John Thain faces many challenges as CEO of
, including rebuilding a fractured firm's lost culture, according to its former chairman.
Thain, the former
president, on Wednesday
stepped down as CEO of
to take Merrill's top job. He confirmed the news, which broke earlier in the day, after the closing bell on
"First thing I have to do is really get to know the people," Thain said during the
Win Smith Jr., a former chairman of Merrill Lynch International whose father was a Merrill Lynch founding partner, said he believes that Thain will be well received and could be the prescription the big U.S. securities firm needs to recover.
"I think it is a real shame that there wasn't an internal candidate," Smith told
"That would be the one criticism for this board of directors. That said, I think
Merill is lucky to attract someone with the talent of Thain."
Merrill's top spot opened up two weeks ago, when then-CEO Stanley O'Neal was ousted a week after he announced huge losses in collateralized debt obligations and other shaky paper, to the tune of nearly $8 billion. The firm announced a loss of $2.2 billion, or $2.85 a share, for the quarter -- nearly six times the size of the loss O'Neal had projected earlier in the month.
Big losses and word that O'Neal sought to arrange a covert merger-deal with
, proved to be the death knell for the chief executive, who walked off with about $90 million in stock, $40 million in options and another $30 million in pension and other goodies.
Potential successors for O'Neal had been bandied bout around Wall Street even before he had officially stepped down, including frontrunners Larry Fink, CEO of
, and internal favorite Bob McCann , who heads up Merrill's wealth management group and leads its massive army of brokers. Gregory Flemming, Merrill's co-president, had also been in the running.
How well Merrill's 30,000-strong retail brokerage contingent and McCann -- it's well respected leader -- receives Thain will play a big part in his ultimate success. For one, Thain, for all his plaudits at improving the NYSE and Goldman background, has not run a company with the personnel of Merrill.
Still, Bruce Foerster, president of South Beach Capital and a former Lehman Brothers banker, thinks Thain is up to the challenge.
"He is a problem solver and I think you need that at Merrill," Foerster says. "The guy is going to need the time to get things done."
Smith, who is now CEO of the firm that owns Sugarbush Resort in Warren, Vt., believes that Thain's reputation offers the currency necessary to give him a shot.
"I think people will give him a chance because he deserves a chance," Smith says. "He's competent, he's got a good track record and he's a decent person and right now Merrill needs a strong leader and he certainly is a good one," he notes.
Leadership will be in high demand at firm that could be facing further writedowns in what has been an intensely turbulent market for guys in the executive suite.
Ironically, Merrill, a firm that had tried to model itself after Goldman, will now have an ex-Goldman staffer leading it. Smith thinks that also might be a good thing.
"They are two different cultures, but both firms have terrific histories and organizations that inspired great pride," Smith notes. "
Thain will understand how to reestablish the old culture at Merrill and bring back the pride."