NEW YORK, 19 September 2003 — The New York Stock Exchange sought to turn over a new leaf yesterday after ousting chief Richard Grasso, whose $140 million pay package sparked a furor over responsible governance at the world’s biggest stock market.
The NYSE was searching for a new chairman and chief executive after Larry Sonsini, a high-profile San Francisco-area lawyer, turned down an offer. But more significantly, the exchange was forced to consider new corporate governance safeguards after the payout highlighted a lack of checks and balances at the NYSE.
Grasso’s pay package, and his ties to the compensation panel that agreed to it, raised hackles in the investment community because the NYSE sets governance standards for the public companies it regulates.
After announcing Grasso’s departure, the NYSE took pains to show it was committed to reforming its own procedures to become more transparent and accountable.
“The New York Stock Exchange Board of Directors is unanimously committed to reforming the corporate governance procedures of the Exchange,” board member H. Carl McCall said in a statement. “In the coming weeks, we will conclude the work of our Special Committee on Governance at the NYSE. That committee, which I co-chair with Leon Panetta, has reviewed every aspect of the exchange’s governance and will make recommendations to the board for significant reform,” McCall added.
“The board has determined to use its existing structure and has designated me as lead director to oversee this process as we move forward with these reforms.”
Grasso’s resignation was accepted late Wednesday at an emergency meeting of the NYSE board amid growing outrage over the payout. Grasso said he reluctantly offered to quit in the best interest of the exchange, the largest in the center of the US financial world.
“For the past 36 years, I have had the honor and privilege of working for what I believe is the greatest equities market in the world — the New York Stock Exchange,” said Grasso in a statement issued by the NYSE.
“Today, I shared with the board of directors in a conference call that, with the deepest reluctance, and if the board so desired, I would submit my resignation as chairman and chief executive officer.”