Merrill Lynch Begins Search For New CEO

The Stan O'Neal era at Merrill Lynch (MER-NYSE) appears to be over, with the Wall Street Journal reporting that the 56-year executive spent the better part of the weekend negotiating his severance package:

The 56-year-old CEO was negotiating the terms of his forced departure yesterday afternoon in the wake of a multibillion-dollar write-off he announced last week, according to a person briefed on the negotiations. Merrill's board is expected to consider external candidates and current Merrill executives in its search for a successor. Mr. O'Neal's resignation is expected to be announced as early as today. Wall Street Journal

The Journal's crosstown rivals at the Gray Lady had their own take on the big story, but were hedging just in case:

Capping a tumultuous week that included a significant quarterly loss and write-down, the board of Merrill Lynch has reached a broad consensus that E. Stanley O’Neal, the chairman and chief executive of the company, will not remain in his position, according to people briefed on the discussions.....Details remain to be worked out, including who will take over and what the timing of Mr. O’Neal’s departure will be. New York Times

Many Merrill employees and alum's are likely thrilled with the news, particularly the old guard such as Dan Tully, who have been upset with the manner in which O'Neal consolidated his grip on power since his tenure commenced in 2002. O'Neal purged many Merrill veterans, and was quick to issue walking papers to subordinates who did see things his way. Indeed, many felt it was O'Neal's way or the highway, often to the detriment of the firms long term future.

The final straw might have been O’Neal’s overture to Ken Thompson, CEO of Wachovia, to discus a strategic combination. In the event of a Merrrill sale O’Neal stood to reap north of $250 million, motivation a ‘plenty but perhaps not in the best interest of Merrill’s constituent stakeholders. Assuming O’Neal is out, who might assume the throne?

4-1
Greg Fleming/Robert McCann- Current Merrill managers might share corner office, or take it over alone.  Fleming represents the investment banking side of the firm, McCann global wealth management. A power sharing arrangement might not be ideal, but would ensure both divisions are well represented by Merrill insiders. An interim step that might set up a horse race for top slot. Might be messy, but possibly in firm’s best interest.

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Laurence Fink- The head of BlackRock seems to be on the shortlist of replacements. A power sharing arrangement with current Merrill executives is one trial balloon being floated. Does he want the job?

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John Thain- Goldman Sachs alumni rule the world, why not Merrill. Thain has his hands full at NYSE, and we do not see Merrill’s old guard getting behind Thain. Will their opinion matter?

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Warren Spector- The brilliant ex-Bear Stearns banker might be a logical choice to interview, but his aloof nature might be a minus. A shakeup from an outsider might cripple morale. Would Warren fit in?

The Thundering Herd deserves someone respectful of the firm’s culture and long history. They don’t have to be Irish, but need to figure out Merrill’s strengths and weaknesses, and not attempt to compete with Goldman Sachs in every business line 85 Broad excels in.

O’Neal Out as Merrill Reels From Loss
Wall Street Journal

Merrill Lynch Reported Ready to Dismiss Head
New York Times
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