If you're an investor in Merrill Lynch & Co. (NYSE: MER), it really matters why your board has chosen John Thain over Laurence Fink. The reported reason for not picking Fink has changed since yesterday.
Yesterday, I posted about a CNBC report that Fink was the initial candidate. When he asked the board for a thorough reporting on Merrill's subprime problems, however, he was shunted aside. Today's New York Times suggests that Fink was not offered the job because he was too cocky, talking freely about the pros of leading Merrill compared with the cons of leaving BlackRock. The article suggests that Fink had told the press he was a shoe-in for the job, which angered the board.
I guess it's possible that Fink did not get the job for both reasons, but the notion that Fink embarrassed the board by going public with the offer certainly does not seem like a good justification for passing Fink over if he was the best one for the job. While this is not a good reason, it would concern me even more if Fink did not get the job because the board did not want to know how much of a subprime problem Merrill had before Fink decided whether to take the CEO job.
Whether Fink lost because he embarrassed the board or because he wanted it do to its job for shareholders makes a big difference. It shows whether the board is merely thin-skinned, woefully incompetent, or both. The good news is that John Thain is neither.
Investors should consider waiting to invest in Merrill Lynch until after Thain has had a chance to take a big-bath write-down of all Merrill's problems.
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.
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Reader Comments (Page 1 of 1)
11-15-2007 @ 10:18AM
Jgoo said...
Investors will once again to keep their eyes on Merrill Lynch. The NewsVisual article on the firm’s new CEO, John Thain, http://www.newsvisual.com/newsvisual/2007/11/john-thain.html makes clear that his experience is an asset that can help Merrill move forward.