Bus= iness

Stan O'Neal: The Rise and Fall of a Numbers Guy

by E= ric=20 Weiner

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Joe Raedle

Merrill Lynch CEO Stan O'Neal, shown in a 2003 file = photo, is a=20 numbers person in what is, at its heart, a people business. Getty Images

NPR.org,=20 October 29, 2007 =B7 It's tempting = to describe=20 Stan O'Neal's journey from the grandson of a former slave to the head of = a $50=20 billion bank as the stuff of legends, but it's probably not the kind of = phrase=20 that O'Neal himself would use.

The CEO of Merrill Lynch, one of the nation's top investment firms, = O'Neal is=20 famously self-effacing, and something of a contradiction: a loner in a = world=20 that tends to reward glad-handers, a numbers person in what is, at its = heart, a=20 people business.

O'Neal credits his meteoric rise to a combination of gumption and = luck.=20 "Let's face it: If I had been born 30 years earlier, there's no way that = we'd=20 ever be sitting here, having this conversation," he said in a 2003 = interview=20 with Newsweek.

O'Neal's apparent demise, analysts say, can be attributed to the = vagaries of=20 the market, a few ill-conceived decisions and a long list of enemies he = amassed=20 after years of aggressive cost cutting at the investment giant.

An Outsider at 'Mother Merrill'

O'Neal was always something of an outsider at Merrill Lynch, or = "Mother=20 Merrill," as it's known by insiders. The firm had a reputation for a = nurturing=20 environment, at least by Wall Street standards. Lower profit margins = were=20 accepted so that veteran employees could remain on board. O'Neal, = however, never=20 bought into the concept of Mother Merrill.

"To the extent that it is paternalistic and materialistic, I don't = think that=20 is healthy," he said in a 2003 interview with The New York = Times. "I=20 guess there is something instinctive in me that rebels against = that."

Former employees describe O'Neal as a corporate leader who did not = brook=20 dissent. There were few freewheeling discussions during strategy = meetings and he=20 tended to surround himself with people who shared his point of view, = according=20 to published reports.

O'Neal has now reportedly lost the support of Merrill Lynch's = 11-member board=20 of directors =97 nine of whom he handpicked. In other words, it's a = corporate=20 mutiny.

No Indoor Plumbing

Born in 1951 in Roanoke, Ala., E. Stanley O'Neal spent his early = childhood=20 delivering newspapers, and picking cotton and corn on the family farm. = He was=20 educated in a one-room school built by his grandfather, a former slave. = (He was=20 born in 1861.)

"We had little," he told students at Washington's Howard University = in 2004.=20 "No car, no running water or indoor toilets. But I was lucky because I = had=20 parents who knew it was important for me to go to school every day, = however=20 inadequate it might have been."

When he was 13, his father landed a job at General Motors in Atlanta = and=20 O'Neal's life changed. He soon earned a place studying engineering and=20 industrial administration at the General Motors Institute. He briefly = worked as=20 a foreman on a GM assembly line in Flint, Mich. Later, he would attend = Harvard=20 on a scholarship, where he earned an M.B.A. At one point, O'Neal = reportedly took=20 speech lessons to lose his Southern accent.

In 1986, he joined Merrill Lynch's junk-bond division. From then on, = his=20 career moved in one direction: up. By the early 1990s, he was running = Merrill's=20 leveraged finance division. In 1998 he was promoted to chief financial = officer,=20 a crucial position at a time when Merrill Lynch was faltering and = investors were=20 growing impatient.

Ruthless Efficiency

With what the British newspaper the Financial Times = described as=20 "ruthless efficiency," O'Neal began cutting costs. He laid off 24,000 = employees=20 =97 a third of the work force =97 fired 19 top executives and eliminated = perks such=20 as gourmet meals and chauffeured cars.

Not surprising, O'Neal's cost-cutting was unpopular among employees. = But soon=20 Merrill Lynch was the most profitable investment bank in the country, = making=20 more money per broker than any of its rivals. Suddenly, Stan O'Neal was = the=20 darling of Wall Street and the business media. "Meet O'Neal and you = can't help=20 but be impressed with his politeness and easy charm," cooed the magazine = EuroMoney.

In 2002, he was promoted to chairman and chief executive officer, = becoming=20 the first African-American to run a major Wall Street firm. Last year he = earned=20 $48 million in salary and bonuses. Asked by Newsweek about his = unlikely=20 rise from the cotton fields of the Deep South to the pinnacle of Wall = Street,=20 O'Neal replied with almost teenage glee. "It's pretty cool, isn't it? = Every once=20 in a while I have to pinch myself."`

O'Neal put in place one of the youngest management teams on Wall = Street and=20 he pushed people to match the growth rates of their biggest rival, = Goldman=20 Sachs. But in a business that tends to reward schmoozers, O'Neal was a = loner=20 with few friends at the banks. "Cool and austere" is how The New = York=20 Times described him in a 2003 article. "His eyes give nothing = away."

O'Neal also abhorred the clubbiness of Wall Street. "I think clubs = have their=20 place but not in modern commerce," he said.

Those Darn Numbers

In the end, though, it was not necessarily O'Neal's personality that = led to=20 his demise but those very numbers that he loved so much. "Losing a lot = of money=20 for shareholders is the surest way to end a career on Wall Street," is = how=20 Bloomberg, the financial news wire, neatly summed up the imminent fall = of Stan=20 O'Neal. Last week, the company posted a quarterly lost of $2.3 billion, = its=20 worst performance in its 93-year history. Merrill's stock price slid 21 = percent=20 since the size of the losses began emerging earlier this month.

Much of these losses can be traced to the meltdown in the subprime = mortgage=20 markets and some former Merrill Lynch employees suggest that O'Neal was = being=20 made a scapegoat for what is a company-wide (and national) problem.

"I can only say that apart from Stan, the global head of sales and = cronies=20 also need to be pushed out," former Merrill Lynch employee Peter = Dragomer wrote=20 on a BBC blog. "Whoever signed off the credit risk on these instruments=20 definitely needs head-chopping as well."

If Stan O'Neal is indeed booted from Merrill Lynch, he need not worry = about=20 his financial future. His company holdings, retirement benefits and = severance=20 package would easily top $200 million, regulatory filings show.

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