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To: TFF who started this subject	9/18/2003 12:04:43 PM
From: TFF	of 12617

NYSE set for biggest shake-up in 211 years By Vincent Boland in New York Published: September 18 2003 1:06 \| Last Updated: September 18 2003 1:06 The resignation of Richard Grasso as chairman and chief executive of the New York Stock Exchange sets the stage for what could be the biggest shake-up the 211-year-old institution has ever undergone. The controversy over Mr Grasso's $188m pay package raised many questions about the way the NYSE - the world's largest stock market - operates, and about the relationship between its role as a regulator and the operator of the marketplace. More importantly, it highlighted the various networks of connections among the 27-member board of directors. This meant that not only were those the NYSE regulated represented on its board; some of them also sat on the compensation committee that awarded Mr Grasso his pay and benefits. As public outrage at a range of corporate fraud cases - including Enron and WorldCom - grew in the past two years, corporate governance became the focus of much attention. The NYSE introduced strengthened new listing requirements and claimed to be setting the standard for improved corporate governance. It was only a matter of time before the focus shifted to the NYSE, which had long resisted calls for any change in the way it was run. In an interview with the Financial Times last year, Mr Grasso insisted there was no need to change its governance. That is no longer the case. Earlier this year the Securities and Exchange Commission asked all US exchanges to ensure their own corporate governance practices were at least as robust as those they insisted upon from their listed companies. A special governance committee of the NYSE was established to review its practices. Leon Panetta, a former NYSE board member who is one of the two chairmen of the committee, said earlier this year "everything was on the table", including the structure of the boardroom and the way executives were paid. The NYSE has submitted the committee's findings, and the SEC had been expected to respond by early October. But they have now been overtaken by events surrounding compensation. This could lead to even more radical reform at the exchange. Some NYSE directors are prepared to suggest the roles of chairman and chief executive be split, and that the regulatory and commercial functions of the exchange be separated. There could even be a revival of a late 1990s plan to turn the NYSE into a listed company. The board has also been criticised for its role in awarding Mr Grasso his pay package. Some directors apparently were unaware of how much the chairman was set to earn. "The problem with putting very wealthy people on a board is the wealth effect - someone worth $1bn doesn't think $30m is an excessive salary to pay," said Espen Eckbo, director of the Centre for Corporate Governance at Dartmouth College.

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