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Politics : WHO IS RUNNING FOR PRESIDENT IN 2004 -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (4922)	9/20/2003 12:25:09 AM
From: calgal	Read Replies (1) \| Respond to of 10965

Grasso's Mistake He accepted what the NYSE board agreed to pay him. Saturday, September 20, 2003 12:01 a.m. EDT Dick Grasso, one of the better leaders the New York Stock Exchange has had and a man still in the prime of his career, was forced to resign this week for the crime of . . . being overpaid? This would certainly puzzle the proverbial visitor from Mars, unless he'd lived through the past 24 months of corporate scandal. Mr. Grasso was booted not just for his shockingly big pay package, but for the fact that the responsible board members were surprised and bemused by the discovery that they'd paid him so much. The head of the board's compensation committee, H. Carl McCall, whose most recent day job involved looking after billions in New York State pension funds, somehow lost track of the fact that he'd signed off on $140 million in accumulated pay and benefits for Mr. Grasso. Once this got around, thanks to new public-disclosure rules agreed to by Mr. Grasso, it was inevitable that his head would roll--Mr. Grasso's that is, not Mr. McCall's. James Needham, a former Big Board chief, was the first to state the obvious: Mr. Grasso had grievously erred by accepting all the money the board was willing to pay him. This error has now cost him his job. The spectacle of NYSE board member and J.P. Morgan Chase CEO William Harrison presiding over Mr. Grasso's dismissal is also richly ironic. Whatever Mr. Grasso's mistakes, the NYSE didn't aid and abet Enron's deceptions as a recent SEC settlement shows that Morgan Chase clearly did. Yet Mr. Harrison continues to run his bank. Perhaps Mr. Grasso had to go because his pay reminded too many people of these and other genuine business sins. Another redolent question is whether this is really the business of any of the public-sector pols who've spoken up, including the treasurer (and wannabe governor) of near-bankrupt California and the supposedly apolitical heads of various state-employee pension funds. Mr. Grasso's pay ultimately comes from the pockets of the seat holders who own the exchange. They decide how to distribute the revenues of its business, including overpaying Mr. Grasso. But then these revenues themselves have been suspect in the public mind lately. Shares of stock can in theory be traded everywhere and nowhere (in cyberspace), but the NYSE still captures a dominant chunk of the business thanks to a mixture of regulatory advantage and historical luck. Mr. Grasso did wonders bringing technology to bear and building the exchange's brand equity, but some believe the future of trading is all-electronic and that the NYSE has been dragging its feet mainly because the current system benefits insiders at the expense of the public. There's a debate here, but turning the exchange into a profit-seeking, shareholder-owned company would force it to come to terms with whether its business model still makes sense--especially if regulations were swept aside that currently hinder electronic-based competitors from trading NYSE-listed stocks. More to the point, becoming a publicly listed company would force the exchange itself to practice the disclosure and transparency that investors increasingly demand from their companies. Even if the seat holders aren't keen to trade in their rights for allocations of shares for their own enrichment, the last week has made clear that the exchange's public customers are demanding openness and accountability of the sort that can best be achieved by becoming a public company. How to get from here to there? Mr. Grasso is gone, though frankly we'd rather have kept him as CEO and brought in a new board, one that would have set a strict timetable for taking the exchange public. Now things have to be done the hard way. First get a new CEO, then a clean sweep of the board. Mr. McCall and company have already forfeited the confidence of the investing public as caretakers of the exchange's public image. They'd hardly do much better as caretakers of the nest eggs of investors who might be tempted to buy shares in a publicly traded NYSE Corp.