Merrill Lynch's chief executive to retire with large benefits

Stan O'Neal, Merrill Lynch's departing chief executive, will get $161.5 million (112 million EUR) in stock, options and retirement benefits.

Photo: Merrill Lynch's chief executive to retire with large benefits

O'Neal, the second-highest paid Wall Street CEO in 2006, retired from Merrill Lynch & Co. Inc. on Tuesday, almost a week after the investment bank reported its largest-ever quarterly loss. The $2.24 billion (1.55 billion EUR) loss was precipitated by a $7.9 billion (5.48 billion EUR) third-quarter writedown, as the company revalued assets backed by shaky mortgages. O'Neal's ouster was expected after the loss.

O'Neal left with a $131.4 million (91.2 million EUR) equity package of stock, options, restricted shares and restricted units. His restricted stock and restricted stock units will continue to vest on their original schedules, the company said.

He also has retirement benefits worth $24.7 million (17.1 million EUR), while his deferred compensation stands at $5.4 million (3.7 million EUR), according to the company. He will be entitled to an office and an executive assistant for up to three years.

Since O'Neal will keep his options and his stock grants, he could do even better if the stock rises under a new CEO, said James F. Reda, a compensation consultant. A $10 (6.94 EUR) jump in the stock under new management could mean $30 million (20.8 million EUR) for O'Neal.

There is some precedent for such an ironic windfall. After Michael Eisner was ousted as CEO at The Walt Disney Co. in 2005, he made another $100 million when the company's stock price improved under his replacement, Reda said.

"It's a funny dynamic," Reda said.

But Reda questioned both the size of O'Neal's package and why Merrill made O'Neal, 56, eligible for retirement at 55. The policy guaranteed O'Neal so much money that "he was basically indifferent," Reda said.

O'Neal's parting wealth comes after he spent five years as Merrill's CEO, earning nearly top dollar. O'Neal's 2006 pay was approximately $48 million (33.3 million EUR), second on Wall Street only to the $54.3 million (37.7 million EUR) earned by Goldman Sachs Group Inc. CEO Lloyd C. Blankfein.