Merrill's Stan O’Neal’s departure package: $160 million

By Karyn Chenoweth Oct 31, 2007, 13:37 GMT

Suffering huge losses thanks to plunging mortgage-based securities, Merrill Lynch on Tuesday gave Stan O’Neal $160 million parting compensation, allowing him to retire as chairman and chief executive rather than firing him.

The company said O’Neal and the board had “both agreed that a change of leadership would best enable Merrill Lynch to move forward”.

The Financial Times reports that O’Neal’s departure is after the admission last week that Merrill Lynch lost almost $8 Billion on mortgage-backed securities, making him the most senior executive to lose his job as a result of the US subprime mortgage turmoil.

FT reports that allowing him to retire, O’Neal, (paid $48 million last year), wll keep his deferred compensation in the form of unvested stock worth $90 million, giving him a total exit package of about $160 million, including other compensation, shares and benefits.

Their strategy is an example of senior executives that "fail"  rarely are dinged in their own wallets, the financial losses are felt among employees whose jobs will be cut, and investors who have lost a significant portion of their portfolios.

Alberto Cribiore, a board member for four years, has been chosen to serve as interim chairman.  The top internal candidates are considered to be Greg Fleming, co-president, and Bob McCann, who heads the wealth management operations, according to the Financial Times. 

O’Neal, 55, became the first African American to head a Wall Street bank, said Merrill Lynch had provided him with “opportunities that I never could have imagined growing up”.

The Financial Times reports that Merrill shares closed down almost 3 per cent at $65.56