NEW YORK — Merrill Lynch & Co. chief executive Stan O’Neal faced the potential loss of his job Friday over questions about his leadership of the world’s largest brokerage – and he may face a revolt led by former top executives calling for his ouster.
Shares of the company had their biggest jump in five years Friday as speculation swirled that O’Neal’s job was on the line.
He lost the confidence of investors earlier in the week after Merrill posted a $2.24 billion third-quarter loss – the biggest amount in its 93-year history.
In the face of reports that O’Neal angered Merrill Lynch’s board by initiating merger talks with Wachovia Corp. without the board’s knowledge, there is growing sentiment on Wall Street that his days are numbered.
“I wouldn’t be surprised if we didn’t get some kind of announcement this weekend, that either the board is standing behind O’Neal or that he’s out,” said Dick Bove, an analyst with Punk Ziegel & Co. “And, if there’s no announcement soon, then Merrill Lynch could become a snake pit similar to what happened at Morgan Stanley.”
In 2005, dissident Morgan Stanley shareholders revolted against then-CEO Philip Purcell as the investment bank’s business and shares were struggling. It led to the dramatic return of John Mack, formerly the company’s president.
Win Smith, whose father was among Merrill Lynch’s founders, has renewed his criticism of Merrill’s leadership. He lost out to O’Neal for the top job and is considered to be a potential replacement.
