Over 2,600 take buyout at ailing Merrill Lynch

3.9% of workers quit, reflecting woes at No. 1 securities firm

November 17, 2001|By BLOOMBERG NEWS

NEW YORK - Merrill Lynch & Co. said yesterday that more than 2,600 employees, or 3.9 percent of its work force, took the buyouts offered as part of President Stanley O'Neal's effort to trim expenses and improve profits at the nation's biggest securities firm.

Merrill, which had 65,900 employees on Sept. 30, earned $6,403 per employee in the third quarter, making it the least profitable of the five biggest Wall Street firms. Morgan Stanley Dean Witter & Co., which ranks fourth in profitability, earned $11,780 per employee, 45 percent more than Merrill.

The buyouts provide "a significant step forward in the process of re-engineering our company to adjust to current market conditions while positioning ourselves for future growth," Terry Kassel, senior vice president of human resources, said in a memo to employees.

The drought in business across Wall Street, especially stock sales and mergers advice, has led to the most prolonged drop in profits since 1995 and the deepest job cuts in 14 years. The glut has highlighted Merrill's relative inefficiency and prompted a reorganization of management throughout the firm.

Among the most prominent employees to accept the buyout are Internet analyst Henry Blodget, Donald Ullmann, head of fixed income research; and Louis Wolfe, head of investment banking in Asia.

Even as the firm began firing employees this week to supplement those who are leaving voluntarily, Merrill executives are trying to hold onto employees in the most profitable businesses, such as the bankers, salespeople and traders in the firm's Canadian institutional business. Three top executives flew to Toronto this week to urge those employees to stay.

Merrill won't say how many employees it hopes to cut. Most employees had until Nov. 9 to decide whether to accept the buyout offer. Departures were subject to approval by managers.

U.S. employees who accept the buyout will receive up to 54 weeks' pay, depending upon length of service. They will also be paid 40 percent of their year 2000 bonuses.

Those who are subsequently fired will receive the same severance package.

Employees outside the United States may receive different benefits depending upon local requirements, the memo said.

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