As the New York Stock Exchange grapples with a report that says it overpaid its past chairman and CEO by as much as $150 million, the Big Board is also looking to its future, trying to convince former J.P. Morgan chief Dennis Weatherstone to become the new chairman of the NYSE board.
Sources familiar with a report on an internal investigation led by attorney Dan Webb say that the report finds that the NYSE overcompensated Richard Grasso by between $43 million and $50 million in regular pay and an additional $100 million in deferred compensation that the report said could be called inappropriate, reported the Wall Street Journal.
In a letter to the SEC and Spitzer, Reed, Interim Chairman and Chief Executive said the board determined that "serious damage has been inflicted on the Exchange by unreasonable compensation of the previous chairman and CEO, and by failures of governance and fiduciary responsibility."
The report also suggests that the NYSE directors who approved Grasso's hefty pay package potentially breached their fiduciary responsibilities, the Journal reported.
On Thursday, the U.S. Securities and Exchange Commission said it had authorized a formal investigation of matters raised in an internal New York Stock Exchange report.
The Commission's investigation will seek to determine whether there have been violations of the federal securities laws or NYSE rules. The Commission will coordinate its investigation with the New York Attorney General, who will seek to determine whether there have been violations of New York laws governing New York nonprofit corporations.
The Commission's investigation is the most recent step in its ongoing efforts, which began almost 12 months ago, to address governance issues at the NYSE.
One of the changes the NYSE has made since Grasso resigned in September amid the compensation controversy is to separate the positions of chief executive and chairman. This was done to divide the power at the top between two people.
John Thain, president of Goldman Sachs Group Inc., was named as CEO last month and he has asked Weatherstone, 73, who headed J.P. Morgan before retiring, to be the chairman, an offer Weatherstone has already refused once. Thain is hoping to convince Weatherstone to reconsider. If he still declines, the exchange's board has four other potential candidates in mind.