Trying to sell the company behind the board's back -- what could go wrong?

While the board at Merrill Lynch (NYSE: MER) didn't really need another reason for pushing out CEO Stan O'Neal ($8 billion in write-downs is probably enough), rumors suggest that Mr. O'Neal's decision to approach Wachovia (NYSE: WB) about a merger without consulting the board was another factor.

The New York Times isn't so sure what the big deal is: "The job of a CEO -- even one at a floundering firm -- remains the same: to lead the firm's strategy. That task may include talking to rivals and others about possible combinations. According to some of the nation's top corporate governance experts, a board's role is to sign off on the wisdom of a corporate union, not necessarily to look over the chief's shoulder during negotiations or micromanage every decision .... In deal talks, boards are not Mommy and Daddy. CEOs enamored with another company should be free to pursue their heart's desire -- or at least woo it, without going too far."

At some companies, this might be true. But at Merrill Lynch, O'Neal's clandestine pursuit of a merger was indicative of a management style that was too autocratic. The huge write-downs point to the failure checks and balances, and questionable deals with hedge funds may raise questions about internal controls at the company. That O'Neal talked to Wachovia alone is confirmation of many of the reports that have emerged about him in the past week: He didn't respond well to criticism, and tended to go off and do things on his own.

That's a style that's led to Merrill's current troubles, and it's not the strategy that should lead to any kind of merger to save the company.