John Thain, chief executive of NYSE Euronext, has agreed to take the position of chairman and chief executive at brokerage house Merrill Lynch & Co.
Alberto Cribiore, Merrill's search-committee chairman, called Thain "the right person to become the new chairman and CEO of Merrill Lynch." Thain, he added, will be "adept at balancing the focus on risk management and controls while taking the steps necessary to ensure the company evolves and grows."
The move, effective Dec. 1, is somewhat unexpected, as many insiders on Wall Street were speculating Merrill Lynch's board would tap BlackRock Inc. CEO Larry Fink. Earlier Wednesday, however, a Merrill spokeswoman said Fink "was never offered the job" as Merrill CEO.
Meanwhile, NYSE Euronext confirmed it has named Duncan Niederauer, its co-chief operating officer and president, as its new chief executive.
Thain said: "I am excited and honored to have the opportunity to lead such an outstanding organization. Merrill Lynch is a leader in global wealth management, investment banking and sales and trading. I look forward to working with an incredibly talented group of people with a terrific brand and reputation. I am certain that together we can continue to grow Merrill's global business and add value to our customers and our shareholders."
With the move, Merrill has chosen an ex-Goldman Sachs Group Inc. executive who remade the Big Board into a public company and has deep knowledge of technology and operations on Wall Street. Thain, 52, has never led a giant brokerage force like Merrill's however.
The white-shoe Goldman, where Thain spent more than 20 years, never focused on brokers that dealt with the masses.
Thain has spent many years on the mortgage bond desks of Wall Street, a key skill considering that many of the billions of dollars in losses are now focused in bonds and the housing market. Thain worked on the mortgage bond desk of Goldman before becoming president of the firm after a series of promotions.
Thain also was rumored to be considering the top job at Citigroup Inc. to fill the spot of former Chairman and CEO Charles Prince. But Thain has remarked in the past that he wasn't that interested in the Citigroup job, viewing it as a very difficult management challenge, according to people familiar with the matter.
Some thought Thain still would lean toward Citigroup, considering that the firm has a big international presence, something Thain pushed hard for at the NYSE when it bought European exchange operator Euronext NV. Thain also forged alliances over the years with Robert Rubin, previously Goldman's co-chairman and now a senior executive at Citigroup.
The Illinois native and son of a doctor, Thain studied engineering at MIT and quickly got a master's in business at Harvard before starting a career on Wall Street. He has developed a reputation as a chief executive as a patient consensus builder who asks penetrating, often technical questions about how things work. As a child growing up, he assembled a Heathkit radio for his mother.
The decision by Thain leaves NYSE Euronext with its first new leader since former CEO Dick Grasso left amid an outcry over his pay package in 2003. While it has become a more diversified business since Thain arrived, NYSE also has lost market share in the trading of its own stock to electronic players like Nasdaq Stock Market Inc.
Thain said he always viewed the NYSE job as a public service role where he could help reform an important American financial institution. He also said he saw his role there as one that could play out within three to five years of his arrival at the exchange in early 2004. Since then, Thain increased electronic trading at NYSE and changed it into a public company from a membership organization owned by brokerage firms and trading firms.
Many executives at Merrill believed Fink was the front-runner for the top job, based on his experience with debt management as founder and chief of BlackRock, of which Merrill owns 49%. According to people familiar with the search, Fink was approached as a candidate for the job following the resignation of Stan O'Neal on Oct. 30.
One question about the Thain appointment is whether it raises the risk of more defections from both the banking side as well as the firm's brokerage force. Some top Merrill brokers had sought a senior role for brokerage chief Bob McCann.
