| Jeff Peek | ||||||
It’s being presented as a resignation, but it is clear there was no place for Peek after he lost out to Stan O’Neal in the race to be president and COO, and thereby heir apparent to the CEO. But Merrill has been known for preferring consistency over office politics: when David Komansky was earmarked for CEO in the early 1990s, he made a point of asking his main rival, John Launny Steffens, to run the retail brokerage arm.
O’Neal gave the impression he would do the same. “I have terrific relationships with each of them, and have huge respect for them,” he said of his rivals: Peek, head of investment banking Tom Davis, and head of international private client Win Smith.
That doesn’t appear to have stretched to keeping them on board. O’Neal is said to have spent an hour or two with each of them after his appointment. Never did he try to reassure them about their positions. evidence, says an insider, of a management team “bent on cost-cutting rather than client service”.
The decision is not popular with analysts. “We view this news negatively,” says CSFB’s brokerage analyst, Joan Solotar. “Certainly not as a reflection of Bob Doll’s talent [MLIM’s global CIO who is replacing Peek], but rather as a testament to Jeff’s proven abilities to effect change.”
Mark Constant, brokerage analyst at Lehman, says: “We clearly view this as a negative development for Merrill, as we have long considered him to be among the most important elements of the management turnaround in recent years.”
Peek is well liked, a proven manager of people and a builder of businesses. At a time when Merrill’s New York staff are scattered around the tri-state area, having an executive such as Peek on board ought to be a no-brainer. Instead, the firm is getting rid of him and constructing a new team.
For asset management, that involves creating an extra reporting layer. Peek reported directly to Komansky and latterly to O’Neal. Doll will have to report to the newly created position of chairman of MLIM, Michael Marks, chairman of Merrill Lynch Europe, Middle East and Africa.
None of the other businesses has this extra layer. MLIM has it, say observers, because Doll is perceived as a US-specialist retail fund manager. But as owner of the old Mercury Asset Management, MLIM needs to show that its executives understand the importance of the international and institutional businesses.
As for Peek, he says: “I’m not retiring.” With his experience he will be hot property.
