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NYSE head quits after outcry
NEW YORK (CNN) -- The chairman of the New York Stock Exchange has resigned following a public outcry over his $140 million pay package. Richard Grasso, who has worked at the exchange for 36 years, quit after an emergency board meeting following mounting pressure from investors, regulators, politicians and Wall Street firms over the scale of his payout. "I shared with the board of directors ... that, with the deepest reluctance and if the board so desired, I would submit my resignation," Grasso said in a statement two years to the day after he reopened the exchange following the September 11 attacks on America. "I believe this course is in the best interests of both this exchange and myself." The move came after a day after U.S. business leaders called for Grasso to step down, saying the package was inappropriate for someone whose position was to regulate the market and the exchange. The controversial compensation package extended Grasso's contract and included a lump-sum payout of $139.5 million dollars in deferred compensation and retirement benefits. In the wake of last year's corporate scandals and disputes over excessive executive pay, the details of Grasso's package infuriated business and political leaders, who were looking to the NYSE to take the lead. "Dick Grasso's pay package is extraordinarily excessive, but the amount is just a symptom of the real problem," Sen. John Edwards, a presidential candidate, said in a statement before the resignation. "The real problem is that the Board of the New York Stock Exchange has operated like a clubhouse, with no accountability to anybody except itself. Instead of setting an example for corporate America, the board has become a symbol of what's wrong at too many corporations." It is not clear if Grasso will still receive the $140 million package. ShakeupThe NYSE board has decided against naming an interim chairman, saying instead that board member H. Carl McCall will serve as lead director, while two co-chief operating officers will run day-to-day operations. New York State Comptroller Alan Hevesi, who called Tuesday for Grasso to step down, praised the decision, but said the exchange needed to do more. "The issue is making fundamental reforms at the stock exchange to restore investor confidence [and] establish a model of good corporate governance, accountability and disclosure," said Hevesi.
While news of the package upset traders, U.S. pension firms and brokerages, some traders who worked on the floor of the world's biggest exchange stood behind Grasso. "This is a sad day for the NYSE and Dick Grasso," said Art Cashin, head of floor trading at UBS Paine Webber. "For people who have worked so hard for the American investor. This is not a triumph for anyone." Brushed aside concernsAt an August 7 meeting of the compensation committee of the NYSE board, Grasso had expressed concern about potential negative publicity if the package was disclosed, according to minutes CNNfn obtained Wednesday. The committee's chairman, McCall, "informed the committee that, as a result of calls he had received, Mr. Grasso did not think it was wise to proceed at this time," the minutes state. But the members brushed aside Grasso's concerns, saying it would be in the exchange's best interest to complete the new deal. Securities and Exchange Commission (SEC) Chairman William Donaldson said the agency had further questions for the NYSE. Meanwhile, the managing executive for External Affairs at the SEC, Laura Cox, said they would continue to review governance standards and work with the exchange's new leadership. Amid the controversy, the NYSE board's governance committee is set to propose at a September 24 meeting that the board be comprised of a majority of independent directors, an exchange official told CNNfn. At the moment, 12 directors come from the securities industry while another 12 are "public" directors -- considered to be independent representatives of the public. Grasso also sat on the board, along with his two top lieutenants. The NYSE had said repeatedly that Grasso had no plans to resign before his contract expired in May 2007. -- CNNfn's Allan Chernoff, Louise Schiavone, Chris Huntington and Gene Bloch contributed to this report.
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