Posted on: Thursday, August 28, 2003
Contract of NYSE chairman under scrutiny
By Amy Baldwin
Associated Press
NEW YORK — The New York Stock Exchange extended chairman and chief executive Dick Grasso's contract in a deal that included $140 million in previously accumulated savings, retirement benefits and other incentives.
The payout drew immediate scrutiny from critics as well as the Securities and Exchange Commission yesterday.
In an unusual public comment, the SEC said it was "looking into the details" of Grasso's package. SEC chairman William Donaldson, Grasso's predecessor at the NYSE, has said the nation's stock exchanges must lead by example in setting standards for corporate governance.
Critics said Grasso's package failed to do that.
They said he received too much in pay and incentives, especially given the stock market's recent decline and the corporate scandals that rocked investor confidence. They also said the exchange should have provided more information about when and how the $140 million figure was reached. Yesterday was the first time the NYSE board has disclosed its top executive's compensation.
"It is a pretty phenomenal amount. It is basically an entrepreneurial return for someone who works in a public capacity. He is a regulator," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.
Grasso, 57, has been with the NYSE for 36 years and has been chairman since 1995. Under the new contract, which extends to 2007, he will maintain his $1.4 million annual base salary and could continue to collect a yearly bonus of at least $1 million, according to a news release issued by the exchange. The NYSE board-approved contract replaces one that was signed in 1999 and was set to expire in 2005.
"The board is very pleased that Dick Grasso will remain Chairman and CEO at least through May 2007," said H. Carl McCall, chairman of the NYSE Human Resources and Compensation Committee.
Grasso has had a high-profile tenure as chairman of the Big Board — from his regular attendance at the daily ringing of the opening and closing bells to his leadership following Sept. 11 and the recent corporate scandals.
But he has also been criticized.
Earlier this year, Grasso came under fire for being a member of The Home Depot's board of directors while the company's lead director, Kenneth Langone, was head of the NYSE's compensation committee that awarded Grasso a pay package of more than $10 million last year — including more than $8 million in bonus pay.
The NYSE board in June passed new rules — recommended by a newly formed corporate governance committee — barring its three top officials from sitting on boards of listed companies and requiring the exchange to begin disclosing their salaries. Grasso stepped down from The Home Depot's board and Langone resigned from the compensation committee.
