NYSE under attack over chairman's pay

The New York Stock Exchange faced fresh scrutiny yesterday over the size of its chairman's compensation package, adding to pressure on the exchange amid a probe into possible illegal activity by brokers on its famed trading floor.

Mr Richard Grasso, who is also the NYSE's chief executive, earned more than $10 million (€8.8 million) in 2002 despite the downturn in trading activity that has accompanied a three-year bear market in stocks and growing criticism of high executive pay at US companies. The NYSE is a private institution and is not accountable to shareholders.

But details of Mr Grasso's compensation package caused a stir because Wall Street is shedding thousands of jobs. Executives at investment banks and brokerages are keen to stress a new rectitude after the recent stock research scandal.

Mr Grasso's earnings were much more than the heads of other exchanges or self-regulatory organisations, the Wall Street Journal reported. He also has accumulated a retirement package of $80 million-$100 million, partly through deferred salary payments during his 35-year NYSE career.

The NYSE did not return a call seeking comment. Mr Grasso's package does not include stock options because the NYSE is not a listed company.

The exchange had net profit of $28.1 million in 2002, down from $31.8 million in 2001 and sharply lower than the $101.3 million it earned in 1998. It had revenue of just over $1 billion last year, making it a relatively small US company by that measurement.

Mr Grasso's compensation compares more to pay levels elsewhere on Wall Street. Mr David Komansky and Mr Stan O'Neal, chairman and chief executive respectively of Merrill Lynch, earned $14.4 million and $14.3 million in 2002, including a substantial amount of stock options.

Mr David Bushley, an executive pay specialist at Buck Consultants, said he was not convinced Mr Grasso should be paid relative to top investment bankers "because the NYSE does not take the risks these firms do" with their capital.

Mr John Challenger, chief executive of Challenger Gray & Christmas, said Mr Grasso was being paid on terms similar to sports stars. Randy Johnson, the pitcher with the Arizona Diamondbacks baseball team, recently signed a two-year contract worth $16.5 million a year.

"Dick Grasso is being paid in that rarified company," Mr Challenger said. - (Financial Times Service)