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Grasso May Receive an Additional $48 Million

NYSE's Reed says his predecessor may have a claim to the money that he had vowed to forgo.

November 08, 2003|Kathy M. Kristof | Times Staff Writer

Former New York Stock Exchange chief Richard Grasso may be entitled to an additional $48 million in compensation on top of the roughly $140 million in pay that sparked an outcry so loud it led to his ouster.

The NYSE's interim chairman, John S. Reed, said Friday that Grasso "has some legitimate claim for future compensation" under terms of his five-year employment contract. Reed's comment came after a speech to the Securities Industry Assn.'s annual meeting.

Reed, who stepped in to lead the NYSE while it searched for Grasso's successor, said he had asked a Chicago law firm to examine the exchange's contractual obligations to Grasso.

"When I have that in front of me, I will call Mr. Grasso and ask if he'd like to have a cup of coffee or something and talk about his situation," Reed said.

NYSE officials would not comment about whether Grasso had asked for the pay.

Reed's comments are the latest wrinkle in a saga that started last summer, when, bowing to pressure, the NYSE revealed details of Grasso's pay, including that he would be allowed to cash out $139.5 million in deferred compensation this year, in addition to receiving a salary and bonus of at least $2.4 million.

The size of Grasso's pay package touched off a firestorm as critics noted that Grasso's pay soared even as Wall Street suffered through the worst bear market in decades.

Grasso vowed last summer to forgo the roughly $48 million in promised future compensation. But he left the exchange without committing that promise to writing, several sources said."This is just like any CEO who leaves a company on bad terms, when he is contractually entitled to more money," said Ann Yerger, deputy director of the Council of Institutional Investors. "I think it's completely up to him as to whether he wants to take it."

The final chapter in the Grasso saga may still be coming, said Paul Hodgson, senior research associate with the Corporate Library, a Web-based corporate governance research firm.

The NYSE hasn't yet disclosed whether Grasso also was entitled to severance pay. If he is, and if he opts to take the $48 million he'd previously renounced, Hodgson predicted that Grasso's total package could hit $200 million.

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Bloomberg News was used in compiling this report.

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