Merrill Lynch CEO's job on the line

Merrill Lynch CEO's job on the line

	Published : Sat, 27 Oct 2007 06:03 By : Agencies Print this Story

NEW YORK (AP) - Merrill Lynch & Co. chief executive Stan O'Neal faced the potential loss of his job Friday over questions about his leadership of the world's largest brokerage -- and he may face a revolt led by former top executives calling for his ouster.

Shares of the company had their biggest jump in five years Friday as speculation swirled that O'Neal's job was on the line. He lost the confidence of investors earlier in the week after Merrill posted a $2.24 billion third-quarter loss -- the biggest amount in its 93-year history.

In the face of reports that O'Neal angered Merrill Lynch's board by initiating merger talks with Wachovia Corp. without their knowledge, there is growing sentiment on Wall Street that his days are numbered.

'I wouldn't be surprised if we didn't get some kind of announcement this weekend, that either the board is standing behind O'Neal or that he's out,' said Dick Bove, an analyst with Punk Ziegel & Co. 'And, if there's no announcement soon, then Merrill Lynch could become a snake pit similar to what happened at Morgan Stanley.'

In 2005, dissident Morgan Stanley shareholders revolted against then-CEO Philip Purcell as the investment bank's business and shares were struggling. It led to the dramatic return of John Mack, who was formerly the company's president.

Win Smith, whose father was among Merrill Lynch's founders, has renewed his criticism of Merrill's leadership in recent weeks. He lost out to O'Neal for the top job, and is considered to be a potential replacement should he be fired.

He told the Associated Press in an interview the board has yet to reach out to him or other former executives, but that many of them stood by to help lead a search for a new CEO. Smith added there is 'growing anger about what's happened here.

'We are all getting tons of e-mails and phone calls from people in and outside the firm,' he said, though he added 'there is no organized effort yet.'

There is also growing consensus on Wall Street that a replacement would need to be found outside of Merrill Lynch. Among the two names most frequently talked about are NYSE Euronext CEO John Thain and BlackRock Inc. CEO Laurence Fink.

Thain has not been contacted by Merrill Lynch, according to a person close to him who was not authorized to speak publicly on the matter.

The former Goldman Sachs Group Inc. executive declined to comment through a spokesman.

Meanwhile, Fink is also said to be a strong candidate. Last year, Merrill Lynch bought a 49.8 percent stake in BlackRock.

It was not clear if a new CEO would explore any further conversations with Wachovia. The two companies have some shared history, though. Merrill has advised Wachovia on four recent transactions, including its $25.2 billion acquisition of Golden West Financial Corp. in May.

If O'Neal were able to stay and orchestrate a takeover of the company, he would stand to cash in on a hefty golden parachute. He would get $250 million if he was forced out via a change in control of the company, according to documents filed with the Securities and Exchange Commission.

'We are ... not sure that shareholders' and board members would be so eager to approve a merger that would provide Stan O'Neal with that kind of compensation,' said Keefe Bruyette & Woods analyst Lauren Smith. 'That would be a very handsome payday for leading the firm down a very tenuous road.'