As Merrill Lynch wrote down the largest quarterly loss in the investment bank’s 93-year history, and watched its stock value plummet, O’Neal walked away with $161 million in pocket.
The profit-laden departure spurred a collective grunt from the public.
“I sure wish I could find a company to work for where I could do a terrible job, lose my employer over two (2) billion dollars and then have the company hand me a check for $160 million dollars as I was being kicked out of my office,” wrote disgruntled blogger Mark Hutcherson.
At a time where home foreclosures are rampant and jobs are being shed by the thousands, the multi-million dollar packages paid to CEOs who torpedoed their companies into the subprime mortgages that started this whole mess prove even more egregious.
In 2005, O’Neal told the Times, “We’ve got the right people in place as well as good risk management and controls.” Two years later, Merrill was writing down billions of dollars from the firm’s failed investment in risky securities.
The $160 million severance pay – though part of O’Neal’s contract way before Merrill started posting huge quarterly losses – highlights the massive discrepancy between performance and pay in the finance sector.
Arguably, O’Neal did not mean to drive Merrill Lynch into the state in which Bank of America acquired it. However, his risky investments while at Merrill’s helm, and the firm’s consequential demise, should take a toll on O’Neal’s compensation.
“If my carpenter did a lousy job that I only discovered after the fact, I’d demand my money back. The same rules should apply to corporate incentive compensation,” wrote Steven M. Davidoff on the New York Times DealBook blog.
Adam, a commenter on a Blogging Stocks post, expressed a similar sentiment; “Mr. O’Neal had a fiduciary responsibility to his board of directors and most importantly to the Merrill shareholders. He certainly is entitled to an “F” grade for such performance.”
And that’s what it comes down to – responsibility. O’Neal enjoyed the perks on the way up, and he should suffer the losses on the way down.