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When CEO’s stumble, do they fall down?
In the case of Stan O’Neal, yes. For five years, he’s been the head honcho of investment powerhouse Merrill Lynch, but it was on his watch that this Wall Street bank got badly over-extended in shaky investments in subprime mortgages. The result is that Merrill has reported its largest quarterly loss ever, totaling more than $2 billion. Ouch. Also, O’Neal’s tenure has been marked by a downturn in Merrill’s stock value. Double ouch.
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O’Neal stumbled, and now he’s taken a fall, having been forced out of the company by the board of directors. But, of course, CEOs are not like regular employees who mess up and simply get the boot. Instead, the board provided a very soft landing for the CEO’s fall. First, he was allowed to retire, rather than being fired. This was more than a nice face-saving gesture, for it allows Stan to cash-in on oodles of retirement benefits.
How much is oodles? For starters, he gets $5.4 million in deferred pay. Then there’s a nice cushion of $27.4 million in pension money for him. Also, to make his fall feather soft, O’Neal was given $131.4 million in stock payments. That adds up to more than $160 million – not bad for poor performance! It certainly is far-cushier treatment than he gave to the 20,000 Merrill workers that he so mercilessly fired when he became CEO five years ago.
Oh, one more thing. O’Neal doesn’t even have to leave the building. Merrill will set him up with an office and an executive assistant for the next three years.
For those of you who think the Merrill Lynch board is either a bunch of corporate softies or totally insane, the directors did point out that they had the guts to reject a 2007 bonus payment for O’Neal’s work. Yeah… that’ll show him who’s boss.
“Merrill Lynch CEO gets $161.5 million to cushion his fall,” Austin American Statesman, October 31, 2007
“Merrill Chooses Insider To Lead Search for Chief,” The New York Times, October 31, 2007
“Merrill cuts its losses, and its CEO,” USA Today, October 31, 2007