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Obscene! - JR
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NYSE Gives CEO Grasso $140 Million By Ben White NEW YORK, Aug. 27 -- The New York Stock Exchange today disclosed that it
recently paid chairman and chief executive DickGrasso a lump sum of almost $140
million, covering 20 years' worth of deferred compensation, retirement benefits
and previously earned incentive awards. The exchange, under pressure to disclose more about the way it compensates
top executives, also announced that it entered into a new contract with Grasso
that will keep him at the helm of the NYSE until at least 2007 and pay him a
$1.4 million salary and an annual bonus of at least $1 million. In making the
$140 million payment, the NYSE said it was granting a request from Grasso that
he receive the money now so he can pay taxes on it for estate planning
purposes. Today's announcement marked the first time that the 211-year-old stock
exchange has disclosed the pay of its top executive. The NYSE, which is a "self-regulatory organization" charged with overseeing
brokerage firms, has been under pressure from shareholder activists to adopt
disclosure and other governance practices at least as strong as those required
of its 2,800 listed companies. After a series of corporate scandals, investors
and regulators have pressured public corporations to disclose more to investors,
rein in executive compensation and appoint more independent directors. The disclosure of Grasso's pay follows earlier actions taken by the NYSE to
address criticism of its governance policies. For instance, in the past,
executives from firms regulated by the NYSE dominated the exchange's
compensation committee. The NYSE announced in June that it will bar securities
industry executives from serving on the compensation committee. It also now bars
senior NYSE executives from sitting on the boards of firms whose shares trade on
the exchange. As a result of the change, Grasso has said he will step down from the board
of Home Depot Inc. Until June, Home Depot founder and board member Kenneth G.
Langone had chaired the NYSE's compensation committee. Former New York State comptroller H. Carl McCall, the newly installed
chairman of the NYSE compensation committee, said in an interview that today's
action is the latest step in an effort to put the exchange's governance policies
at least on par with listed companies. He added that the compensation committee was still struggling with the
question of whether Grasso's pay should be comparable to other Wall Street chief
executives or to top government regulators. SEC Chairman William H. Donaldson,
for example, earns $142,500 per year. "The compensation committee is still looking at that issue and trying to come
up with what the appropriate benchmarks should be," McCall said. "The exchange
is very much a major financial institution, but it is also a self-regulatory
organization. It's very hard to come up with a direct comparison." The SEC today broke with its tradition of not commenting on compensation
packages for executives of self-regulatory organizations, with a spokesman
saying the agency was "looking into the details" of the $140 million payment.
Donaldson has asked the NYSE and other stock exchanges to come up with ways to
improve their governance. Carol Bowie, director of governance research at the Investor Responsibility
Research Center, acknowledged that Grasso operates in a competitive environment
different from the typical federal regulator. But she nonetheless called the
NYSE chief's compensation "totally out of whack." Other corporate governance advocates praised the NYSE todayfor announcing the
lump-sum payment and the new contract, but said the disclosure fell short. Paul
Hodgson, senior researcher at the Corporate Library, said it was impossible to
tell how much of the $140 million came from salary and bonus payments that
Grasso elected to defer over the last 20 years and how much came from incentive
and other payments from the NYSE. The NYSE said in a news release that it paid Grasso a savings account balance
of $40 million, a previously accrued retirement benefit of $51.6 million and a
previously earned account balance of $47.9 million relating to prior incentive
awards. NYSE spokesman Robert Zito declined to give further details.
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