According to the Wall Street Journal:
"Now, former Goldmanite Peter Kraus is getting his $25 million bonus, according to people familiar with the situation, though he has been at Merrill only three months. Kraus left Merrill Friday, shortly after after his rich exit package was triggered by the Merrill sale. In a year when some bankers are being paid with junk, Kraus’s exit payment is a stunner that represents to about 0.1% of Bank of America’s $25 billion capital injection from the U.S. government.
Talk about your good timing. Kraus was hired in May–when Merrill Lynch was talking about expansion–but didn’t officially start until September, only a couple of days before Thain hurriedly sold the firm to Bank of America to avoid the bankruptcy-filing fate of rival Lehman Brothers Holdings."
Merrill's sale to Bank of America triggered a special bonus clause in Mr. Kraus' contract that forced Merrill to pay him $25 million. Since he technically only worked from September to December 22 for Merrill, that's an hourly pay rate that would make even Gov. Spitzer's former employees blush.
Pay packages like this were not uncommon in the past few years, but many will try to draw a straight line between the money the US Government injected in Bank of America and the money that Merrill paid out to Mr. Kraus. Again, it is stunning to consider that 0.1% of our total investment ($25 million of our $25 billion) in Bank of America went to pay for an employee that jumped ship three months after joining the firm. At the very least you'd think that Mr. Kraus would try to keep a low profile for the next few years in an effort to not draw attention to the payout.
But it's not in the make-up of Wall Street executives to keep a low profile. Mr. Kraus' wife apparently went on a little spending spree in NYC that was noticed by more than a few people:
"AllianceBernstein CEO pays $37M for pad at 720 Park Avenue
Investment advisor Carl Spielvogel and his wife Barbaralee Diamonstein-Spielvogel sold their cooperative apartment at 720 Park Avenue, at the corner of 70th Street, for $36.63 million, nearly twice what they paid for it two years ago.
The sale of the seventh-floor unit closed December 18, according to property records posted Friday.
The buyer was identified as Jill Kraus, wife of Peter Kraus, a former executive vice president at Merrill Lynch who reportedly received a $25 million bonus after working at the firm for three months this year."
It's in poor taste at the very least to take $25 million from a firm you worked for for 3 months and then spend $37 million for an apartment when many Americans are struggling to make ends meet. My greater concern is for the health of AllianceBernstein - if the CEO of AllianceBerstein thinks it's a smart time to spend $37 million on Manhattan real estate, then I think you have to question his financial acumen.