Thain Returns: Tarnished CIT Taps Ex-Merrill Chief as New CEO
But now, Thain, whose best career move was modernizing the New York Stock Exchange and taking it public, is definitely with the program. He claims that he was attracted to the CIT job by the chance to satisfy the White House's cherished goal of reviving lending to small and medium-sized companies. This type of lending is CIT's core business.
A Whole New Approach?
CIT needs to redeem itself just as much as Thain does, if not more so. That's because CIT was one of the few Troubled Asset Recovery Program participants to go bankrupt and lose money for the government. Specifically, CIT lost $2.3 billion in taxpayers' TARP investment when it filed for bankruptcy last year.
And in helping to restore CIT's luster, Thain is going with the program in another way -- he'll embrace what passes for the New Austerity on Wall Street. That austerity was cemented by Goldman CEO Lloyd Blankfein's decision to accept a mere $9 million 2009 bonus when he could have conceivably claimed $78.4 million for boosting Goldman's profit 16% over 2007, when he got a $67.6 million bonus. (Blankfein's $9 million in long-term stock was a far cry from the $100 million bonus rumors I questioned last week.)
To lead CIT, Thain will receive a mere $500,000 base salary, along with $5.5 million worth of restricted stock, much of which must be held for one to three years. He'll also receive an additional discretionary payment of $1.5 million in restricted shares, which will vest over two years, according to the Times.
Remember "Pay for Performance"?
For Thain to get the big bucks at CIT, he'll have to find a way to make that restricted stock worth much more. It's almost hard to believe these days, but the best way for Thain to restore his reputation and his fortunes will be to make CIT shareholders better off.
That concept has been foreign on Wall Street for a while. When Thain lavished Merrill's cash on office renovations and paid out billions in bonuses despite Merrill's losses, he seemed to have forgotten about the notion of pay for performance.
Now he has a chance to show whether he has remembered it.