Ex Merrill Lynch CEO a Collector of Antiques

Peter Green of Bloomberg reports recently removed CEO of Merrill Lynch redecorated his office at a cost of $1.2 million. Over the past year, as Merrill Lynch was having major difficulties and laying off employees, the CEO, John Thain thought it a prudent time to redecorate his office. Green reports that Thain purchased from decorator Michael Smith $837,000.00 of antiques including a $25,000.00 table, $87,000.00 for area rugs, and $68,000.00 for an antique credenza. Life is good at the top, especially when the company is paying.

Green reports The antiques Thain reportedly purchased will probably hold their value over time, said Clinton Howell, a New York dealer in English furniture.

“Michael Smith is a very smart guy and he buys very good things,” said Howell. “It’s very likely that what he bought was worth the money if Merrill Lynch wants to get their money back.”

In light of Merrill’s $56 billion in losses from subprime loans and the credit crisis, $1.2 million spent on antiques hardly seems worth getting outraged over, Howell said.

“What John Thain did with his office is a little like noting that somebody failed to turn on his blinker before driving into a train,” said Howell.

Designer Dennis Rolland, who has done homes and offices for financiers including Peter Peterson, the co-founder of Blackstone Capital Partners LP, said it’s unwise to furnish an office with antiques.

‘Too Fragile’

“I would seldom encourage someone in an office to use antique furniture, it’s too fragile,” said Rolland.

The statement, or perhaps more so the attitude that bothers me the most is that of dealer Howell stating the amount Thain spent to decorate, in the grander scheme of Merrill Lynch losses and ultimate failure and subsequent buyout by Bank of America was insignificant. I am sure the stock holders of Merrill Lynch will feel much better at the insignificance of the decorating. It also bothers me that Thain, while the investment bank was struggling for its survival felt comfortable to spend over a million dollars to decorate his office. The sense of entitlement amazes me. Thain was just fired by Bank of America, terms have not yet been disclosed, but I am sure Mr. Thain will land on his feet.

There have been additional articles stating Thain will repay Merrill for the cost, as well as other dealers defending the purchases, saying there was value in the property purchase. I have not seen the property, but I would probably agree there is value there, and the pieces most likely will hold their value instead of depreciate. I am sure we could find a NY appraiser to place strong values on all of the items purchased by Thani for his office project. But I think these comments on value miss the point. I see the central argument as when a firm is on the brink of financial collapse and firing employees, the leadership of the organization should not be spending over a million dollars on office decorations. To me, that is just common sense. Again, the sense of entitlement and the enablers on corporate boards never ceases to amaze me.

To read the article, click HERE.