New Head of the Herd

Modern corporations usually make it a practice to prepare carefully for any change in command. But few are as forehanded as Merrill Lynch, Pierce, Fenner & Smith, the Thundering Herd of Wall Street. The biggest brokerage house in the world, with 170 offices and a $369,443,000 annual business with 914,000 active customers, Merrill Lynch announced last week that it was beginning to transfer leadership of the Herd to a group of executives who have been on the street only since World War II. The heir apparent for the top job has not only been grooming for it for at least a decade, but still has another two years of apprenticeship to go before he becomes chief executive.

In the key move, President James E. Thomson, 63, became vice chairman of the board, chairman of the policy committee and chief planning officer. Following Thomson as president will be Donald T. Regan, 49, a Massachusetts Irishman from Harvard who was a 1940 classmate of John F. Kennedy. Chairman George J. Leness remains as chief executive. But since Merrill Lynch has a mandatory retirement age of 65, Chairman Leness will step out late this year and turn his title over to Thomson. When Thomson retires a year after that, Regan will step in to run the world's largest investment house.

"We Goofed." After joining Merrill Lynch in 1946, fresh from South Pacific service with the Marines, he went through the firm's sales training program and caught the eye of the then sales-promotion chief, Robert Magowan. While other graduates were sent out to run branch offices, Regan remained behind at the 70 Pine Street headquarters for increasingly responsible administrative jobs.

Regan's blend of Irish charm and office skill made him a natural for special assignments. In 1962, after the company discovered that some of its salesmen were misrepresenting a small cigarette-filter company in order to sell its stock, Regan was dispatched to an SEC public hearing in Washington to explain. Said he simply: "Let's face it. This is one in which we goofed." He went on to explain that Merrill Lynch had already fined the salesmen involved and repaid $116,000 in losses suffered by customers. In recent years, Regan has also been one of the trustees responsible for deciding on charitable donations from the $35 million trust established by Founder Charles Merrill.

In the orderly transition from executive vice-president to his new job, Regan expects the routine to remain largely the same. But there will be one major change. In 1955, to round out his experience, Regan took charge of Merrill Lynch's Philadelphia office for a five-year period; when he returned to Pine Street he continued living in Bryn Mawr to let his four children grow up in accustomed surroundings. That decision has meant a two-hour commute twice a day ever since. Now, with the children grown, Regan's first presidential decision will be a family move to Sands Point, L.I., a Merrill Lynch executive haven from which his travel time will be 40 minutes.

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