Wednesday, October 31

Merill's Suits and Golden Parachutes - Could the O'Neill Result Be Litigated?

By now we're sure you know all about E. Stanley O'Neil's "resignation" as CEO of Merill Lynch. The MSM has taken their normal tack of squeezing the story to death in a "this is horrible - let's move on" kind of way.

Our MSM saturation line for a story is when the Today Show picks up on it. When Jim Cramer suggested Merill not pay the parachute and just wait to get sued, I spit out my cereal.

Maybe he wasn't too far off, though. According to the NYT blog Dealbook, the first institutional investor is challenging the firm's financial honesty, based on O'Neil's "mismanagement" and the resulting $8 billion loss.

The plaintiff, which is seeking class status, is not challenging the parachute right now, but we're interested to see if the case gets its class status and proceeds to the discovery phase. The Dealbook commenters seem to want to challenge the Board's Business Judgment (see, we paid attention in other classes, too). With the right proof, O'Neill could be accused of an Ovitz-like lazy-day approach to his job.

Matt Lauer did say he played a lot of golf last month...