Buffett touted as next NYSE chief

By Jed Horowitz
Bloomberg News Service

Even before Richard Grasso resigned late yesterday as chairman and chief executive officer of the New York Stock Exchange, his critics were seeking a successor.

Some seat-holders proposed Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., as a replacement, people familiar with the matter said.

At least one met with Securities and Exchange Commission staff last week to get their approval to approach Buffett, the people said. Buffett, 73, declined to comment through a spokeswoman.

While the board tapped H. Carl McCall, chairman of the NYSE compensation committee, as lead director and Robert G. Britz and Catherine R. Kinney to run daily operations, potential successors probably include candidates intended to shore up investor confidence in the world's biggest equity market and its directors following criticism over Grasso's $139.5 million payout this month.

Candidates may include Robert Rubin, chairman of the executive committee at Citigroup Inc., William J. McDonough, chairman of the U.S. Public Company Accounting Oversight Board, Donald Marron, former chairman of Paine Webber Group Inc., Paul A. Volcker, ex-chairman of the Federal Reserve, and Arthur Levitt, former chairman of the Securities and Exchange Commission, they say.

"The board must move quickly to bring in a new leader that can restore credibility with all the NYSE's constituencies, especially individual investors," said William Harts, the former head of strategy at the Nasdaq Stock Market, the NYSE's main competitor. "They must demonstrate that they can attract someone who is beyond reproach, someone with the highest level of integrity and someone who can instill confidence in Wall Street as well as Main Street."

The new chairman will also need to repair confidence in the exchange and its governance procedures in a job that Grasso last week described as being two-thirds financial-services executive and one-third market regulator.

Critics say the exchange's trading system, which relies on auctions in which traders known as specialists are required to make markets in 2,559 listed securities, is outdated.

At the same time, the Securities and Exchange Commission is studying the structure of U.S. equities markets and may curb the NYSE's authority to make — and enforce — its own rules.

A new leader may have to remake a 27-seat board that was criticized for awarding Grasso a compensation package that ultimately ended his 36-year career at the exchange. Until June, Grasso appointed the members of the compensation committee, which had included Goldman Sachs Group Inc. Chairman and CEO Henry Paulson. Paulson withdrew his support from Grasso yesterday.

"The issue of a particular salary is just a small but important piece," SEC Chairman William Donaldson said yesterday before Grasso's resignation. The "first level of responsibility" for Grasso's pay "rests with the NYSE board."