Senior managers at Merrill Lynch Investment Managers (MLIM), led by Carol Galley and Stephen Zimmerman, are set to share a payout totalling more than 100m (€165m) next February. This is the final tranche of money payable to Mercury Asset Management's team following the firm's 3.2bn takeover by Merrill Lynch three years ago.
At the time of the takeover, 100m was the indicated size of the payout to staff. It was to be paid on a deferred basis to keep the Mercury team loyal and may have risen in value since that time.
The impending payout has led to speculation within MLIM that up to a dozen senior people may decide to leave after getting their money. There has even been speculation about Zimmerman. He and Galley will be among the main beneficiaries. 'I'd be amazed if they didn't pick up 20m a piece,' said one insider. However, Zimmerman insisted last week he had no intention of leaving.
MLIM sources said that both Zimmerman and Galley were both enjoying working at Merrill. Galley is said to have had a difficult time immediately after the Merrill takeover but has since taken enthusiastically to the new regime and the benefits of Merrill's energetic salesforce.
Although Unilever's negligence claim against MLIM is due to come to the courts in October next year, Merrill Lynch is fully committed to backing Galley and her team and to defending the case. Furthermore, MLIM's Select team of managers, which looks after MLIM's largest pension fund clients, is now producing improved results under Andreas Utermann. Select has stemmed the loss of mandates and MLIM is winning specialist work.
MLIM has been exploring ways of tying in staff through incentive arrangements. One option is financing a purchase by managers of stock in their own funds. Stock options in Merrill Lynch and a profit-sharing arrangement could also play a part in the new packages.