The rise and fall of Stan O'Neal

Every CEO has his own management style, which tends to evolve from his personality. At Merrill Lynch, Stan O'Neal's style grew out of his self-confidence. Not only had he proven himself to be smarter than his rivals for the top job earlier in the decade, O'Neal was more ruthless. After becoming CEO in 2002, he systematically eliminated any executive who had enough experience to challenge him, or marginalized him in such a way that the executive left. Few people who reported to him in his early years as CEO were surprised to learn that O'Neal's favorite TV show was The Sopranos.

O'Neal's imperial style worked superbly in good times. Merrill's four-year run of healthy profits from 2003 to 2007 only served to reinforce the notion that the CEO was the all-knowing master and commander of Merrill Lynch.

But the sudden announcement of a $4.5 billion write-down on its assets in the first week of October punctured the myth of O'Neal's infallibility. On the morning of Friday, October 5, the firm's top finance people and O'Neal huddled to go over the final language that would be part of the earnings warning sent out just after 9 a.m. The finance group, headed by CFO Jeff Edwards, had come up with the $4.5 billion number for the write-down on the firm's CDO portfolio. Once the language was in place, the group dispersed, in the belief that the work was done.

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