Divisions have emerged on the board of the New York Stock Exchange over how directors were informed about the $187 million pay package of Richard Grasso, the NYSE chairman.
Robert Fagenson, an NYSE director and vice-chairman at Van der Moolen, a specialist stock trading firm, said there was “considerable disappointment” with the way the board was told about Mr. Grasso’s pay.
“The board is extremely concerned about improving the process of acquiring information on executive compensation,” he said. Mr. Fagenson’s comment, in a telephone interview with the Financial Times, comes after other directors, notably Carl McCall, the head of the NYSE board committee that sets Mr. Grasso’s pay, and Jürgen Schrempp, chief executive of DaimlerChrysler, expressed doubts about how the pay award was handled.
The board divisions appear to undermine the NYSE’s claim that the award had the full backing of the 27-member board. Mr. Grasso was awarded $139.5 million in deferred compensation and said he would not accept a further $48 million he was owed under his contract.
They coincide with a revolt on the floor of the NYSE over Mr. Grasso’s award. Mr. Fagenson is one of three exchange directors who will meet traders on Thursday to try to stem the tide of anger that has included a call for the chairman to resign.
The meeting will “give everyone an opportunity to vent, talk, or opine”, said Mr. Fagenson. He wanted to gather the “whole gamut of opinions and views” on Mr. Grasso’s compensation and other issues in order to have a clear insight into the floor’s concerns for other board members.
The other directors due to meet the floor representatives are Christopher Quick and James Duryea. Like Mr. Fagenson, they represent the stock trading community on the NYSE board.
The Securities and Exchange Commission is also scheduled to hold discussions with exchange members in Washington this week. At least one senior exchange member is to meet officials to discuss the SEC’s view of the controversy surrounding Mr. Grasso’s pay package.
Since the disclosure several NYSE members have contacted William Donaldson, the SEC chairman and former NYSE chairman, urging him to take action.
Some seat-holders will also begin talks on a formal proposal to the board to make the exchange a publicly listed company. Francis Maglio and William Higgins, who head the association of NYSE equity members, or lessors of exchange seats, are organising the meeting. Mr. Maglio said that the organisation represents about 400 members.
Other members said the controversy about Mr. Grasso’s pay has tainted the exchange too much to consider a public offering.