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Big Changes Are Promised for the NYSE

Grasso's resignation after a compensation furor brings a vow from the interim leader

September 19, 2003|Thomas S. Mulligan | Times Staff Writer

NEW YORK — In his first public appearance as the temporary leader of the New York Stock Exchange, director H. Carl McCall promised Thursday that the NYSE would "operate differently" from the way it did under deposed Chairman Richard Grasso.

For one thing, McCall said the Big Board would pay more attention to its prime customers, including the giant California pension funds that helped precipitate Grasso's resignation Wednesday and that continue to push for change at the world's largest stock exchange.

But at the top of the NYSE agenda is the search for a permanent successor to Grasso, whose 35-year career ended in a hail of criticism over a $140-million compensation package. Detractors said it was grossly excessive and the product of a corporate governance breakdown at the venerable exchange.

McCall took himself out of the running for the job Thursday, as did several other prominent figures whose names were floated as candidates.

For The Record
Los Angeles Times Saturday September 20, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 35 words Type of Material: Correction
Treasurer spokesman -- In an article in Friday's Business section about changes at the New York Stock Exchange, the first name of Mitchel Benson, a spokesman for California Treasurer Phil Angelides, was misspelled as Mitchell.

William J. McDonough, chairman of the new Public Company Accounting Oversight Board; Robert E. Rubin, chairman of Citigroup Inc.'s executive committee and the U.S. Treasury secretary during the Clinton administration; and Donald B. Marron, former chairman of UBS PaineWebber, all said through spokespeople that they weren't interested in the job.

At a news conference at the exchange, McCall said he would convene a special NYSE board meeting today via a conference call linking as many as possible of the 25 directors.

Several directors had been unable to participate in Wednesday's hastily convened emergency meeting in which the board, by a 13-7 vote, demanded Grasso's resignation. McCall told reporters that he had voted with the majority but declined to disclose how others voted.

McCall -- who disclosed that he and other directors earned $30,000 a year, plus $2,000 per board meeting -- said he intended to dispel the secrecy that has traditionally surrounded the board's activities.

For example, he said, the NYSE's annual report from now on will detail the salaries and benefits of its top five officers.

Next week, McCall said, he will fly to California for a face-to-face meeting with investment officials. That meeting was set for next Friday at the office of Sean Harrigan, president of the board of the California Public Employees' Retirement System, the largest public pension fund.

Arrangements were incomplete Thursday, but McCall spokesman Steve Greenberg said McCall hoped to also include California Treasurer Phil Angelides and Comptroller Steve Westly, both of whom sit on the boards of CalPERS and the California State Teachers' Retirement System.

On the agenda will be how to increase the representation of the investing community on the NYSE board.

Critics have charged that the board has been controlled by major Wall Street brokerages, and that that's a conflict because the firms also are supposed to be regulated by the NYSE.

Harrigan on Thursday suggested shrinking and reconfiguring the board to give investor representatives half of the seats.

At his news conference, McCall was noncommittal on that and other reform proposals, saying only that the NYSE's special corporate governance panel, which he chairs, would consider all suggestions in a report it planned to deliver to the full board on Oct. 2.

McCall didn't say whether Grasso would receive a severance payment under his employment contract. According to published reports, the severance could total millions of dollars.

Officials attending the California meeting also will be asked for their views on a permanent replacement for Grasso.

Angelides' name surfaced in TV reports Thursday as a potential candidate. But Angelides "has no idea where those rumors came from," spokesman Mitchell Benson said. The NYSE has not contacted Angelides, nor has he approached the exchange, Benson said.

Calls continued Thursday for other members of the NYSE board to quit. McCall said he hadn't heard of any planned resignations, but added that "the board will be held accountable."

In the first sale of a broker membership slot at the exchange since Grasso's departure, an NYSE seat sold Thursday for $1.85 million, down slightly from $1.9 million at the last sale on Sept. 8.

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