Calls for Dick Grasso’s head swelled to a deafening roar yesterday, as California’s treasurer and the chiefs of some of the nation’s largest pension funds said it was time for the Big Board chief to step down.
Some said Grasso should fork over some of his $140 million payout on his way out the door.
“The recent disclosure of your compensation agreement with the NYSE has shocked the investing public and set back critical efforts to restore the public’s faith in our financial system,” said Philip Angelides, treasurer of California.
New York State Comptroller Alan Hevesi also called for Grasso’s resignation – saying Grasso’s ability to fight corporate corruption and improve corporate governance had been “shattered” – and North Carolina and Iowa’s treasurers joined the chorus as well.
Meanwhile, a special governance committee at the NYSE is contemplating dramatic proposals to rebuild the corporate governance of the exchange, including prohibiting securities industry directors from sitting on the nominating committee, separating the role of chairman and CEO – a move Grasso has rejected, say board members – and giving some board seats to investors as well as lessors.
The committee is also contemplating separating regulatory responsibilities of the NYSE from its marketplace status.
The special committee will be circulating a copy of its report in coming weeks, prior to the previously scheduled Oct. 2 board meeting.
Angelides, along with the California Public Employees’ Retirement System and the teachers’ pension system, called for Grasso’s immediate resignation in a letter sent to the Big Board boss as well as to the SEC.
They also demanded that Grasso’s pay package be renegotiated to a “rational and appropriate level.”
Calls from prominent institutional investors – all activists on good corporate governance – are significant because they represent billions of dollars of business done at the exchange.
CalPERS and the teachers’ pension system have combined assets of $240 billion, of which $46 billion in CalPERS assets are invested in NYSE-listed stocks.
Angelides said divestiture of those stocks, in the event that his calls were not heeded, was “not realistic” – but made clear he did not think such a move would be necessary.
“The drumbeat to call for resignation and revision of this package can’t be ignored by Wall Street,” he said. “The chorus of voices will keep getting louder and louder and louder.”
Perhaps worse for Grasso was Angelides’ suggestion that the board – broker-dealers, investment banks and specialists – join the call for Grasso’s ouster.
CalPERS and the teachers’ pension system provide millions of dollars in commissions to the Street, and most major Wall Street heads would be loath to lose such lucrative business.
An exchange spokesman declined to comment.
“We thought we had cleaned up some of the financial hurricanes created by the WorldComs and Enrons,” said Sean Harrigan, CalPERS’ president. “These latest revelations have created a new hurricane, and in our opinion, Dick Grasso is in the eye of the storm.”
Angelides was particularly critical of a $5 million bonus awarded to Grasso by the compensation committee for getting the exchange up and running after Sept. 11, 2001. “I’m not aware of one firefighter or policeman or even the mayor getting a bonus” for their hard work, he said.