Earnest Stanley O’Neal, American Business Executive   Leave a comment

Earnest Stanley O’Neal (born October 7, 1951[citation needed]) is an American business executive. He is the former President, Chief Executive Officer and Chairman of the Board of Merrill Lynch & Co. Inc., having served in numerous senior management positions at the company prior to this appointment. He has taken criticism for his performance during his reign as chief executive at Merrill Lynch, and the deterioration of the firm’s stability and capital position.[1] During the final hearings prior to the Bank of America merger, numerous people – including a founder’s son, Win Smith – laid the blame on O’Neal for the firm’s downfall and loss of independence.[2]

O’Neal was a member of the board of directors of General Motors from 2001 through 2006. He currently serves on the board of Alcoa.

  College years

O’Neal’s father moved his family from Wedowee, Alabama to Atlanta, where he worked on a General Motors assembly line.[3] Stan O’Neal also worked briefly on GM’s assembly line as a teenager under a work-study program offered by the General Motors Institute (later known as Kettering University),[4] where he gained a degree in industrial administration in 1974. GM later provided O’Neal a scholarship to attend Harvard Business School, where he attained his MBA in 1978 and later rejoined GM as a Treasury Analyst.[5]

 Professional life

O’Neal initially worked as an analyst for General Motors; within two years he was a director in the treasury division. In 1986, he joined Merrill Lynch and by the early 1990s, he was running Merrill’s leveraged finance division.[6] After spells as global head of capital markets and co-head of the corporate and institutional client group, he spent two years as CFO from 1998 to 2000. In 2000, he was appointed president of the U.S. Private Client Group, the first executive of the division that oversees Merrill’s brokerage who had not himself been a broker. O’Neal led massive layoffs within the division. He became president of the firm in 2001 in a palace intrigue that eventually led to the early ouster of his predecessor and one-time mentor David Komansky.[7] By 2003, he was CEO and chairman.[5] He was one of the first African Americans to hold such a high position on Wall Street. O’Neal earned $48 million in 2006 and $46 million in 2007.[8]

When he came to power, he attempted to get rid of the ‘Mother Merrill’ culture of job security, arguing that it promoted cronyism instead of merit. He also wanted to transform Merrill into a trading powerhouse, and beat Goldman Sachs at its own game. He promoted loyalists like Osman Semerci, who shared his vision. The new team plowed into the mortgage-backed CDO market on a massive scale; Merrill was one of the top CDO underwriters of the boom era. People who complained about risk were fired or sidelined. Initially this plan brought huge bonuses to Merrill, but when the market turned, trouble brewed. [9]

During August and September 2007, as the sub-prime crisis swept through the global financial market, Merrill Lynch announced losses of $8 billion. O’Neal realized that he had steered Merrill Lynch into the disastrous sub-prime arena, and was responsible for the losses.[9][10] As the crisis worsened, O’Neal approached Wachovia Bank about a possible merger, without first obtaining the approval of Merrill’s Board of Directors, which led to his ouster.[11] O’Neal walked away with a golden parachute compensation package that included Merrill stock and options valued at $161.5 million at the time.[12] The board hired John Thain to replace O’Neal, believing that he could save the business. A year later, he did the same thing O’Neal had planned to do; sold the company. This time, though, it was for a much lower price, and he sold it to Bank of America.

On January 18, 2008, O’Neal was named to the board of directors of Alcoa.[13]

O’Neal is said to have an “abrasive” personality. CNBC includes O’Neal in their list of “Worst American CEOs of All Time”.[10] When Thain arrived at Merrill he scrapped O’Neal’s practice of having the security guards always hold an entire elevator bank open excusively for him.[14] In The New York Times Magazine on April 18, 2010, O’Neal was described as one of the “feckless dolts” who helped precipitate the financial crisis of 2007.



Posted March 2, 2012 by pennylibertygbow in Entrepeneur

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