Stan O'Neal believes in preparation and hard work.

Without a lot of hard work, you don't go from being a dirt-poor kid to a player on Wall Street in a couple of decades.

Without a lot of preparation, you don't overhaul one of the world's largest investment banks in a couple of years.

O'Neal, Merrill Lynch's chairman and chief executive, did that by sticking to the plan he prepared years ago. He made thorough — some say ruthless — changes in Merrill Lynch's (MER) culture and results.

"Being prepared allows me the freedom to perform at my best, to go beyond what's required, to innovate, to expand my perspective, even to be creative on occasion," O'Neal once told students at Howard University.

O'Neal, 55, began his ascent in the South. The son of a farmer and the grandson of a former slave, O'Neal grew up in tiny Wedowee, Ala. His family lacked a car, running water and indoor toilets. The local schools were segregated. O'Neal's parents told him to attend his one-room schoolhouse every day, no matter how inadequate it was.

When he was 13, O'Neal's family moved to Atlanta. His father worked at a General Motors (GM) plant, and for the first time O'Neal attended an integrated school.

He worked at the auto plant, too, and GM, recognizing his talent, sent him to the General Motors Institute, now called Kettering University. GM later paid his way to Harvard Business School.

By the early 1980s, O'Neal was helping handle GM's mergers and acquisitions.

"I was confident I understood corporate finances as well as anyone, and yet investment bankers were making five times more than me," he said in the 2004 speech at Howard.

He knew bankers couldn't be five times smarter than he was. "Maybe twice as smart, but not five times," he said. "And they definitely couldn't have been working any harder."

Merrill Lynch hired O'Neal in 1986. His rise through the ranks sped up in the late 1990s, when top execs started to see his talent and drive.

In 2001, Merrill's board made O'Neal president, the No. 2 job, and in late 2002 named him CEO.

He wasn't the safe choice; he called for far-reaching change at the firm. Merrill Lynch employees often called the firm "Mother Merrill" for the way it took care of employees. Executives were accustomed to large bonuses, gourmet food and a clubby atmosphere.

The firm was bloated, O'Neal believed. Its heavy costs weren't sustainable. An international expansion had gone too far.

In the next two years, O'Neal slashed perks and bonuses. More than 24,000 employees lost their jobs. About 300 offices were closed around the world.

O'Neal was the first black American to lead a major investment bank, a firm with $28 billion in revenue in 2003. Under him, revenue would rocket to $70.6 billion in 2006.

About the same time, blacks were taking over as CEOs at Time Warner, (TWX) American Express (AXP) and elsewhere. "This says a lot about the end of limitations for individuals of African-American descent in business," O'Neal said in 2004. "Even five years ago, not to mention 10 or 50 years ago, this was unthinkable."

While he cut costs, O'Neal faced a series of challenges.

2001 and 2002 were tough years for the firm — "the worst market environment since the Great Depression," O'Neal said in 2003.

On 9/11, 9,000 Merrill employees fled from the firm's offices in the World Financial Center, adjacent to the World Trade Center. Three Merrill workers died in the attack.

When Enron collapsed, Merrill Lynch was accused of helping the energy firm pump up profit. New York Attorney General Eliot Spitzer accused Merrill of skewing research for its investment banking clients. Merrill paid hundreds of millions of dollars to settle the charges.

Less expensive, but important as O'Neal sought to change his firm's culture, was handling allegations that managers discriminated against women in its brokerage operation.

"There is no acceptable excuse for what happened at that office," he said in 2004 after hundreds of female employees filed claims. Merrill settled the lawsuits for more than $100 million.

Through all the controversy, Merrill Lynch's board stuck with O'Neal. His cost-cutting was paying off, and profit was recovering.

In early 2003, O'Neal added chairman to his business card.

Many other senior executives left the firm in the meantime. O'Neal seemed intent on eradicating traces of the Mother Merrill culture.

The goal, he said in a 2004 speech, was "a culture based on merit, a culture based on fairness and performance, a culture of inclusion."

To reach it, O'Neal also focused on changing Merrill's leadership around the world. Managers carefully identified and promoted the "future leaders of our firm."

Though O'Neal was known for firing thousands of workers, he quickly began hiring again in other areas. The problem with Merrill's bloated costs, he said in late 2005, wasn't just that they cut into profit. There also wasn't enough money left to invest in "a whole slew of emerging areas." These were promising sources of profit, "where we should have been in front."

The firm hired more financial advisers — to help baby boomers prepare for retirement — and added to its commodities business.

O'Neal also began buying up smaller firms, purchases designed to broaden the firm's expertise. Merrill made more than 30 acquisitions or other deals in three years.

By late 2005, O'Neal could say in a speech to investors: "I can't think of an organization of Merrill Lynch's size and complexity that has improved its prospects for growth as quickly and effectively as we have."

Earnings per share hit records of $5.27 in 2005 and $6.48 in 2006. Earnings per share were $2.65 in 2001, before O'Neal began his turnaround plan.

O'Neal, who is married and has a twin daughter and son, has put a lot of his energy, and much of Merrill Lynch's resources, into the issue of education. He is a strong supporter of Bronx Prep, a charter school that focuses on underserved students.

Reflecting on his childhood, O'Neal in 2004 said his move up was a "stumble into opportunity."

"I despair at the thought of a child who's smarter than I am — has more potential than I did — who's willing to work hard but who simply doesn't understand how to produce positive results in life," O'Neal said. "It's such a waste."