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Financial industry turmoil: What's in store for IT workers?

Thomas Wailgum | Sept. 22, 2008
The higher the IT worker sits in the hierarchy, the worse his chances of keeping his job.

FRAMINGHAM, 19 SEPTEMBER 2008 - Perhaps Tom Sanzone saw this coming. Perhaps he did not.

But Sanzone, who is Merrill Lynch's brand-new EVP and chief administrative officer (which is the top technology position), may be looking for a new place to hang his hat since Bank of America announced on Sept. 15 that it was buying troubled Merrill Lynch for US$50 billion. (Other than announcing that three directors of Merrill Lynch will join Bank of America's board of directors; as of Sept. 19 the companies have not yet announced which top executives from each company will remain with the combined entity once the acquisition is complete.)

Sanzone left his high-profile CIO post at Credit Suisse in late February 2008 to join Merrill Lynch, though he didn't actually start his new job until mid-July, due to his preexisting employment contract with Credit Suisse.

According to a Merrill Lynch filing with the SEC, Sanzone was slated to earn approximately $10 million during his first year (a base salary of $600,000 plus a $9.4 million bonus.)

It's not entirely clear if Sanzone will still receive this compensation in the event he loses his job due to Bank of America's acquisition of Merrill Lynch. The legalese of Sanzone's employment agreement with Merrill Lynch suggests that he may very well receive this compensation even if he's forced out in the aftermath of the BofA deal: The employment agreement states that if Sanzone is terminated without cause or if he wants to resign from the company for "good reason" before he is paid any portion of his $9.4 million bonus, that bounty will awarded to him in cash.

Sanzone's future with Bank of America isn't the only one that's uncertain. Thousands of other IT workers in the financial services industry are wondering whether their jobs are safe.

Collateral Damage

Outside of Mahogany Row where golden parachutes are reserved for the privileged few, "there's clearly going to be a reshuffling of the deck" inside IT departments, says Marc Lewis, CEO of executive recruiter Leadership Capital Group (LCG).

So far, the reshuffling of the deck is looking more like a collapsing house of cards. Management consulting firm Janco Associates reported on Sept. 15 that the financial industry turmoil, along with HP's announcement that it would lay off 24,600 employees over three years, would "glut" the IT job market.

Based on interviews with "highly placed sources" within Lehman Brothers and Merrill Lynch, Janco reported that "a large number of IT professionals in both organizations will lose their jobs before the end of the year."

For instance, Janco estimates that more than 230 IT professionals at Lehman Brothers who make $250,000 or more a year will be out of a job by year-end. At Merrill Lynch more than 180 IT professionals making more than $250,000 a year will be also without work, according to Janco.

 

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