Where the Bucks Stop

While Merrill Lynch professes to be bullish on America, Donald Regan, chairman of the largest brokerage of all, has more ursine feelings these days about Merrill Lynch. With trading volume fading and profits dwindling throughout the securities business, Regan has pared the salaries of Merrill Lynch's 140 highest executives by 10% to 20%. The cuts are expected to save about $900,000 a year and impress the 20,000 other employees with the need for economy.

The reductions are only part of a year-old effort to shrink overhead at Merrill Lynch, which is considered one of the best-managed firms in the business. Merrill Lynch has reduced its payroll by more than 500, primarily through attrition, limited many of its brokers to a single telephone, and put restrictions on the use of first-class mail, messenger services and copying machines.

Regan, who will lose about $40,000 from his own $240,000 salary-and-bonus package, is merely acting out Wall Street's growing bearishness about the prospects of making ends meet. In the first five months of 1973, U.S. brokerage houses lost a total of $153 million, and a number have reduced executive salaries. No fewer than 68 firms are on the New York Stock Exchange's "warning list" because they are operating at a loss. For this year's first quarter Merrill Lynch's revenues were down 8%, and profits 53%; its stock has shrunk this year from 32 3/4% to last week's 13 3/8%.

Like other brokerage heads, Regan may now feel that he expanded his firm more rapidly than trading volume warranted. Last year he moved headquarters to a lavish building on lower Broadway. Two years ago he enlisted IBM to put in a computerized communications system with a terminal for each broker; the project has since been shelved.

Still Regan remains one of the most influential persons in the securities business. He was a primary force in persuading his 20 fellow New York Stock Exchange directors to endorse the principle of competitive, unfixed rates for all trades. That policy will be enunciated in an Exchange position paper to be published this week.

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