(February 15) – “Merrill Lynch & Company has put its chief financial officer, E. Stanley O’Neal, in charge of the nation’s biggest brokerage operation and on track to be the next chairman of the firm. Mr. O’Neal, one of the highest-ranking blacks on Wall Street, is the first person to be named to oversee Merrill’s 14,200 brokers without having been a stockbroker himself,” reports Patrick McGeehan in today’s New York Times.
“He succeeds John L. Steffens, a former broker who has been president of the brokerage unit for 15 years. Mr. Steffens, one of Merrill’s top three executives, was named chairman of the unit. Merrill chose Thomas Patrick, 56, an executive vice president who once was the firm’s chief financial officer, to replace Mr. O’Neal in that job. “Analysts and people inside Merrill interpreted Mr. O’Neal’s job switch as a sign that he had the early lead to succeed David H. Komansky as chairman and chief executive in a few years. The firm’s presidency, the slot directly below Mr. Komansky’s, has been vacant since Herbert M. Allison abruptly left the firm in July.
“Mr. Komansky, who is 60, said yesterday that he intended to continue working until he was 65. ‘We certainly have no plans to name a president for at least two years,’ he said. That will leave time for Mr. O’Neal to prove his ability to run one of Merrill’s core businesses while it is going through a period of sweeping change. The firm, which started out as a stock brokerage firm and evolved over the years into a diversified provider of financial services, derives about half of its profit from its brokerage operations.
In the post, people inside the firm say, Mr. O’Neal will be competing with the heads of two other business units: Thomas W. Davis, who runs the institutional business, and Jeffrey M. Peek, who is trying to turn around Merrill’s mutual fund unit. One of the three is likely to be the next president, those people say.
For his part, Mr. Komansky declined to make any predictions. ‘My very, very, very strong preference is to name an insider’ to succeed Mr. Allison, he said. Mr. O’Neal said he had been studying the brokerage operation for a couple of years, but added that ‘there are a lot of people in this business I need to meet. ‘With Merrill’s introduction of online trading last year, he said, ‘we’ve got the right formula and we have all the right attributes to compete for garnering assets.’
Before becoming chief financial officer in 1998, Mr. O’Neal, 48, was an investment banker. He joined the firm in 1986 from General Motors, where he started out working the night shift in an assembly plant in Doraville, Ga. After graduating from the General Motors Institute, now known as Kettering University, Mr. O’Neal won a scholarship from the automaker to attend Harvard Business School. After receiving his master’s degree from Harvard, he joined the treasury department of General Motors in New York and worked there until he left for Merrill. In 14 years at Merrill, Mr. O’Neal has run its junk bond business and has been co-head of its institutional businesses.