Merrill grants Montag $40 mln shares, options

By Dan Wilchins

NEW YORK, Aug 6 (Reuters) - Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz)
awarded new sales and trading head Thomas Montag stock and
options valued at about $40 million, a compensation expert
said, on top of a nearly $40 million bonus it previously agreed
to pay him.

The shares and options are meant to compensate Montag for
equity awards from Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) that he gave
up when he agreed to join Merrill. In May, Merrill said a third
of that compensation would be paid in cash.

Merrill disclosed the awards in a U.S. Securities and
Exchange Commission filing, three weeks after reporting a $4.89
billion second-quarter loss.

Based on the $40 million estimate for the shares and
options awarded and the fact that a third of the compensation
for his relinquished equity awards would be paid in cash,
Montag could have received $60 million, meaning Montag's total
award could top $100 million.

That is a steep figure, even by Wall Street standards.

Merrill Chief Executive John Thain received a $15 million
bonus when he agreed to join Wall Street's third-largest
investment bank and brokerage late last year from NYSE Euronext
(NYX.N: Quote, Profile, Research, Stock Buzz), where he was also chief executive.

Goldman Chief Executive Lloyd Blankfein was awarded about
$53.97 million in its 2007 fiscal year, including a $26.99
million bonus. Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) Chief
Executive Dick Fuld got $22 million

But those awards cannot be completely compared with
Montag's, since he is being compensated by Merrill for Goldman
stock he accumulated over time.

Merrill has recorded about $40 billion of write-downs over
the last four quarters and said last week it expects to take a
$5.7 billion third quarter charge on a $30.6 billion portfolio
of repackaged debt it sold at a loss.

The company, like many on Wall Street, is reeling under
billions of dollars of bad debt on its balance sheet. Those
problems arose from the investment bank, an area Montag was
brought in to help fix.

Montag began working at Merrill on Monday. He had worked at
Goldman for 22 years before leaving in December. Thain is also
a Goldman alumnus.

In the filing, Merrill said it granted Montag 1.04 million
restricted shares and 2.45 million options. Their ultimate
value depends on Merrill's stock price.

The shares and options granted were in addition to the
$39.4 million bonus Merrill agreed to pay Montag for 2008.

The options allow Montag to buy stock at $26.395 a share
and are exercisable in 2009, 2010 and 2011. The restricted
shares vest over the same period.
(Editing by Andre Grenon)