NEW YORK -- Now the search begins.
After days of silence, Merrill Lynch & Co. directors named Alberto Cribiore, a private equity executive, to look inside the firm and out for a chief executive to succeed E. Stanley O'Neal, who said yesterday that he would retire after 21 years.
O'Neal's departure was long expected - the board decided late last week that he would have to go, after an $8.4 billion write-down and an unauthorized merger approach to a rival bank, Wachovia Corp. But the news still marked a final, stunning coda to one of the more abrupt chief executive departures in Wall Street history.
"I have been very fortunate to spend the past 21 years at Merrill Lynch," O'Neal said in a statement. "The company has provided me with opportunities that I never could have imagined growing up, culminating with my leadership of the company over the past five years."
His ouster was being described as a retirement, which allows him to hold onto $161.5 million in stock and retirement benefits, according to public filings.
In addition to leading the search, Cribiore will serve as interim non-executive chairman. He was the first director tapped by O'Neal after he took over in 2002. A longtime deal maker and executive at the private equity firm Clayton, Dubilier & Rice as well as his most recent firm, Brera Capital Partners, Cribiore had been selected at a time when O'Neal was trying to promote new businesses such as private equity that had never been a core focus for the firm.
Now Cribiore is in the awkward position of finding the person to succeed O'Neal.
While such a process can take weeks if not more, all indications are that the directors and Cribiore are going to move as quickly as possible.
While directors have put out informal feelers to outside candidates like Alan D. Schwartz, the president of Bear Stearns Cos., Laurence D. Fink, chief executive of the asset management firm BlackRock Inc., is at the top of their list, and it would seem to be only a matter of time before he receives a phone call from Cribiore, according to a number of people inside and outside Merrill.
A BlackRock spokesman could not be reached for comment.
With his experience in building an asset management business that now oversees more than $1 trillion in assets, Fink is considered well-placed to build upon Merrill's core strength - its vast and growing private client business that manages close to $2 trillion in assets.
BlackRock's work in developing trading and software programs that assess risk exposure in stock and bond portfolios also gives him a grounding in Merrill's chief weakness at this point: its risk control.
All the same, the board is expected to go through a process that would examine the qualifications of other outside candidates such as Schwartz; John A. Thain, the president of the New York Stock Exchange; and perhaps former Merrill Lynch executives now running other companies. According to people briefed on the deliberations, the board has been interviewing top search firms to help with the process.
Also in the mix is Gregory J. Fleming, Merrill's co-president and the firm's top investment banker, although most insiders believe that at age 44, he is too young for the job.
In an indication that Fleming has not been hurt by his role in the merger approach to Wachovia, Merrill said yesterday that Fleming would have interim executive responsibility for all the firm's operations, which would include its troubled fixed-income trading positions and its risk-management function.
Fleming, in essence, becomes a temporary chief executive, with Cribiore as chairman. While an ungainly solution over the long term, Fleming's experience at Merrill should allow the arrangement to hold until a chief executive is selected.
Ahmass L. Fakahany, who shares the co-president title with Fleming, was given the responsibility for mostly administrative areas such as finance, global support and human resources. Before being appointed co-president, Fakahany, who has never worked as a banker or a trader, oversaw risk at the time that the firm built up its large and ultimately disastrous positions in subprime-backed securities.
A close ally of O'Neal, Fakahany has received the brunt of the criticism for Merrill's write-downs. While it is expected that he will leave eventually, people who have been briefed on the board's discussions said there would probably be no major changes in management until a new chief executive picks a team.
O'Neal will keep more than $131.4 million in unvested stock and unexercised options, a $27.4 million pension and $5.4 million in deferred pay that he accumulated during his career, according to public filings.
O'Neal worked without an employment contract and was not guaranteed a severance.