- The Washington Times - Thursday, September 18, 2003

NEW YORK (AP) — The opening bell at the New York Stock Exchange ushered in a new era yesterday, as the financial market began life without the charismatic Dick Grasso as its leader.

As trading began, Mr. Grasso, who resigned Wednesday in response to rising fury over the $139.5 million payout he received last month, was notably absent from the podium where he had helped open sessions since becoming chairman in 1995.

His departure left the NYSE searching for a successor under the scrutiny of its members, critics and federal regulators, who want big changes at the world’s richest market.

“Richard Grasso has done the right thing. He’s fallen on his sword,” said New York State Comptroller Alan Hevesi. “However, the issue is not just Mr. Grasso. The issue is making fundamental reforms at the stock exchange to restore investor confidence.”

Mr. Hevesi and other state finance officials and pension managers had called for Mr. Grasso’s resignation a day earlier, joining an increasingly noisy chorus of politicians, investor advocates and traders who said the lavish pay undermined the credibility of the exchange, a not-for-profit, member-owned institution that also serves as a regulatory watchdog.

“In an era of corporate scandals, you can’t have the regulator of the world’s largest stock exchange take tens of millions of dollars in remuneration from the people he’s regulating,” Mr. Hevesi said. “That’s a conflict of interest.”

Mr. Grasso called an emergency meeting of the NYSE Board shortly after the market closed Wednesday. He offered to resign as chairman and chief executive, and after some discussion the board accepted, said H. Carl McCall, chairman of the compensation committee.

The vote was 13-7, according to a source familiar with the meeting, which was held by teleconference. Among those who thought Mr. Grasso should step down were heads of the nation’s largest investment banks, former Secretary of State Madeleine K. Albright and Avon CEO Andrea Jung, the source said.

His defenders included Home Depot co-founder Kenneth G. Langone, who led the compensation committee when key parts of Mr. Grasso’s pay were approved, and William B. Summers Jr., chairman of McDonald Investments, Inc., a unit of Midwest banking giant Key Corp., the source said.

Mr. Grasso is entitled to keep the $139.5 million in benefits and savings accumulated over his three decades with the exchange and he could get another $10 million in severance pay, according to his contract.

In a statement, Mr. Grasso said he was stepping down “with the deepest reluctance.” But he added, “I believe this course is in the best interest of both the exchange and myself.”

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