Citing E. Stanley O’Neal’s “keen strategic vision” and “great ability to inspire and lead people,” the board of directors at Merrill Lynch & Co. Inc. has elected O’Neal president and COO of the corporation. In his new position, O’Neal, 49, becomes the No. 2 man at Merrill Lynch, and will work with Chairman and CEO David H. Komansky, 62, plotting strategy and directing the worldwide operations of the company’s three primary businesses: corporate and institutional, private client, and investment management. Previously, O’Neal was president of the corporation’s U.S. brokerage unit. Merrill Lynch, a 150-year-old monolith, remains one of the world’s leading financial management and advisory companies, with offices in 44 countries and total client assets of more than $1.6 trillion.
O’Neal, last year’s BLACK ENTERPRISE Corporate Executive of the Year (see “Running With the Bulls,” September 2000), has spent 15 years at Merrill Lynch & Co., joining as a director in investment banking in 1986. With Komansky approaching retirement age in three years, this latest promotion places O’Neal just a heartbeat away from the top spot at a Fortune 500 U.S. financial services firm. Should he rise again at Merrill Lynch, he would become only the third African American–after Fannie Mae CEO Franklin Raines and American Express CEO Kenneth Chenault–to lead a trillion-dollar financial services firm into the 21st century.
However, overseeing Merrill Lynch’s operations, in what the company calls a “tumultuous” market, won’t be a walk in the park. For O’Neal to be successful, he will have to navigate the company through the market’s uncertainties. The company’s financial services group, which includes brokerage and investment banking, saw its second-quarter earnings-per-share drop 31 cents from the 87 cents earned in the first quarter. Komansky and CFO Thomas Patrick reported a slump in revenues from equity and debt trading as the cause of the drop. Industry insiders say that more than any other U.S. broker, Merrill Lynch is more exposed to the equity market because of its heavy retail market presence. Therefore, market slowdowns have more impact on Merrill Lynch than they do on its competitors.
In response, the company had to cut 3,300 jobs, equal to 5% of its workforce, in 2001. The cuts were carried out across most of its business lines.
Komansky is certain O’Neal is the man for the challenge. In announcing the promotion, he said, “In every position [O'Neal] has held at Merrill Lynch, he has shown a passion for excellence and market leadership. His dedication to outstanding performance on behalf of our clients, shareholders, and employees makes him the ideal person to join me in leading our company.”
Time will reveal the wisdom of Komansky’s confidence.
“This removes the glass ceiling,” says William H. Hayden, a 25-year veteran of Wall Street and senior managing director and co-head of public finance at Bear Sterns. “Everyone’s excited. This is a great testament and a tremendous credit to Stan’s years of hard work.”
O’Neal’s life journey has taken him from the small Southern farming hamlet of Wedowee, Alabama (which lies about 85 miles from