CIT names ex-Merrill CEO Thain as chairman

CIT Group Inc., one of America’s largest lenders to small and mid-sized businesses, said Thain will take the helm immediately. The 54-year-old replaces acting interim CEO Peter J. Tobin, who will remain on CIT’s board.

As chairman and CEO of Merrill Lynch, Thain’s deal to sell Merrill was considered a lifesaving move for the company at the height of the financial crisis. But he then came under fire for having paid out $3.6 billion in bonuses to Merrill employees just before the deal closed, and for spending more than $1 million to redecorate his office at Merrill, despite its massive losses. Thain resigned as head of global wealth management at the combined company shortly after the deal was completed and later repaid the bank for the renovations.

CIT said Thain will get an annual salary of $6 million, mostly in restricted stock. The former Merrill Lynch chief will get $500,000 in cash, $2.5 million of restricted CIT stock with a holding period of one year and the remaining $3 million in stock restricted for three years, the company said in a regulatory filing. Apart from salary, Thain may get an incentive award from the board for 2010 capped at $1.5 million, the commercial lender said.

Prior to Merrill, Thain served as CEO of the New York Stock Exchange and president and chief operating officer of Goldman Sachs. A CIT spokesman said Thain’s role at the NYSE, where he modernized the exchange and better positioned it to compete in the global marketplace, was one of the accomplishments that most impressed CIT’s board.

CIT Group, which lends to more than 3,000 businesses including supermarkets and department stores, was forced into bankruptcy after failing to raise cash to pay off outstanding debt. The more than 100-year-old company also was hammered by mounting loan losses as more customers fell behind on repaying loans during the recession.

Common stock holders and the government lost their investments when CIT filed for bankruptcy protection. The Treasury Department had given CIT $2.3 billion in loans as part of its $700 billion financial bailout plan.