NYSE Chief’s Pay Package Under SEC Scrutiny

With executive pay packages under increased scrutiny after recent scandals, the Securities and Exchange Commission (SEC) is looking into the compensation of Richard A. Grasso, chairman of the New York Stock Exchange.

The NYSE claims it will save about $3.5 million this year by paying out a lump sum of $140 million to Grasso in the form of accrued savings and incentives. This was on top of his base salary of $1.4 million and a bonus of at least $1 million.

The lump sum payment was tied to the renegotiation and extension of Grasso’s contract and directors defend the payment by saying that it would save on as much as $10 million more in interest that would have accrued by the time the original contract expired in 2005.

Despite this, the SEC Chairman William Donaldson wrote to NYSE Director H. Carl McCall, who is also head of the exchange's Human Resources and Compensation committee, saying that approval of Grasso’s pay package “raises serious questions regarding the effectiveness of the NYSE's current governance structure.”

Donaldson, the former head of the NYSE, asked that a list of questions about Grasso's pay package be answered by Sept. 9.

This is the first time the NYSE has disclosed the details of its chief executive’s pay package and the payment has raised eyebrows since in comparison Donaldson makes just $142,500, and Federal Reserve Chairman Alan Greenspan earns about $172,000 a year.

The New York Times said Donaldson was “unusually blunt” in his letter to McCall, taking aim at the pace of the NYSE’s reforms. “I am especially concerned that the pay package was awarded before the exchange completed its governance review, which has been pending since March,” Donaldson wrote.

You may like these other stories...

Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...
Read more from Larry Perry here and in the Today's World of Audits archive.In my last article, I summarized major differences between principles in U.S. GAAP and the Financial Reporting Framework for Small and Medium-...
OECD calls for coordinated fight against corporate tax avoidanceDavid Jolly of the New York Times reported that dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.