Power Struggle at Merrill Led To Ouster of No. 2 Executive
Merrill Lynch & Co. Chief Executive Stan O'Neal forced this week's sudden retirement of Thomas Patrick, his No. 2 executive, after Mr. Patrick persistently advocated a succession plan that Mr. O'Neal disagreed with, according to people familiar with the executive-suite spat.
In discussions with Merrill directors and other officials, Mr. Patrick was advocating the appointment of one of his own longtime colleagues, Arshad Zakaria, to be designated president and heir-apparent to Mr. O'Neal, the same people said. Mr. Zakaria, 42 years old, is currently head of Merrill's global-markets and investment-banking division. Mr. Patrick, who held the title of executive vice chairman, finance and administration, spoke up in Mr. Zakaria's favor as recently as Merrill's latest board meeting Monday, they added.
Mr. O'Neal, 51, who serves as chairman, chief executive and president, took a dim view of Mr. Patrick's efforts, the people said. Only two weeks ago on a satellite TV appearance broadcast to Merrill employees on July 17, Mr. O'Neal had said that he believed it was too soon to designate a No. 2 executive who could be considered an heir-apparent because he himself had only become the chief executive last December and chairman in April.
The reasons for Mr. Patrick's sudden and, at the time, unexplained departure offer an unusual public glimpse into a power struggle at the top levels of a major Wall Street institution. Merrill is the nation's top brokerage firm as measured by number of brokers. Its staff of 13,300 brokers is followed by that of Citigroup Inc.'s Smith Barney unit, which has 12,317 brokers.
The fact that Mr. Patrick, 60, would advocate Mr. Zakaria's elevation so openly indicated that "he forgot he was not the CEO," according to one person briefed on the board meeting and Mr. O'Neal's swift follow-up action against Mr. Patrick.
Mr. O'Neal broke the news to Mr. Patrick that he had to leave Merrill just before 8 a.m. Tuesday morning, according to people familiar with the events. The two met in the CEO's office on the 32nd floor of the World Financial Center in lower Manhattan, they said. Later that afternoon, after a flurry of midday reports that Mr. Patrick had been barred from the building by Merrill's security staff, Mr. O'Neal announced that Mr. Patrick was retiring, "effective immediately."
Calls to Mr. Zakaria were referred to Merrill's press office. Attempts to reach Mr. Patrick at his homes in New York and Chicago and through Merrill Lynch weren't successful. A Merrill spokesman said Mr. O'Neal wasn't available to comment.
The mysterious circumstances surrounding Mr. Patrick's departure had prompted a guessing game that had riveted Wall Street this week. Speculation swirled that Merrill had suffered possible bond-market losses as interest rates rose sharply in the past month, or that the sudden retirement had been prompted by some new flare-up concerning regulatory issues, which have bedeviled the firm for the past 15 months.
The speculation about bond-market losses had been further fanned by the simultaneous departure of John C. Stomber , senior vice president and treasurer.
Merrill officials called speculation about bond-market losses or regulatory issues "unwarranted." They added that Mr. Stomber resigned for personal reasons unrelated to Mr. Patrick's departure.
In the broadcast to employees, Mr. O'Neal voiced another concern about putting the firm through some new process of designating a new No. 2 executive and possible heir-apparent. In response to an employee question about whether he planned to name a president, Mr. O'Neal said he believed that the extended horse race that lasted nearly two years among four top executives to succeed his predecessor, David Komansky, had been destructive to the organization because it fueled distracting internal rivalries. In addition, Mr. O'Neal said that as a new CEO he didn't want to add a layer between him and his top managers.
Nevertheless, Mr. Patrick had repeatedly urged Mr. O'Neal to elevate Mr. Zakaria and made "an impassioned speech" in favor of Mr. Zakaria at the board meeting, according to one person briefed on the session. As a result, the same person said, "Stan came to the conclusion that he, as the CEO, could not tolerate having somebody trying to influence his board." He came to regard the initiative as an effort to "usurp" his authority, the person added.
Ironically, Mr. Patrick had been Mr. O'Neal's ally in winning the horse race to succeed Mr. Komansky. At one point, Mr. Patrick presented a set of numbers to directors just before they voted on the selection in July 2001 that included profit results favorable to Mr. O'Neal, then head of the firm's brokerage unit, and adverse to another contender, Jeffrey Peek, then head of asset management. After Mr. Peek protested that he had never seen the numbers used, Mr. Patrick quickly amended them, saying later through a spokesman that he had made an honest mistake.
Following Mr. O'Neal's selection, Mr. Patrick served as his top lieutenant in a brutal campaign of cost-cutting designed to boost Merrill's profit margins. He also helped orchestrate Merrill's move to exit some businesses and diminish its footprint in others. In underwriting, Merrill allowed the securities unit of Citigroup Inc. to take the lead by halting the practice of underwriting short-term fixed-income securities on terms unfavorable to Merrill.
The cost-cutting had recently borne fruit, as Merrill reported that its profits in the second quarter rose 61% to $1.02 billion, its second-best quarterly result ever, helped by strong bond-market results. Together with a healthy stock market turnaround, the profits helped boost Merrill's stock price 72% since its recent low on March 11, just before the start of the war in Iraq.
Mr. Patrick's brusque style also made him enemies throughout the firm amid the forced departure of many of those who held top jobs in the Komansky administration. All three of Mr. O'Neal's rivals and many of their allies have left. Mr. Patrick openly criticized former Merrill CEO Daniel Tully, a longtime adversary of Mr. Patrick's, former colleagues of Mr. Patrick said. And during the Komansky era, he undertook an unfavorable analysis of the acquisitions that Merrill had made under Mr. Komansky, according to two people familiar with the firm.
Nearly 15 years ago, Mr. Zakaria had worked in a unit that became controversial later for having designed and marketed a series of tax shelters for such major corporate clients as Colgate-Palmolive Co., Paramount Communications Inc. and Schering-Plough Corp. that were challenged by the Internal Revenue Service. Mr. Patrick was a close ally of the unit's members.
Mr. Patrick had handed over his former responsibilities as chief financial officer last November to Ahmass Fakahany; together they had led the past two conference calls Merrill held to explain its quarterly earnings to analysts and institutional investors. Two weeks ago, Mr. Patrick also disclosed the sale of 111,290 Merrill shares for proceeds of about $5.8 million. That was about one-quarter of his total holdings, according to filings with the Securities and Exchange Commission.
美林二号人物因权利斗争被逐出局
据熟知美林公司(Merrill Lynch & Co.)高层权力斗争内幕的人士透露，由于该公司"二把手"帕特里克(Thomas Patrick)不顾首席执行长奥尼尔(Stan O'Neal)的反对，在有关总裁继任人选问题上坚持己见，致使奥尼尔向帕特里克施加压力，最终上演了本周帕特里克突然退休的一幕。
这些人士称，在与美林董事和其他管理人士讨论时，现年60岁的帕特里克主张任命他个人的一位长期同僚泽卡里亚(Arshad Zakaria)担任公司总裁。显而易见，出任这一职位的人将成为奥尼尔的继任者。
现年42岁的泽卡里亚目前是美林全球市场和投资银行部的负责人。这些知情人士补充说，现任美林金融和管理部执行副董事长的帕特里克在美林周一召开的董事会上，对泽卡里亚予以高度评价。
现年51岁的奥尼尔，集美林公司的董事长、首席执行长和总裁于一身。他对帕特里克的这番周旋并不买帐。就在仅仅两周以前，奥尼尔在向美林公司雇员所作的卫星电视直播中曾表示，由于他本人只是在去年12月才担任公司的首席执行长，今年4月份才出任董事长，因而他认为目前就任命二号管理人士还为时尚早。
帕特里克突然而且是莫名其妙地离职，使公众将关注的焦点齐聚在美林高层的权利斗争上。从经纪商数目来看，美林是美国最大的经纪公司。其经纪商数目达到13,300人，花旗集团(Citigroup Inc., C)旗下所罗门美邦(Salomon Smith)子公司以12,317名经纪商紧随其后。
一位知情人士在谈到这次董事会会议及随后奥尼尔对帕特里克采取的迅速行动时表示，帕特里克如此毫无顾忌地建议提拔泽卡里亚说明，"他忘记了自己的身份并不是首席执行长。"
据知情人士称，在董事会会议结束后，奥尼尔突然通知帕特里克，要求他在周二上午8点钟之前离职。二人在美林位于国际金融中心32层的CEO办公室进行了这番对话。当天下午，奥尼尔即宣布了帕特里克"即刻"退休的消息。
记者打往泽卡里亚的电话被转到了美林公司的新闻办公室。记者打电话至帕特里克位于纽约和芝加哥家中，以及美林公司，均没能找到他。美林公司的一位发言人称，奥尼尔不会接受采访对此发表评论。 在上述消息披露之前，帕特里克的神秘离职在华尔街引发诸多猜测。有传言称，由于过去一个月利率大幅下挫，美林在债券市场的投资可能出现损失。也有人猜测，帕特里克的突然离职同新的监管调查有关。
此外，美林高级副总裁兼财务总管John C. Stomber几乎在同一时间宣布辞职的消息进一步强化了市场上有关美林债市投资不利的猜测。
