Governance Issues at the New York Stock Exchange

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Payback Time at NYSE

On September 18, 2003, Richard Grasso (Grasso), Chairman and CEO of NYSE resigned amidst widespread criticism of his pay package and governance practices at NYSE. Earlier in August 2003, NYSE announced that Grasso had been given a lumpsum amount of $140 million from NYSE (covering two decades of deferred compensation, and retirement benefits). TIt also announced that Grasso's contract had been extended upto 2007 with an annual pay of $1.4 million, and an additional $1million annual bonus. William Donaldson (Donaldson), Chief of the Securities and Exchange Commission (SEC),3 commented that Grasso's compensation details raised serious doubts about governance standards at the NYSE.....

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Donaldson sent a letter to the compensation committee head - Carl McCall (McCall) asking for more details about how Grasso's compensation package had been decided. The misgovernance at NYSE came to light in August 2003 when the Council of Institutional Investors (CII)4 published a report which highlighted the shortcomings in NYSE's governance practices.The Grasso episode provided more ammunition to the critics of NYSE, who were demanding greater transparency in its working.In September 2003, former Citigroup Co-CEO, John Reed (Reed) was appointed the new interim chairman and CEO of NYSE. Soon after taking over the charge, Reed announced that his first priority would be to reform the working of the exchange.....

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