Merrill Lynch Wachovia?

The news that Merrill Lynch’s CEO E. Stanley O’Neal had recently reached out to Wachovia to explore a potential merger hit the tape this morning. Peter Cohan on Blogging Stocks puts it well:

As Citigroup’s (NYSE: C) Chuck Prince illustrates, the key to keeping the CEO job is not generating consistently superior corporate performance, it’s maintaining good relationships with your board of directors. Without the board’s support, Prince’s string of disappointing quarters would have cost him his job long ago. Lesson: if you let the board know you’re failing then you keep your job — but if you surprise the board, you’re out.

That’s why corporate loner Stanley O’Neal, Merrill Lynch (NYSE: MER)’s CEO, is likely to get the boot. Because not only did he oversee a 58% increase in writing off bad investments two weeks before Merrill’s latest earnings announcement, he committed the unpardonable sin — if you want to keep the CEO title — of initiating merger discussions with Wachovia (NYSE: WB) without board approval.

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