It looks like Dick Grasso won no friends in the new NYSE management. Grasso had worked for the exchange for years before getting the boot when someone leaked that he had been paid US$140M in 2003. The exchange asked Winston & Strawn to investigate the matter and report. You can hear the directors screaming, “We’re innocent! We didn’t know! We took the blue pill!” The NY Times article on the report today is very entertaining, even though the editors obviously reigned in the reporters who wanted to dance around and sing “Grasso Going to Sing Sing!”
[The W&S report] says that of the $97.8 million [Grasso] received in compensation, at least $43.1 million was excessive. Of the $95.1 million in pension benefits he received, at least $70.1 million was deemed excessive. — NY Times, “Ex-Chief of Big Board Had ‘Unfettered Authority'” by FLOYD NORRIS, February 3, 2005
If you’ve bothered reading Mark Van Clieaf’s articles, to which I’ve posted links here in the past, you’d know that these are people who are already being paid too much saying that Grasso’s pay was excessive by at least US$43M. From a felt-fair pay standard, the exchange actually overpaid Grasso by closer to US$70M. I consider that a goodly bit of money, even in these trying times. But then again, I don’t earn more than I’m worth (regardless of what BIG and INFOSEC say!).
Mark Van Clieaf has put several of his articles on executive compensation on MVC International’s website. Mark approaches the issue from the works of David Billis and the VSM guy, among others. He has a presentation slide set that discusses it in more detail, but you can read the articles (many of which appeared in Ivey Business) without knowing them.
As Van Clieaf points out, the Delaware Disney decision means that if the board doesn’t do their job, they lose indemnity.
Investors unite! Sue the Board of Directors of the NYSE!
I’ll be honest: I somewhat agree to Grasso point that they had the information and decided to pay him the money. Or just didn’t care enough about it to bother looking at it in any detail. I’m not sure that Grasso is the bad guy here. Opportunistic and probably unethical, yes, but the board should be left holding the bag on this. These directors should get their pants sued off them. They took on a job and then didn’t do anything to get it done.