Stan O'Neal Leaves Merrill Lynch with $140 Million

Evidently, twenty-one years of service were worth a lot of money but not much loyalty at Merrill Lynch as Stan O'Neal, the embattled CEO retired less than five years after being placed in charge of leading the financial giant. With his recent announcement that Merrill Lynch would be writing down over $8.4billion in losses for the recently completed quarter, Stan O'Neal was unable to remind the Merrill Lynch board of the tremendous growth the bank saw under his leadership.

Like many others who have taken major hits through the Collateralized Debt Obligation (CDO) notes that were called in first in Europe and then quickly in America, Merrill Lynch saw its exposure create a vacuum of needed capital, siphoning off over $7.9billion in the recently reported quarterly reports. In the previous eighteen months, that includes six quarters, Stan O'Neal saw Merrill Lynch increase its bond exposure for sub-prime loans from $1billion to over $40billion. That astronomical increase opened the door for both O'Neal and Merrill Lynch to be blindsided when the markets push for the bonds to be repaid in the face of mounting concerns from investors and institutions that had wearied of the potential risks and saw the proper time to pull out of the super-risky investments. This move was eerily similar to the tech bubble collapse and the wave of concern mounting around Enron previous to its collapse. This quarter also saw Merrill Lynch report its largest quarterly loss of $2.24billion in its almost 100-year history.

But the mortgage fiasco was not the only reason or cause for Stan O'Neal's widely anticipated retirement. In fact, many observers believed that he would not make it through the weekend. From a leadership standpoint, O'Neal was never considered a guy that gelled well with the culture of Merrill Lynch, a surprising thing considering he has spent the last twenty-one years on Wall Street with the firm. With his top-down approach to leadership, Stan O'Neal pushed Merrill Lynch in whatever direction he chose and against whatever wind approached him or the direction he was steering the financial giant.

But do not feel terribly bad for Stan O'Neal. He may be leaving Merrill Lynch and headed towards the pasture, but he is taking over $140million reasons why leaving the top job may not be that bad of a business decision on his part. In an age where corporate governance is at an all-time high and scrutiny is coming in all directions, Stan O'Neal was smart enough to protect himself by ensuring if he was terminated or removed from office, he would receive compensation commiserate with his long-term service to the investment bank.

Lay the losses at Stan O'Neal's feet. They are his for sure. But so are the unprecedented earnings that Merrill Lynch experienced during his tenure at the top spot as he pushed the bank to risk more and it paid massive dividends for the company. In fact, Merrill Lynch had its most successful quarters under O'Neal's watch. Which goes to show how far his star had fallen on Wall Street and amongst the board members of Merrill Lynch? O'Neal's departure while not unexpected will still cause Merrill Lynch to pay a price for the move. While that is going on one person who will not be worried is Stan O'Neal who will be sitting in a lawn chair counting his reasons why he left the job as CEO of Merrill Lynch.