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Merrill CEO Steps Down, Leaves Firm In Crisis
E. Stanley O'Neal's $161.5 million exit package has no severance.
(Louis Lanzano - AP)
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"The leader in the clubhouse is Larry Fink, I hear, and he would be an excellent choice," said Daniel Tully, who headed Merrill in the mid-1990s. A BlackRock representative declined to comment.
Wall Street would likely cheer the selection of Thain, who has helped steer the New York exchange into an era of electronic trading and globalized trading platforms.
Fleming and Ahmass Fakahany will serve as Merrill's co-presidents and chief operating officers, the firm said. Fleming will lead the businesses of Merrill, including risk management, and Fakahany the firm's global support, finance and human resources divisions.
Merrill did not say when it would name a successor to O'Neal, but observers said time is a luxury the board does not have.
"They can't delay this. It just adds additional uncertainty," said Warren Neel, executive director of the University of Tennessee's Corporate Governance Center in Knoxville.
Shares of Merrill, which had risen in recent says on investor hopes of a takeover and new management, fell 2.8 percent Tuesday to $65.56.
In a note to clients published Tuesday, analysts at Bernstein research outlined just how challenging the situation could be for Merrill, noting its $15 billion exposure to collateralized debt obligations, or CDOs, an exotic area of finance that the firm charged into under O'Neal's leadership. Depending on market conditions, Merrill could face billions in additional write-downs, the researchers noted.
"Does this change of management solve the Merrill CDO-overhang problem?" the read the report. "Unfortunately, the answer is no."
Staff researcher Richard Drezen contributed to this report.
