NYSE Pays $139.5 Mln to Keep Grasso
Wednesday August 27, 1:06 pm ET
By Nicole Maestri
NEW YORK (Reuters) - The New York Stock Exchange on Wednesday said it paid out almost $140 million to Chairman and Chief Executive Richard Grasso in accrued savings, benefits and incentives, and extended his contract until 2007.
The announcement is the first time the exchange has publicly disclosed the compensation of its top employee and outlines just how lucrative the job has been for Grasso, who has worked at the NYSE for 36 years.
The disclosure comes as the 211-year-old exchange faces scrutiny of its corporate governance practices, including how much it pays executives.
"I am a big believer that social stratification is not a good thing, and that no one needs that much money to motivate them to do a good job," said George Washington University law professor Theresa Gabaldon of Grasso's compensation package. "The idea that anyone needs that much money for motivation is ludicrous."
She said the exchange may have feared losing Grasso.
Grasso was not immediately available to comment.
The new employment agreement means Grasso, who was appointed chairman in 1995, will remain in his post for two years beyond the term of his current contract, the exchange said in a statement. It provides for the same base salary of $1.4 million and the same annual bonus of at least $1 million.
The No. 1 U.S. stock exchange also said it distributed to the 57-year-old Grasso his savings account balance of $40 million, his previously accrued retirement benefit of $51.6 million and his previously earned account balance of $47.9 million relating to prior incentive awards.
Grasso in a statement said he withdrew his accumulated deferred compensation, savings and retirement benefits to "facilitate personal financial and estate planning" and will pay taxes on the funds.
H. Carl McCall, chairman of the NYSE human resources and compensation committee, in a statement said the exchange decided to disclose the information as part of its corporate governance reform efforts. McCall was not immediately available to elaborate on the NYSE decision.
"It seems they are sticking by Grasso despite recent problems," said Sarah Teslik, executive director of the Council of Institutional Investors. She added that with Grasso taking his benefits and the NYSE extending his contract until 2007, the groundwork could be set for Grasso's departure at that time.
Last June, after a spate of corporate scandals rocked the stock market, the Big Board's directors proposed a wide range of governance improvements for its listed companies.
But the state of the NYSE's own house has been the subject of close scrutiny as the board weathered high-profile resignations and other negative news, including the abandoned nomination of Citigroup Inc. Chairman Sanford "Sandy" Weill to its board; criticism of Grasso's pay package that was reported to be $10 million; and a rare admission of an investigation into specialists who trade on its floor.
Newly appointed Nasdaq Stock Market (News - Websites) Inc. President and Chief Executive Robert Greifeld's base salary is to be $790,000 annually, according to an employment agreement filed with the U.S. Securities and Exchange Commission (News - Websites). He is also eligible to receive up to $1.75 million in bonuses each year, contingent upon reaching certain performance goals.
Nasdaq on April 15 granted Greifeld an option to purchase 1 million common stock shares at $5.28 per share. He has also been granted an option to purchase another 1 million common stock shares at $6.30 each.
Clara Furse, chief executive of the London Stock Exchange, Europe's biggest equity market, earned a basic salary of 351,000 pounds ($553,000) in the financial year ended March 2003, plus a bonus of 515,000 pounds ($811,000).
The New York Stock Exchange on Tuesday said its second-quarter profit doubled to $11.6 million from $5.6 million a year earlier as revenue edged up to $271.5 million from $271.4 million.
(Additional reporting by Brendan Intindola, Jonathan Stempel, Niala Boodhoo and Huw Jones)
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