I’ve had the opportunity to meet former New York Stock Exchange chairman Richard “Dick” Grasso on two occasions, and in those brief exchanges, I found him to be terribly charming but with a detectable veneer of quiet confidence. No doubt two of the reasons why he gradually climbed the ranks at the button-down NYSE during a 30-plus-year career at 11 Wall Street.
Now whether he was worth $140 million in a deferred pay package — or whether he should have resigned amidst the firestorm over his exorbitant compensation — is probably a discussion for another day.
But it’s important to note that Grasso didn’t execute an accounting slight-of-hand to command an executive pay package of that magnitude – the exchange’s compensation committee basically dumped it in his lap.
And how many off us — at least those of us safely classified as rational — would refuse if we suddenly received a call from human resources about an astronomical re-negotiation of our salary?
Meanwhile, over at the American Stock Exchange, chairman and chief executive Salvatore Sodano will reportedly receive a retirement package worth $22 million, a parachute that appears minute in comparison with that of his counterpart at the Big Board.
Apparently, Securities and Exchange Commission Chairman William Donaldson has seen enough of these NBA-like salaries and compensation plans.
Donaldson, who served as NYSE chair prior to Grasso, had his organization draft a letter to all U.S.-based exchanges and self-regulatory organizations requesting details on how they structure their boards, nominate directors and, of course, compensate top executives.
The agency’s latest action expands an earlier investigation by the chairman himself when Donaldson demanded details of Grasso’s compensation — when news of that windfall was made public — and exactly how the NYSE compensation committee arrived at that figure.
One of the criticisms of Grasso’s pay package was that Grasso himself nominated the committee heads of the NYSE board, which, well, set Grasso’s compensation.
My question is, where were these guys when I was hired?
The SEC’s recent communiqué also requested information regarding disclosure of compensation plans. Closer scrutiny of an institution like the NYSE will always garner kudos from the rank-and-file, but doesn’t necessarily fix what obviously is broke.
The problem at the NYSE is that must operate at once as a both a for-profit business and as a regulator. And in the current climate of corporate reform and renewed focus on governance that’s become a high-wire act worthy of the Wallendas.
As the wait begins to select Grasso’s permanent successor, I’ve heard repeated calls to divide the top post at the NYSE into two — with one person running the business and the other serving as a regulator — a strategy that, on paper at least, makes a lot of sense.
But whatever scenario unfolds, you can be sure that whoever succeeds Grasso, details of their compensation plan will not remain as closely guarded as their predecessor.
It’s beginning to appear that the only constant in this climate of federal oversight is change. And for the majority of us sitting in the cheap seats (in lieu of seats) on the NYSE, that’s not necessarily a bad thing.
