Merrill Slashing Bonuses

Bloomberg reports today that Merrill Lynch & Co., Inc. (MER) will cut its employee year-end bonuses in half. Seven weeks ago, huge losses for the Wall Street investment bank prompted its buyout by Bank of America Corporation (BAC). Considering this buyout happened right around the same time Lehman Brothers went completely out of business, it's fair to say things could have been worse for Merrill employees.

Thus, though the bonus cut may seem at first a shameful hardship endured by Merrill Lynch, we note that no one currently still working at the firm will likely be going broke soon. According to Bloomberg, "Even if Merrill set aside nothing for compensation in the fourth quarter, the firm's 60,900 employees still would reap an average of $184,000 in compensation and benefits for the full year." That's not chump change -- in fact, it's a few times more than the average American worker's salary per year.

Nevertheless, investors expect a shareholder vote on the Bank of America/Merrill Lynch merger soon. Both BAC and MER stocks have been facing downward pressure from analyst estimates lately, and even if everything runs smoothly for the merger, the process for getting back on track is going to take some time. Merrill shares are rated Zacks Rank #3 ("hold") currently, and Bank of America is a Zacks Rank #5 ("strong sell").

Read the full analyst report on MER

Read the full analyst report on BAC