- The Washington Times - Friday, September 12, 2003

NEW YORK (AP) — Richard Grasso’s colossal compensation package has placed the New York Stock Exchange under a powerful microscope, outraged many seatholders and reportedly prompted traders to circulate a petition calling for big changes at the top.

With federal regulators poised to take a closer look at the NYSE’s governance structure, it is not clear whether the chief executive and chairman will survive the terms of his contract extension — announced Aug. 27 with his $139.5 million payout in accrued benefits and savings. The Securities and Exchange Commission, which asked for more details on Mr. Grasso’s pay, is still examining the NYSE’s response.

The petition — which seeks to replace Mr. Grasso, according to the Wall Street Journal — was widely discussed among floor traders and brokers yesterday but was not, apparently, widely circulated. No one interviewed had seen it, and an NYSE spokesman said yesterday that no petition had been submitted to the board.

Nevertheless, to see so much unrest on the floor “is fairly unusual,” said Todd Clark, head of listed equity trading at Wells Fargo Securities.



“The exchange is like the police department, with an unwritten code of solidarity among the members of the exchange,” Mr. Clark said. “The fact that there is this controversy is really surprising.”

The uproar followed revelations from meeting minutes, internal memos and consultant reports released by the NYSE this week that show how Mr. Grasso’s compensation grew after he was named to the top post in 1995 — through long-term incentive plans, tax-deferred retirement and savings accounts and bonuses that soared higher each year.

The topic is likely to be discussed at a highly anticipated NYSE general membership meeting on Oct. 7; some traders speculated it would be addressed at smaller meeting of active seatholders next week.

The details of Mr. Grasso’s pay, never disclosed previously, came as a shock to many who hold stakes in the exchange.

“The thing that really surprised me was that he was paid a bonus for 9/11,” said Muriel Siebert, a seatholder since 1967 who heads her own brokerage. “Now, I think Dick did a superb job that day. … But a lot of people in this country would have paid for the privilege of having that responsibility. And they would have done it without a bonus.”

In 2001, when terrorist attacks shut down the nation’s markets for nearly a week, Mr. Grasso’s total compensation swelled to its highest level: $25.6 million, including a $16.1 million bonus and a $5 million “special award” to be paid upon retirement.

Other top executives were also extravagantly rewarded. Bonuses of $2.3 million each were paid to Robert G. Britz and Catherine R. Kinney, who share the title of executive vice chairman and chief operating officer. And Edward A. Kwalwasser, executive vice president in charge of regulation, was paid a $1 million bonus, according to NYSE documents.

It was an unusual year, compensation committee Chairman H. Carl McCall noted in his letter this week to SEC Chairman William Donaldson — who earned $1.65 million as the NYSE’s top executive in 1992. Besides weathering the attacks, the exchange saw unprecedented trading volume, made many technological advances and brought a record number of cases for misconduct.

A public-private hybrid, the exchange is a not-for-profit business owned by the 1,366 members who hold seats on its trading floor; but it is also obliged by federal law to monitor and regulate the brokerage industry.

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