John Thain may look like superman, but he's only human. According to my brother William D. Cohan's article in Fortune, Thain contributed mightily to his efforts to get himself fired following the takeover of Merill Lynch by Bank Of America (NYSE: BAC). Now Thain is trying to salvage his reputation by offering to repay Bank of America for the $1.2 million he spent to decorate his office.

Thain's career suicide involved five key steps:

• Thain tossed out his Merrill deputies Greg Fleming and Robert McCann;
• He was late to disclose some $15.31 billion in trading losses that may have derailed the deal if they had been disclosed earlier;
• He took a year-end vacation at Vail and signed up for this week's Davos fest (against his boss, Ken Lewis's advice);
• He paid $4 billion in bonuses to Merrill workers before the deal closed -- although Bank of America knew about them so Thain should not get all the blame for these;
• He spent $1.2 million to redecorate his office.

Now Thain is going to try to partially reverse the damage from the last item in his career suicide process.

Former Merrill Lynch CEO John Thain's decision to spend $1.22 million to redecorate his office will probably put the issue of executive compensation limits back in play for the U.S. Congress, most likely for only bailout fund recipient companies, but quite possibly for other business arrangements, as well.

The compensation issue was considered politically dead for this year, but Thain's audaciousness could serve as the type of catalyst necessary to get a controversial bill through a review process that's designed to defeat or delay legislation. Thain was put in charge of Merrill's trading, investment banking, and brokerage operations after the Bank of America (NYSE: BAC) acquired Merrill.

Further, Thain's $1.22 million splurge of the company's money is the type of action voters will notice, prompting them to place pressure on U.S. Representatives and U.S. Senators to act. Thain's gratuitous redecorating has surfaced alongside Merrill's distribution of bonuses despite massive losses at the former investment banking and brokerage giant.

Board of directors oversight?

Some will argue that executive and employee compensation is a matter for a corporation's board of directors, not the U.S. Congress. Economist Peter Dawson said that's precisely the reason Congress should intervene.

On Monday morning, Doug McIntyre posted that former Merrill Lynch CEO John Thain was demanding a $10 million bonus for his work there. But now CNBC is reporting that Thain won't be getting any bonus at all.

So far, details are not forthcoming but Charlie Gasparino, CNBC's On Air Edtior, reported that Thain, along with several other executives, will forgo bonuses this year. The Wall Street Journal is also reporting that according to people familiar with the matter, Thain, Merrill President Gregory Fleming and wealth management chief Robert McCann asked the board's compensation committee not to pay them for their work in 2008. So did two other Merrill executives.

Thain is being unfairly punished because the problems at Merrill happened under his predecessor Stan O'Neal. O'Neal walked away from the mountain of toxic waste he created with $161 million. He's the one who should be forking over a chunk of his compensation due to the problems he caused. To make Thain pay the price is unfair -- but politically expedient.

[Update: Morgan Stanley (NYSE: MS) CEO John Mack would not get a bonus for a second straight year. The bank also announced compensation changes that should link pay and performance better.]

Peter Cohan is president of Peter S. Cohan & Associates. Portfolio will publish his book about Boeing, You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing, on December 26, 2008. He has no financial interest in the securities mentioned.

PAPERS:

• With shares of eBay Inc (NASDAQ: EBAY) down 17% from their highs in 2007, CEO Meg Whitman is more than likely on her way out, TheDeal Blogs speculated.
• According to sources, International Business Machines Corporation (NYSE: IBM) is in advanced talks to acquire the Israeli start-up XIV for 4300M-$350M, Globes reported.
• According to sources in London and New York, Merrill Lynch and Co Inc's (NYSE: MER) CEO, John Thain, is in talks with Chinese and Middle Eastern sovereign wealth funds this weekend, which could lead to the sale of another big stake in the U.S. bank, the Observer reported.

WEB SITES:

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• iLounge learned that Apple Inc (NASDAQ: APPL) is planning a push for iTunes tagging-ready, HD Radio-equipped boomboxes with iPod docks and is expected to make an announcement at Macworld in mid-January.