Dick Grasso Digs a Deeper Hole

By disclosing that he rejected an extra $48 million in compensation, the NYSE head did anything but defuse the controversy over his pay

It seems that widespread reports of New York Stock Exchange Chairman Richard A. Grasso being the "$140 million man" are grossly inaccurate. In fact, the beleaguered chairman of the New York Stock Exchange is the $188 million man. But not to worry, he's not taking that other $48 million.

Such was the latest bombshell to emerge from the continuing saga of the world's highest-paid stock market executive. At a Sept. 9 press conference, Grasso announced the NYSE's answer to a Sept. 2 letter from Securities & Exchange Commission Chairman William H. Donaldson, who had demanded details of Grasso's controversial pay package (see BW Cover Story, 9/15/03, "The $140,000,000 Man").

By admitting that he actually was eligible for more compensation than he had previously disclosed, Grasso hoped to defuse the controversy over his paycheck. Instead, Carl McCall, chairman of the NYSE board's compensation committee, may have given Grasso's growing roster of critics more ammunition with a 12-page letter disclosing the new details of Grasso's compensation package.


  For one thing, the letter showed that his pay jumped significantly in 1999, when his lavish package was determined by the board's compensation committee -- headed at the time by longtime Grasso friend Kenneth R. Langone, former chairman of Home Depot (HD ). In 1998, Grasso was paid $6 million. That leaped to $11.3 million in 1999, $21.8 million in 2000, and $25.6 million in 2001. In 2002, he was paid $12 million. In all, Grasso's paychecks from 1995 to 2002 climbed to slightly more than $87 million under the watch of his pal Langone.

The much-criticized $140 million -- which Grasso is drawing as a lump sum -- includes portions of the $87 million that he had deferred, plus retirement payments and interest. The $48 million that he's turning down was due to him over the next four years. Grasso said he won't take the money in order to return the public's "focus" to things other than his pay. He also indicated that he wasn't going anywhere -- that he would stay at the exchange at least through the end of his contract in 2007.

Job security is certainly not a big worry for Grasso. He still has the backing of the NYSE board of directors -- whose membership he essentially decides in annual "audiences" with the NYSE's nominating committee. McCall, a former New York State controller, praised Grasso in glowing terms at the press conference and said the stock exchange boss still has unanimous board support.

Don't count on Donaldson, an ex-NYSE chairman himself, to be easily charmed by Grasso's latest feat of crisis management, however. Donaldson wasn't a happy man when he demanded details of the Grasso pay package on Sept. 2. And if anything, McCall's letter is likely to raise his blood pressure even more.

By Gary Weiss in New York

Edited by Douglas Harbrecht

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