of State, County and Municipal Employees, said, “If money is coming out of shareholders’ pockets, but the executives who are responsible are held harmless, that’s a good mixture for a shareholder revolt.”

Julie Goodridge, president of Boston-based wealth management company NorthStar Asset Management, called on shareholders of the world’s most profitable company—ExxonMobil—to address executive compensation at its annual meeting.

The submitted resolution reads, “We are concerned that the over-compensation of top executives has a negative effect on employee morale and customer trust.”

Web site CorpWatch points out that it would take the lowest-paid U.S. employee at ExxonMobil one year to make what CEO Rex Tillerson makes in one hour.

Headline Links: Merrill Lynch Announces Write-Downs, Job Cuts

Audio: ‘Merrill Lynch Plots Mortgage-Meltdown Recovery’

Background: Recent developments at Merrill Lynch

Opinion & Analysis: Executive compensation and shareholders’ reactions

Reference: Write-down defined and executive pay


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