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How big should Stan’s payoff be?

30 October 2007

Sarah Butcher

Stan O’Neal is on his way out. Does he really deserve a $100m+ exit package?

With Merrill’s share price down 44% since January and bonuses on track to fall 25% on last year (according to Reuters), does O’Neal deserve anything in the way of a payoff?

According to the Wall Street Journal , O’Neal is embroiled in discussions to negotiate an exit package that could exceed $160m. This includes stock options and the eventual vesting of restricted shares.

O’Neal is not entitled to anything in the way of cash severance, says the paper, but would have gained an additional $29.5m if the merger with Wachovia had gone ahead and he’d lost his job as a result of it.

Writing in the Financial Times today, Abigail Hofman, a former investment banker at Merrill, says the manner of O’Neal’s exit is odious and that he shouldn’t be forced out after a single bad quarter.

Do you agree? And do you think O’Neal should walk away with anything given that Merrill’s bankers look set to be paid worse than even Citi’s this year?

Comments (5)

  • Stan deserves whatever he can get. He shouldn't be the only one carrying the can for this - investment banking revenues were up, excluding the screw up in fixed income. The fixed income heads should walk, not the chief exec.

    Ramsey 30 Oct 2007

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  • Regarding Stan's ousting to a certain extent this rather appalling quarter is the tip of the iceberg. A new CEO is needed that will not prosecute anyone that might challenge the CEO. And maybe as far as senior management is concerned the amount of leeway a CEO might have to have too many different opinions can be at times distressing and unproductive. However, dissent in the boardroom should be encouraged to produce a more competent and engaged board better that the one ML currently has and not only comprising of yes-men (product of Stan's persecutions in the past).

    I would say that in order for ML not to show losses that are well below its peers reform should begin with a top down approach starting from the board not just the CEO and thinking through their strategy for the future thoroughly.

    Jonathan, M&A 30 Oct 2007

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  • Only in Investment Banking can you get paid for completely screwing up.

    Unbelieveable 31 Oct 2007

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  • The exit package is ridiculous. With the $4bn write-down plus maybe another write-off in the next quarter (what analysts expect), nearly all profits of Merrill of the last two years will have been eaten up. So apparently O'Neill did a bad job. He received his regular compensation in the last years which already contains a risk premium - that's how investment banking remuneration is determined. And this is ok. Entitling him for additional millions of dollars is not ok - it's just ridiculous!

    However, this is general. O'Neill apparently only takes what market standards make him to be able to get. It's not a criticism on Merrill, this is the industry (and not only the finance industry)in general. Are the shareholders happy about this?

    Steve 31 Oct 2007

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  • Ramsey - Osman Semerci, fixed income head went a few weeks ago. dullard.

    Big swing 31 Oct 2007

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