Stan Oneal career at ML

In 1986, at the age of 35, he joined Merrill’s high-yield, or “junk bond,” department. Within three years he was running the department, competing with Michael Milken’s Drexel Burnham Lambert Inc. When Milken pleaded guilty to securities fraud in 1990, it enabled O’Neal’s unit at Merrill to become the biggest junk bond operator for five consecutive years.

In 1997, O’Neal became co-head of Merrill’s corporate and institutional client group, which includes investment banking and securities trading. A year later, he was promoted to chief financial officer. In 2000, O’Neal was promoted once again to head the brokerage division, Merrill’s more prominent department.

He quickly redirected Merrill’s army of 15,000 brokers to focus on winning more millionaires as clients, and after the 9/11 terrorist attack on the World Trade Center he eliminated more than 20,000 employees and closed 266 offices around the world. This ruthless cost-cutting gave him an inside track to the top position, which he was awarded in 2002.

Soon after becoming chairman and CEO he set the tone for his tenure by purging the firm of dozens of its longtime senior employees and firing those who had been considered his rivals for the CEO post. Later he forced out some of his former allies, including Executive Vice President Thomas Patrick, who had campaigned for his elevation to head the company.

As the Wall Street Journal put it on Monday: “With his restructuring, Mr. O’Neal was seen as rejecting the longtime culture of a company known internally as “Mother Merrill.” For years, the brokerage giant was willing to accept lower profit margins in order to keep longtime loyal employees on the payroll, much like International Business Machines Corp. had a no-layoff policy during its 1980s heyday...

“Merrill’s board gave him leeway because he more than doubled the firm’s profit level to an average topping $5 billion annually from 2003 to 2006. Those at the company said he was proud of cutting through the cozy corporate culture.”

According to various press reports, O’Neal’s management style was little short of despotic. “Merrill Chief Executive Stan O’Neal would grill his executives about why, for instance, Goldman Sachs was showing faster growth in bond-trading profits,” wrote the Journal. “Subordinates would scurry to analyze the Goldman earnings to get answers to Mr. O’Neal. ‘It got to the point where you didn’t want to be in the office’ on Goldman earnings days, one former Merrill executive recalls.”

In July of 2006, O’Neal ousted three senior bond executives. They were, according to the Journal, “summoned upstairs, one after another, for 5- to 15-minute meetings” and told “there was no role for them.”

Winthrop Smith, who left as head of Merrill’s international brokerage after O’Neal became president, told Bloomberg.com, “He got rid of people with hundreds of years of [combined] experience.”

Earlier this month, after the end of the third quarter, O’Neal fired two top bond executives and, the New York Times reports, he was looking to fire his chief financial officer and replace him with a longtime friend.

Little wonder than a large number of former executives have been involved in discussions to launch a proxy fight if O’Neal was not removed.


http://wsws.org/articles/2007/oct2007/merr-30o_prn.shtml