Cahouet Said to Be a Tough Sell on Merging

Bank of New York Co. could not have picked a tougher task than trying to persuade Mellon Bank Corp. chairman and chief executive officer Frank V. Cahouet to merge.

The 65-year-old executive, who has led Mellon since 1987, is uninterested in growing for size's sake - and is reluctant to share the stage with anyone, analysts said.

"He has always said it's the quality of your business that counts, not the quantity," said Anthony R. Davis, bank analyst at SBC Warburg Dillon Read.

Analysts said Mr. Cahouet and former Bank of New York CEO J. Carter Bacot failed consummate past merger talks due to their personalities. "Both are dominant and controlling types, and both wanted to come out on top," said Thomas H. Hanley of UBS Securities.

Mr. Cahouet's unwillingness to compromise was underscored by Mellon's abortive bid for CoreStates Financial Corp. Could Bank of New York's bid be timed to bear fruit just when Mr. Cahouet retires at yearend?

A deal would certainly assure him comfortable golden years. Mellon's proxy shows he has exercisable options worth $27.7 million and options he could exercise if he sells his company worth $27.6 million. He also owns 1.9 million shares of common stock, worth $14.6 million at current prices, and 30,000 restricted shares worth $1.8 million. - Aaron Elstein