OT? - [NYSE] "$140 million payout `defies the imagination'
By Meg Richards
Associated Press
NEW YORK - Richard Grasso's $140 million payout on benefits accrued over 36 years with the New York Stock Exchange sent jaws dropping even in Wall Street's glitziest corner offices.
``It defies the imagination to understand how someone could have amassed that kind of compensation,'' said Paul Hodgson, a compensation expert with the Corporate Library, a private research group.
Grasso's millions accumulated in three accounts, the NYSE said, particularly over the past 20 years as he rose through the management ranks to become chairman in 1995, a post he'll hold until 2007 under his new contract. The massive withdrawal included $51.6 million in previously accrued retirement benefits, $47.9 million related to past incentive awards and $40 million from a supplemental executive savings account.
``That kind of dough is at the high end of executive deferred compensation accounts, from our experience,'' said Jonathan A. Kenter, co-chair of the employee benefits group at law firm Bingham McCutchen.
Both sides had sound reasons for the timing, experts say. Grasso takes advantage of income tax rates at their lowest levels in years, and the NYSE gets a swelling liability off its books. Plus, Congress is considering new restrictions on tax-deferred compensation plans for executives.
Such programs, known as ``top-hat'' plans, are a way for highly paid executives to set aside a portion of their income over and above what's allowed under more traditional profit-sharing or 401(k) retirement accounts. The assets are held in the company's name and are not protected from creditors in the event of bankruptcy.
The exchange has said Grasso will no longer defer any of his annual income, which is $1.4 million in salary and at least $1 million in bonus under his new contract.
It's not clear how Grasso's deferred funds accumulated, or at what rate, since the NYSE is a private, not-for-profit company and has not made those details public. The Securities and Exchange Commission said it was ``looking into the details'' of Grasso's package.
``If two-thirds of it is him saying, `Well, I can make do on $1 million a year, and I'll defer the rest of it,' there would have been less of an uproar,'' Hodgson, the compensation expert, said. ``But they've given us this kind of flash of disclosure without any detail or history about where this came from. They haven't really done themselves any favors and they've brought down a fair amount of reproach.'' "
Posted on Sat, Aug. 30, 2003
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