Under fire, Merrill’s O’Neal steps down

After days fevered speculation, Merrill Lynch & Co. Inc. chairman and chief executive E. Stanley O’Neal announced his departure from the company after nearly five years at the helm of the mega-financial services firm.
The resignation takes effect immediately.
He has also resigned from the board of BlackRock Inc., New York-based asset management firm.
Merrill announced that the board of directors has elected Alberto Cribiore as interim non-executive chairman.
Mr. Cribiore, who has been a member of the board since 2003, is managing partner and founder of Brera Capital Partners LLC, a global private equity firm based in New York.
He will chair a search committee that will identify and evaluate chief executive candidates from within and outside of the company.
Mr. O’Neal’s departure comes one week after the investment bank announced a $7.9 billion third quarter write-down and made an unauthorized overture to merge with Charlotte, N.C.-based Wachovia Corp (InvestmentNews, Oct. 26).
Merrill’s board considered a merger proposal “major breach of corporate protocol” and its reaction may indicate that a merger with Wachovia was “not likely for now,” noted people familiar with the situation, according to a report in The New York Times.
Mr. O’Neal will not get severance, but will get to keep unvested stock options, according MarketWatch.
There were varied reactions to the widely expected move.
“Merrill Lynch moved too precipitously,” said Richard X. Bove, financial institutions analyst at Punk, Ziegel & Co. LP, a New York-based investment bank.
“You don’t fire a CEO that quickly after he puts up record earnings for a couple of years in a row… Merrill tends to act too quickly and doesn’t understand why they are doing what they are doing,” he said.
“Their precipitous actions mean that they do not build a structure that is favorable.”
Merrill now needs to look for a chairman from the outside with a strong background in capital markets who understands how to build a long-term strategy, Mr. Bove said.
But Danny Sarch, principal at Leitner Sarch Consultants Ltd., a recruiting firm in White Plains, N.Y., thinks Merrill and Mr. O’Neal were never a good fit.
“Stan O’Neal was never seen as a retail guy. Because he never was a broker, he was not seen as retail-friendly and was not seen as a guy that was one of them,” Mr. Sarch said.
Retail broker-dealers want a new chief executive who would keep the company out of scandal, out of the press, and give them the resources that they need to be successful, he added.
“The idea is to keep the stock going up,” Mr. Sarch said. “A good part of broker compensation at Merrill is based on stock options and future wealth building opportunities.”
Merrill, which is based in New York, has approximately $1.7 trillion in assets.