Details about Merrill Lynch's upcoming new compensation package are beginning to trickle down through the branch system, and most brokers are thrilled about what they're hearing.

“This is going to be a huge pay raise for us,” says an East Coast producer.

According to a Merrill rep in the Southwest, the new package may include:

  • Less emphasis on deferred compensation, with more paid out at the grid. Merrill spokesperson Eddie Reeves confirms that changes in the deferred compensation package have been proposed, but emphasizes that some type of deferred compensation will continue.

  • A five-year vesting schedule for the firm's FCCAAP deferred compensation plan, starting in 2002. The current vesting period is 10 years. “I think they're losing a lot of their younger guys,” the rep says.

  • A permanent five percentage point bump in payout on “annuitized” business. Merrill has already increased payouts on net new money in fee accounts by five points between May and September to help brokers converting to fee business, according to Reeves. “It is accurate to say that this is temporarily in place now, and we're looking at possibly making it permanent.”

  • Stock options for million-dollar producers, with a three-year vesting period. “It will be very closely tied to doing the right kind of business,” the broker says. Reeves confirms stock options are “another one of the many things under discussion.” Such a move would require approval from Merrill's board of directors, he adds.

  • The elimination of bonus points based on the number of new “priority households” ($250,000 or more at the firm). The rep suspects the firm will offer a higher payout on these households at the end of each month, rather than the year-end bonus brokers now receive. Reeves calls this statement “pure conjecture.”

  • A higher payout on insurance products, possibly to 55% or 60%.

Most brokers agree that preliminary information about the new package sounds good. “In the past, when Merrill mentioned compensation policy changes, everyone just grabbed their ankles,” says a Merrill rep in the Midwest. “But we're feeling pretty good about the changes. At first blush, it looks a lot simpler.”

The plan is expected to be released this fall.