The New York Stock Exchange revealed yesterday that it has paid out $140m (£89m) in accrued savings and benefits to its controversial chairman, Richard Grasso, and agreed to extend his contract for two more years.
Mr Grasso, who has served as chairman since 1995, won praise for his success in reopening the exchange six days after the devastation of the World Trade Centre on 11 September 2001. Since then, however, he has come under increasing criticism for his leadership of the institution.
The exchange was stung by a report from a Washington lobbying group, the Council of Institutional Investors, which called it a secretive clique of Wall Street insiders. Critics have urged reform in the exchange's governance and argued it cannot happen with Mr Grasso in charge. Ill winds have recently struck the NYSE, with several high-level resignations and the withdrawal of the nomination to the board of the former Citicorp chief executive Sandy Weill. It recently admitted that it was investigating the activities of some of its specialist members. Rumours also circulated recently that Mr Grasso was earning $10m a year.
Observers speculated last night that the exchange may have distributed the money out fear that it might lose Mr Grasso, who remains a highly powerful figure in the industry. "It seems they are sticking by Grasso despite recent problems," noted Sarah Teslik, executive director of the Council of Institutional Investors.
Mr Grasso, 57, sees his current contract, set to expire in 2005, extended until 2007. He will continue to receive a base salary of $1.4m along with annual bonuses of at least $1m. In addition, the exchange released to its chairman $40m from a savings account, previously accrued retirement benefits of $51.6m as well as $47.9m in money accumulated from past incentive awards.
"At this time, I thought it advisable in order to facilitate personal financial and estate planning to withdraw my accumulated deferred compensation, savings and retirement benefits, which are subject to full income taxes, and pay the taxes at this time," Mr Grasso said in a statement.
The publication of Mr Grasso's remuneration deal represented an about-face by the exchange, which recently moved to increase the fees charged to traders and brokers on its floor. It had previously declined to release information on payments to its top executives.Reuse content