Merrill puts money on new CEO Thain

Stanley O'Neal, the first high-profile Wall Street operator to lose his job over the recent credit squeeze, did pretty well out of Merrill Lynch where he was CEO. On top of his $46.4m salary, he received a severance package of about $160m when he parted company with the investment bank earlier this month. But his successor could do even better - if he can lift Merrill Lynch out of the doldrums.

Reports from Wall Street say that John A Thain, the New York Stock Exchange CEO who will replace O'Neal on December 1, can expect an initial pay package of around $50m as he tries to restore the firm's reputation. But extra stock options and bonuses will kick in if he can help boost the Merrill share price from its current low. His annual compensation could go as high as $120m if Merrill stock rises more than $40 a share in the next two years.

That's a tall order, of course, but Thain has a nice little nest egg to fall back on if things don't pan out. He owned more than 3.3m shares of Goldman Sachs stock which were put into a blind trust when he joined the NYSE. Assuming he hasn't sold any of the shares, that stake is reckoned to be worth more than $743m today.

Wall Street pay watchers say Thain's deal at Merrill also sets the benchmark for the pay package of whoever gets the even more complex job of heading up Citigroup, following the resignation of chairman and chief executive, Chuck Prince. Citigroup's fortunes are in virtual free-fall after the Goldman Sachs analyst William F Tanona advised investors to sell yesterday. ·