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Hung out to dry

Former NYSE Chairman Dick Grasso is the first guy in memory to be fired for accepting a huge pay raise handed to him by bosses who then quickly tried to pretend they were insane at the time they agreed to the contract. By Mike Barnicle.
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Congratulations to Dick Grasso. At 57, he becomes the first guy in memory to be fired for accepting a huge pay raise handed to him by bosses who then quickly tried to pretend they were insane at the time they agreed to the contract.

It's been a long time since Grasso punched a time clock or got paid an hourly wage. He quit last week as chairman of the New York Stock Exchange after he was caught grabbing $140 million in salary and pension.

He was a Wall Street lifer. His pedigree came from the streets around Queens Blvd. rather than some prestigious Ivy League business school. He committed no crime, did nothing illegal and from all accounts was terrific at his job, which was to grow and promote the country’s most recognizable symbol of profit and prosperity.

Still, his resignation was covered as if he had been the head of some organized crime family instead of merely another corporate chief who figured he was invisible as well as immune from criticism because he presided over a tremendous balance sheet. Turns out, Grasso’s ultimate mistake was investing in the wrong company: the people surrounding him who told him they were his pals through thick and thin but not the front page.

There are 23 directors of the stock exchange. These are the people who are supposed to be in charge of how the place is run and what kind of a job their principal employee, Grasso, was doing.

A couple months ago, they gave him a new deal. It was a good one, too. It provided Grasso with a package that amounted to $139.5 million.

A few days after those numbers became public, a fellow named William Donaldson read about it in the paper and almost choked on his corn flakes. Donaldson is now head of the Securities and Exchange Commission in Washington but used to hold the job Grasso had and was paid chump change compared with the cash the board threw at little Richard.

This was not good news for Grasso. Human nature being what it is, Donaldson was probably enraged that his pay stub looked like cab fare compared with his successor’s W-2 form. Donaldson recovered from anger, sat down and wrote a strong letter loaded with outrage to the board of the stock exchange. It ended up in the newspapers.

Then, someone read Donaldson’s threatening note to Carl McCall. He is the politician who got hammered in his campaign to unseat Gov. Pataki, then landed on his feet as both a director of the New York Stock Exchange as well as head of its compensation committee. In other words, McCall was the guy who agreed to Grasso’s pay.

McCall and others on the stock exchange board got scared. Soon they were acting as if Grasso had come in with a gun and demanded that they open the safe.

McCall and the others proclaimed their outrage and innocence and then banded together as accomplices in Grasso’s public assassination to save themselves from the humiliation of being branded as total incompetents. But here’s a troubling question: If these people didn’t know what they’d just handed Grasso, why should shareholders trust some of them to run their own companies?

No doubt about it, Grasso’s take-home pay was obscene. But the slicing and dicing of his reputation, while predictable, is absurd. Lumping the guy in with crooks from criminal enterprises such as Enron and WorldCom is foolish.

For years, the business world was not reported well or accurately by most newspapers and TV networks due to little or no public interest. Then, CNBC came along to join Lou Dobbs and others. The Internet exploded. The stock market soared. CEOs became celebrities. The stock exchange was covered like the NFL.

When things went south, anger filled the void in the aftermath of dwindling retirement accounts. Having missed frauds like Enron, the business media reacted in a way that guaranteed they would never get burned again.

Apparently, Grasso didn’t realize times had changed.

There’s no need to feel sorry for the man, though. He leaves with no worries that a check will bounce. He got health care and a sweet kiss walking out the door.

But if there’s any justice or a restoration of the type of “accountability and investor confidence” so many Wall Street phonies began screaming about once they were sure Grasso would resign, someone ought to broom the directors of the New York Stock Exchange who agreed to his deal before Donaldson blew the whistle.

Of course, that probably won’t happen, because now that Grasso’s bald head has been handed to him, it will be back to business as usual in an institution where the hottest commodity seems to be hypocrisy.

Mike Barnicle’s column is reprinted with permission of the New York Daily News.