Stanley O'Neal
Merrill Lynch & Co. said Tuesday that chairman and CEO Stanley O'Neal has left the firm, less than a week after it stunned Wall Street by revealing an $8 billion hit from a bet on subprime mortgages.
Merrill (Charts, Fortune 500) shares fell 1.4 percent in early trade Tuesday on the New York Stock Exchange.
The nation's largest brokerage said O'Neal, 56, would retire immediately and that board member Alberto Cribiore would take over for him as interim non-executive chairman.
Merrill said both O'Neal and the board agreed that a change in leadership would help the company move forward as it attempts to overcome the $8 billion in losses it suffered last week.
"We would like to thank Stan for the contribution he has made leading a major transformation of Merrill Lynch into a global and diversified company with enormous potential ahead of it," Cribiore said in a prepared statement.
Merrill also said that Cribiore would lead a search committee to identify and evaluate chief executive candidates from inside and outside the company.
Laurence Fink, chairman and CEO of investment firm BlackRock (Charts), in which Merrill owns a 45 percent stake; John Thain, CEO of NYSE Euronext (Charts); Bob McCann, the head of Merrill's brokerage division; and Gregory Fleming, Merrill's co-president and co-chief operating officer, have been reported as potential successors to O'Neal.
Cribiore, who has served on the board since 2003, is a managing partner of the private equity firm Brera Capital. Previously he served as a president of private equity firm Clayton Dubilier & Rice.
The company Tuesday also said that Fleming and Ahmass Fakahany will remain as co-presidents and chief operating officers.
Last week, Merrill stunned investors and analysts when it said it took an $8 billion hit in the third quarter from bets on subprime mortgages.
That announcement came only three weeks after the company had estimated that the hit would be about $4.5 billion. The larger-than-expected writedown prompted a $2.3 billion loss in the quarter and a downgrade of the firm's credit rating.
Will Merrill remain independent?
O'Neal reportedly had also been in trouble with his board for approaching the CEO of Wachovia (Charts, Fortune 500), the nation's No. 4 bank, about a possible merger of the two financial services giants without getting the approval of Merrill's board, according to a report last week in the New York Times.
Those talks raised questions on Wall Street about whether Merrill will be able to remain independent.
O'Neal was widely expected to announce his resignation as early as Monday, although Merrill remained silent about his status within the firm. Some experts believed that Merrill's attempt to locate a successor for O'Neal or work out his severance package delayed the announcement of his resignation.
The company did not indicate what kind of payout O'Neal would receive upon his exit. Analysts at the Corporate Library, which tracks executive compensation, estimated the figure to be as high as $250 million.
Including salary and annual bonuses, O'Neal took home a total of $46 million in compensation in 2006.
In the firm's announcement Tuesday, O'Neal, whose career at Merrill spanned 21 years, thanked his colleagues for improving the company's competitiveness and expanding its global reach.
"The company has provided me with opportunities that I never could have imagined growing up, culminating with my leadership of the company over the past five years," O'Neal said.
According to a profile from Harvard Business School, where he got his MBA in 1978, O'Neal was born into poverty in Wedowee, Ala. He worked as a young boy picking cotton on a family farm, while his mother worked as a cleaning lady.
When O'Neal was 12, his family moved to Atlanta and his father went to work at a General Motors (Charts, Fortune 500) plant. O'Neal also worked at the plant as a teenager, and GM tapped him to attend General Motors Institute and paid for him to get his MBA. He worked for eight years in the automaker's New York finance office and in Madrid before moving to Merrill in 1986.
He rose through the ranks at Merrill, becoming president and chief operating officer in July 2001; he was tapped as CEO in December 2002 and added the title of chairman in April 2003. The posts made him one of the most powerful African-American executives on Wall Street, along with Kenneth Chenault, who holds those two titles at American Express (Charts, Fortune 500)
After taking over as chief executive, O'Neal quickly earned a reputation as an aggressive cost cutter. By slashing jobs and shutting down operations around the globe, he helped revive Merrill's stock, which reached an all-time high in January. Merrill shares have lost 33 percent of their value since this summer's market meltdown.
CNN.com
http://money.cnn.com/2007/10/30/news/companies/merrill_oneal/index.htm?postversion=2007103010
