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A Wall Street source revealed to me that Stanley O'Neal, Merrill Lynch's (NYSE: CEO) $322 million ex-CEO, spent an enormous amount of time on the golf course while the markets were convulsing this August. In that pursuit, he is not alone -- according to the New York Times, James Cayne, CEO of The Bear Stearns Companies (NYSE: BSC), also spent August on the links.
As the New York Times has reported, O'Neal loves to golf -- he belongs to four country clubs -- and he has a 9 handicap. But in August 2007, O'Neal turned in 19 scorecards -- a fact which the source claimed was confirmed by the United States Golf Association. If he had played two rounds for each weekend in August, he would have turned in 16 cards -- but he played even more than that.
In case you've forgotten, in August the capital markets began to feel the effects of the subprime mortgage meltdown and they also started to get nervous about lending to private equity buyouts. Both of these businesses were key to O'Neal's risky bets that left him without a job yesterday. Meanwhile, the New York Times reports that Merrill's board is moving quickly to replace him -- so I am now doubting that it will take the time to rethink its strategy before picking a successor.
Merrill shareholders need to look out below.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.
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Reader Comments (Page 1 of 1)
10-31-2007 @ 3:43PM
samww3 said...
The bastard was no good. I really doubted (from day 1) that this non-broker could lead a firm of such magnitude
10-31-2007 @ 4:11PM
Guillermo Gutierrez said...
I am amazed he has a 9 handicap...I thougth he was fully (mentally) handicaped.
10-31-2007 @ 8:02PM
Lisa said...
I worked at Merrill for 6 years during his tenure, and he did a great job! Merrill reached record revenue and profits no one could have ever imagined. When he took over Merrills stock was trading at 31 and peaked around 93 and they have a market cap around 58 bil. He had the biggest fall because he took the biggest risk, which is how money is made in this game. Merrill had Net Profits of 7.5 billion last year, how quickly everyone forgets that a lot of people got rich under Stan, so why shouldn't he. With over 21 years of service and taking Merrill to new heights he deserves every penny he gets, he has made Merrill a 1000 times more than the 160mil he is walking away with. He is not the first CEO to misstep and he won't be the last. He had 11 bosses to answer to, he did not and could not have made a single move with out the boards approval! Who do the have to answer to?
11-02-2007 @ 10:17AM
George said...
Where was risk management under O'Neil's watch?
Taking risk is a given in this business, but there must be someone who can say "that's enough". The fact that O'Neil is walking away with such a large package after being responsible for MER stock falling, and being a major cause of the entire market falling, is ludicrous. If the board goes along with this, they too should be replaced.