Any thoughts on Richard Grasso?

[brian_igo]

I confess I'm of mixed emotions about his forced departure as CEO of the NYSE. By any measure he did a great job of getting the NYSE through a period of revolutionary change. I think it can also be fairly said that he was tarred for the clearly illegal acts of Dennis Koslowski, Ken Lay and John Rigas.

But I keep coming back to this:

Grasso amassed a deferred pay package worth $140 million.

His annual salary was in the range of $25 million annually.

The NYSE made $28 million last year.



How does anyone justify a salary that is nearly equal to what the company makes in a year? Even if his deal was written at the height of the bubble market, what revenue projections did the NYSE board use to determine that salary package would be acceptable? Did they see some situation where the NYSE would have profits of $280 million instead of $28 mil, and if so what were they smoking?

Clearly the compensation committee and board of the exchange wrote a mother of a sweetheart deal for Grasso. I'm relieved to see they are not off the hook. But in the end I'm left thinking what a loss this is for the NYSE.

Anyone else?



Brian

[mnehr]

I just find it funny that the same board of directors that voted his salary is the same one that forced him to resign because of his salary.

Now that we know that the ‘boom’ of the 90s was based on fraudulent or false numbers, both by many companies as well as by the government it makes it even more interesting that it took this long to reevaluate and discover the discrepancy. The NYSE is not a typical company where the salary of the CEO is tied to profits and the shareholders (i.e., public) have voting say-so. The NYSE is directly tied to the entire economy and, in my opinion, should have a higher level of disclosure than the average company.

[brian_igo]

True about the board's change of heart. The law of the jungle, even at Broad and Wall, is still "cover thy ass".

I also agree about a higher standard for the NYSE because of its critical role in the world economy. And though the exchange isn't a typical business, if you don't connect compensation to financial performance then what do you base it upon? What were they paying $25 million for? Integrity? The marketing push he launched? Stealing listings from the NASDAQ?

I'm asking myself what it was worth to have Grasso there over the last few years? If I take that earnings performance out of the equation, twenty-five million a year isn't outrageous for the CEO of a national financial corporation. Nor is it out of line with what he accomplished. I don't know exactly what Grasso did in the immediate aftermath of 9/11, but I shudder to think what a weak or incompetent CEO could have done. At the other end of the scale, what could have happened if Grasso had tried to keep up with the NASDAQ during the heyday of the tech bubble market, instead of emphasizing the stability of companies on the NYSE? The temptation had to be huge. I don't think its exaggerating much to say these were the two most pivotal moments for the exchange since the crash of 1929, and Grasso nailed them both.

I'm not going to lose sleep over someone who will get a $140 million-plus severance package. But this is a real dilema for me. If you can't justify Grasso's salary based on financial performance, and if you can't defend it based on intangible results, then how do you do it? And more importantly, how should they hire the next CEO of the New York Stock Exchange?




Brian

[pluckyduck]

I don't know much of anything, but I don't see how Grasso did anything wrong, or why he should have to resign. He didn't just decide to pay himself that amount when nobody was looking.

Nobody disputes that he did a good job and somebody(ies ) approved that salary. If the salary is wrong, shouldn't the people who approved it resign and let Grasso go about his business. Negotiate a new package with him, will he take that or not?

Personally, I get the feel that he is someone who took pride in a job well done and he would have worked for a hell of a lot less and still done a good job.

I don't see how it's his fault. This is America. You are supposed to try to make as much for yourself, legally and honorably, as you can.

Now, if there was some illegal or dishonorable about what he did, that's another story.

I don't know every detail, just what I've picked up from the major sources.

Andrea