E. Stanley O'Neal

Earnest Stanley O'Neal (born October 7, 1951) is a retired American business executive. He was CEO of Merrill Lynch from 2002 to 2007, and chairman and CEO from 2003 to 2007, having worked at the firm since 1986. He was the first African-American CEO of a Wall Street firm.

O'Neal resigned in October 2007 during the subprime mortgage crisis, after the firm experienced huge losses from its overextension in subprime mortgage-backed securities, and Merrill Lynch was sold at a substantial loss to Bank of America the following year.

O'Neal has served on the board of directors of Alcoa, Arconic, General Motors, and other corporations.

Early life and education

E. Stanley "Stan" O'Neal was born in a Roanoke, Alabama hospital and raised in Wedowee, Alabama. He was the eldest of four children of Earnest O'Neal Sr., a farmer, and Ann Scales, a domestic worker. O'Neal grew up in a wood-frame house on the farm owned by his grandfather, James O'Neal, who died when Stan was five years old. The farm was situated on three hundred acres of mostly pine trees. As a child, he played with his sister, two brothers, and other family members on his grandfather's farm, "picking cotton and corn". He also sold and delivered newspapers.

When O'Neal was 12 year old, his father moved the family to Atlanta for better employment. His father worked on the assembly line at the General Motors (GM) factory in Doraville, Georgia, a suburb of Atlanta. O'Neal attended West Fulton High School.

For college, he enrolled in the General Motors Institute (GMI) (today known as Kettering University), and participated in a work-study program that allowed him to rotate between working at the GM Doraville plant and taking engineering and industrial administration classes at GMI. In 1974, he graduated from GMI with a bachelor's degree in industrial administration, the first person in his family to graduate from college.

After graduation, GM hired him as a supervisor at the Doraville plant. While working at the Doraville plant, O'Neal applied to Harvard Business School (HBS). He was accepted, and offered a GM merit-based scholarship. At HBS, he was one of a few Black students. He was elected vice president of the Afro-American Student Union. In 1978, he graduated with honors from HBS with a MBA in finance.

Career

O'Neal began his career at General Motors. During his tenure at GM, he received several promotions. In 1981, he was appointed director of GM's office in Madrid, Spain and supervised a team of 30 employees.

Merrill Lynch

In 1986, O'Neal joined Merrill Lynch as director of investment banking. By the early 1990s, he was running Merrill's leveraged finance division.

In 1997, he was named executive vice president and co-head of Global Markets and Investment Banking. In 1998, he was appointed CFO. In 2000, he was appointed president of the U.S. Private Client Group, and oversaw 16,000 brokers in 800 branch offices. He was the first head of the private client group who had not previously been a broker at the firm, and led massive layoffs within the division. In 2001, O'Neal became president of Merrill Lynch at CEO David Komansky's request.

On July 23, 2002, O'Neal was selected as CEO, and then-CEO Komansky left his post two years earlier than planned. O'Neal was the first African-American CEO of a Wall Street firm. In April 2003 O'Neal was made chairman of Merrill Lynch as well, when Komansky resigned from the firm entirely. By August 2003, O'Neal dismissed Thomas H. Patrick, Sr., and Arshad R. Zakaria, two senior executives who had played pivotal roles in his promotion to CEO. O'Neal attempted to get rid of the 'Mother Merrill' culture of job security, arguing that it promoted cronyism instead of merit.

O'Neal wanted to transform Merrill into a trading powerhouse, and to surpass Goldman Sachs and other Wall Street firms. In 2006, he hired Osman Semerci as Global Head of Fixed Income, on the advice of trading and investment banking head Dow Kim and COO Ahmass Fakahany. Semerci continued Merrill's advances into the subprime mortgage-backed collateralized debt obligation (CDO) market, grew the firm's position from $5 to $6 billion worth of exposure to $55 billion in under one year, and fired trader Jeff Kronthal, who warned against too much exposure to CDOs. Merrill was one of the top CDO underwriters, and its executives received huge bonuses based on CDO performance.''Crash of the Titans'', Greg Farrell, Crown Business, 2010 According to the then-president of Merrill, Greg Fleming, the dismissal of Kronthal in July 2006 was the day the firm's fate was sealed; in Fleming's opinion after Kronthal's firing Merrill was doomed to make the same mistakes as its competitors.

O'Neal was regarded as out of touch as the market changed and Merrill steered towards trouble, as he had "become isolated from his own firm. He had no idea that key risk managers had been pushed aside or that the people he had put in important positions were out of their depth". O'Neal was described as a manager who "had never been the kind of C.E.O. who walked the trading floor. By 2006, he was so divorced from his own firm that he failed to appreciate the utter lunacy of Semerci’s desire to clean house. Did he really think Semerci could get rid of Merrill’s most experienced mortgage traders and not harm the mortgage desk? Sadly, it seems that O’Neal didn’t think about it at all." "At the same time Goldman executives were canceling vacations to deal with the burgeoning subprime crisis, O'Neal was often on the golf course, "playing round after round by himself".

During August and September 2007, as the subprime mortgage crisis swept through the global financial market, Merrill Lynch announced losses of $8 billion. O'Neal finally realized the huge exposure that Merrill had to subprime mortgage-backed CDOs, and that the firm would have to be sold in order to survive. As the crisis worsened, O'Neal made an unauthorized approach to Bank of America and Wachovia Bank about a possible merger, which played a role in his ouster. On October 30, 2007, O'Neal resigned as CEO. He left with a severance package including Merrill stock and options worth $161.5 million on top of the $91.4 million in total compensation he earned in 2006.

Post-resignation

O'Neal was replaced as Merrill Lynch's CEO with John Thain from NYSE Euronext. Thain orchestrated the sale of Merrill to Bank of America in September 2008, and was eventually fired as CEO when it was revealed that he spent more than one million dollars redecorating the CEO suite.

CNBC included O'Neal in their list of "Worst American CEOs of All Time" in 2009. A book review published by ''The New York Times'' argued that O'Neal was one of the people responsible for the 2008 financial crisis. During the final hearings prior to the firm's merger with Bank of America, numerous people – including a founder's son, Win Smith – laid the blame on O'Neal for the firm's downfall and loss of independence.

On January 18, 2008, O'Neal was named to the board of directors of Alcoa.

Financial Crisis Inquiry Commission

On March 11, 2016, a release of documents by the National Archives revealed that the Financial Crisis Inquiry Commission had recommended that O'Neal be prosecuted for multiple crimes in connection with his activities as CEO of Merrill Lynch during the lead up to the sub-prime crisis. No formal legal action has resulted, however.

Personal

O’Neal met his second wife, economist Nancy Garvey, while working at General Motors. The couple married in 1988. The O'Neals have two children, twins who were born in 1991.

O’Neal first marriage ended in divorce, in 1984.

O'Neal is a golfer with a nine handicap, and has held memberships at four different country clubs, including Vineyard Golf Club.

Honors and awards

* 1998: Kenneth A. Powell Alumni Award for Professional Achievement, jointly awarded by the African-American Alumni Association and the African-American Student Union at Harvard Business School
* 2000: Corporate Executive of the Year, ''Black Enterprise''
* 2002: Achievement Award, Executive Leadership Council
* 2002: “Most Powerful Black Executive in America”, ''Fortune''
* 2003: “25 Most Powerful People in Business”, ''Fortune''
* 2005: Bank Street Celebration Honoree with Nancy Garvey (his wife), Bank Street College of Education
* 2007: Keynote address, Wharton Economic Summit, Michael L. Tarnopol Dean’s Lecture Series, Wharton School

Board affiliations

O'Neal has been affiliated with several board of directors, board of trustees, and advisory boards. The following is a sample of his previous affiliations.
* director, ALCOA
* director, American Beacon Advisors, Inc.
* advisory board, American Cancer Society,
* director, Arconic
* advisory board, Bronx Preparatory Charter School
* trustee, Buckley School, New York
* trustee, Catalyst
* trustee, Center for Strategic and International Studies
* director, Clearway Energy
* director, Element Solutions
* member, Executive Leadership Council and Foundation
* director, General Motors Corporation
* member, Harvard Business School Visiting Committee
* director, Lower Manhattan Development Corporation
* director, NASDAQ Stock Exchange
* director, National Urban League
* director, Platform Specialty Products Corporation
* director, Ronald McDonald House
* director, W. E. B. Du Bois Institute for African and African American Research, Harvard

References

External links

"Blundering Herd"
by Bethany McLean and Joe Nocera, Nov 2010 Vanity Fair pg 179





{{DEFAULTSORT:Oneal, Stanley
Living people
People from Roanoke, Alabama
African-American business executives
American business executives
American chief executives of financial services companies
General Motors executives
Harvard Business School alumni
Kettering University alumni
Merrill (company) people
1951 births
Businesspeople from New York (state)
21st-century African-American businesspeople
20th-century African-American businesspeople
Great Recession