Director Independence Standards

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  Director Independence Standards

Adopted: December 2003
Revised: January 2006

The Board of Directors (the "Board") of Merrill Lynch & Co., Inc. has adopted a formal set of standards with respect to the determination of director independence.  To be considered "independent" for purposes of these standards, a director must be affirmatively determined by the Board not to have a material relationship with Merrill Lynch & Co., Inc. and its subsidiaries ("Merrill Lynch") other than as a director.  In each case, the Board shall broadly consider all relevant facts and circumstances and shall apply the following standards (the "Director Independence Standards").

A. Employment/Compensation:1. The director shall not have been an employee and no family member1  shall have been an executive officer 2 of Merrill Lynch during the last three years.

2.  The director shall not have received more than $100,000 per year in direct compensation from Merrill Lynch during any twelve-month period within the last three years.  "Direct compensation" shall not include director and committee fees, reimbursement of expenses incurred in connection with service as a director and pension or other forms of deferred compensation for prior service (provided that such compensation is not contingent upon continued service). 

3. No family member of the director shall have received more than $100,000 per year in direct compensation from Merrill Lynch during any twelve month period within the last three years.

4.  (a) The director shall not be a current partner or employee of Merrill Lynch's independent auditing firm (the "Auditing Firm").

     (b) No family member of the director shall be a current partner of the Auditing Firm or a current employee of the Auditing Firm who participates in the Auditing Firm's audit, assurance or tax compliance (but not tax planning) practice.

     (c) Neither the director nor any family member shall have been during the last three years a partner or employee of the Auditing Firm and personally worked on Merrill Lynch's audit within that time.

5. Neither the director nor any family member shall be or have been, during the last three years, employed as an executive officer of a companywhile any of Merrill Lynch's present executive officers serves or served on such company's compensation committee.

The Board has determined that employment relationships, compensation and directorships that are not inconsistent with the foregoing standards are categorically immaterial relationships and, therefore, do not impair independence.  In applying the standard in Paragraph A. 3., the Board need not consider compensation received by a family member of the director for service as a non-executive employee of Merrill Lynch.

B. Business Relationships:It is expected that all business relationships between Merrill Lynch and a company (including subsidiaries and affiliates) with respect to which the director or any family member has a primary business relationship3, will be conducted on an arms-length basis.  The Board has determined that business relationships with primary business relationships that are not inconsistent with the standards set forth below are categorically immaterial relationships and, therefore, do not impair independence:

1. Payments by Merrill Lynch to a primary business relationship of the director or the director's family member for property or services that do not in any single fiscal year during the last three fiscal years exceed the greater of $1 million or 2% of the consolidated gross revenues of such primary business relationship.

2. Payments to Merrill Lynch by a primary business relationship of the director or the director's family member that do not in any single fiscal year during the last three fiscal years exceed the greater of $1 million or 2% of the consolidated gross revenues of such primary business relationship.

3. Financial services transactions, including but not limited to underwriting, banking, lending, trading in securities or derivatives and co-investment transactions, between Merrill Lynch and a primary business relationship of the director or the director's family member, provided that (a) Merrill Lynch's gross fee revenues (including interest payments or other fees paid in connection with loan transactions) from such transactions (together with other payments for property or services in the applicable fiscal year, if any) do not exceed the threshold set forth in Paragraph B. 2. above, (b) such transactions are in the ordinary course of business of Merrill Lynch and are made on terms substantially consistent with those prevailing at the time for corresponding services to similarly situated, unrelated third parties, and (c) in the case of lending transactions, the termination of the lending relationship in the normal course of business would not reasonably be expected to have a material adverse effect on such primary business relationship.

In addition, the Board of Directors has determined that business relationships between Merrill Lynch and a company that is not a primary business relationship, including business relationships with a company for which a director or family member serves as a non-management director (including non-executive chair), are categorically immaterial relationships and, therefore, do not impair director independence.

C. Relationships as a Client: 1. It is expected that any services (such as, brokerage services, lending services, insurance and other financial services) provided to a director or any immediate family member 4 by Merrill Lynch will be provided in the ordinary course of Merrill Lynch's business and on substantially the same terms as those prevailing at the time for comparable services provided to unrelated third parties or to Merrill Lynch employees on a broad basis.  The Board of Directors has determined that services that are not inconsistent with this standard are categorically immaterial relationships that do not impair independence.  The Board of Directors has also determined that services provided to directors in connection with the fulfillment of their duties and responsibilities as directors are categorically immaterial and, therefore, do not impair director independence.

D. Charitable Contributions: The Board of Directors has determined that the following philanthropic relationships are categorically immaterial relationships and, therefore, do not impair independence:

1. Contributions by Merrill Lynch to educational or charitable institutions for which the director serves solely as a non-executive trustee or director (or in a similar capacity).

2. Discretionary contributions by Merrill Lynch (excluding contributions made under Merrill Lynch's "matching gifts" program) to any educational or charitable institution for which the director serves as an executive officer  that do not exceed in any single fiscal year during the preceding three fiscal years the greater of (i) $1 million or (ii) 2% of the recipient's most recent publicly available consolidated gross revenues. 

1A “family member” means a director's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee of such director) who shares such director's home.

2An “executive officer” means the Chief Executive Officer, President, Chief Financial Officer, Principal Accounting Officer, (or if there is no such accounting officer, the Controller), or any officer or person in charge of a principal business unit, division or function, or who performs a policy-making function.

3 For purposes of these standards, a “primary business relationship” exists with an entity if the director is currently the controlling shareholder or an employee of the entity, or if any family member of the director is currently the controlling shareholder or an executive officer of the entity.

4 An “immediate family member” includes a director's spouse, and other family members (including children) who share the director's home or who are financially dependent on the director.

5 For purposes of this standard, an “executive officer” of an educational or charitable institution means a CEO, President, Executive Director, Executive Vice President, or any other officer who performs a policy making function. Non-executive Trustees or Directors (or persons performing similar functions) are not considered to be executive officers.

Contact the Board

Please write to:

Board of Directors of
Merrill Lynch & Co., Inc.
c/o Corporate Secretary
Merrill Lynch & Co., Inc.
222 Broadway, 17th Floor
New York, New York 10038