Merrill Lynch boss David Komansky accelerated his decision to pick E. Stanley O’Neal as his successor yesterday to restore confidence in his leadership, after stumbling on the path to new profit goals at the biggest U.S. brokerage firm.
Merrill Lynch just reported one of the worst quarters of any Wall Street firm. The earnings nose dive will make it hard for Komansky, 62, to reach the profit goals Merrill outlined last year and match returns generated by competitors such as Lehman Brothers and Goldman Sachs.
The unanswered question about succession added to the uncertainty. “The issue was turning into a crisis concern,” noted one Wall Street observer. “There is failing confidence in the firm’s leadership.”
Sources say this was one of the reasons why Komansky speeded up his decision to name his heir apparent, an appointment expected to come this year.
Another consideration, say Merrill sources, is the chairman’s declining health. Komansky is known to suffer from chronic back pains and other ailments that make it difficult for him to work. Some believe that Komansky may even want to step down from the CEO post and into a role as chairman emeritus by yearend, before his scheduled retirement in 2004.
The move comes after The Post reported that Komansky talked to former Morgan Stanley & Co. President John Mack about taking a top job at Merrill. Komansky declined comment but reportedly denied holding talks with Mack, who has joined Credit Suisse First Boston as its chief.
Merrill spokesman Richard Silverman said once it became evident Komansky was prepared to make a decision to recommend O’Neal, there was no reason to delay the process. “It was consistent with his timetable,” said Silverman.