But another reason behind the board''s fury (which should cost O''Neal his job) is that if Merrill undergoes a change in control through a merger or takeover, O''Neal would be entitled to a highly lucrative severance package valued at over $200 million, comprising mostly options and restricted shares.

However, if he has to step down in ''normal'' circumstances, the size of his severance package would be completely at the discretion of the Merrill board compensation committee, according to the company''s annual report.

Merger confers major benefits
Merrill doesn''t have agreements that provide for severance unless there''s been a change of control. As a result, for executives whose employment is terminated in the normal course of business, severance benefits are purely at the discretion of Merrill''s compensation committee, headed by private equity firm Brera Capital Partners LLC founder Alberto Cribiore, formerly co-president of the buyout firm Clayton, Dubilier & Rice Inc.

This means that after plunging the USA''s biggest brokerage into a $2.24 billion quarterly loss - the biggest in company history and a figure that was six times larger than the firm had forecast just three weeks earlier - the board members were furious that the CEO appeared to be trying to create a gold plated exit corridor for himself at shareholder expense, by trying for a merger with Wachovia.

It seems quite obvious that board members and shareholders are very unlikely to be pleased by something like that. And it showed; Merrill Lynch shares surged $5.19 (8.5 per cent) to $66.09 on the New York Stock Exchange (NYSE) on speculation that O''Neal would be forced to leave.

A matter of millions
According to the annual report, seven top Merrill executives, including O''Neal, have agreements that provide them with severance should they lose their jobs after an investor or company acquires at least 30 per cent of Merrill''s voting securities.

As of 31 December 2006, O''Neal was entitled to receive $29.5 million in cash severance following a change of control and another $221.8 million for his Merrill stock and options, based on Merrill''s share price of $93.10 at the end of 2006. However, the price has dropped by nearly a third in recent weeks.

Like other brokerages, Merrill pays bonuses in restricted stock that requires executives to remain with the company for several years to collect the awards. Merrill''s annual report says that stock and options represent 60 per cent of the total annual compensation awarded to company executives - one of the highest percentages among major brokerages.

Stock option bonuses
In 2005, the company began allowing executives to earn 25 per cent of the restricted shares during each year of the four-year waiting period. Prior to this, none of the bonus vested until the entire four-year wait had elapsed.

O''Neal received his entire 2004 bonus in the form of restricted shares that were then valued at $31.3 million. In 2005 and 2006, he received bonus payments totalling $79.6 million, including $32.6 million in cash and $47 million in stock. At the end of 2006, O''Neal had 1.15 million shares with a current market value of $76 million that are still subject to forfeiture.

The company allows previously awarded stock grants to continue vesting for executives who retire when they are eligible for retirement, provided they comply with certain conditions. This includes giving proper notice prior to termination, keeping confidentiality, as well as meeting agreements not to compete with Merrill Lynch or recruit its employees for specified periods.

Analysts say the restrictions are designed to keep executives from defecting to competitors, not to punish them if they get pushed out. What awaits O''Neal now? As things stand, the $76 million he''s accumulated in bonuses are subject to forfeiture if the board deems it fit.