Corporate Governance at Merril Lynch
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Case Details:
Case Code : CGOX007
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Merrill Lynch
Industry : Investment banking
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
The Board of Directors
Merrill's Board consisted of nine independent directors and two executive directors. All committees of the Board consisted only of independent directors and every committee had at least three directors. The independent directors met at regularly scheduled executive sessions, which were held on a quarterly basis...
Board Committees
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Merrill's independent directors represented and managed five committees with varying functions and wide ranging responsibilities.
The Board and its committees could retain outside advisors/consultants with respect to any issue, without consulting or obtaining the approval of any officer of the company...
The Audit Committee (AC)
AC consisted of five independent directors to which the corporate audit reported directly.
It supervised Merrill's system of internal accounting controls, internal audit,
risk management procedures and compliance policies...
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Board Evaluation and Succession Planning
The NCGC led the Board in an annual self-evaluation process to determine whether the Board and its committees were functioning effectively. The self-evaluation primarily focused on the Board's contribution to the company...
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Concluding Notes
Merrill had its share of bitter experiences despite all the steps it had taken to embrace high standards of corporate governance.
In 1999, Merrill acquired Enron's three power-generating barges off the coast of Nigeria for $28 million15.
Analysts felt that Merrill had a secret oral agreement with the Enron CFO that he would find a buyer for the barges in six months time with a guaranteed return of 22.5%16.
This transaction actually allowed Enron to inflate its profits by $12 million in
1999... |
Exhibits
Exhibit I: Merrill: Board Structure, March 2003
Exhibit II: Merrill: Board Candidate Guidelines
Exhibit III: Merrill: Director Compensation, March 2003
Exhibit IV: Merrill: Board Stock Holding, March 2003
Exhibit V: Merrill: Board Committee Meetings, March 2003
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