Richard A Grasso, the former chairman and chief executive of the New York Stock Exchange (NYSE), had to resign from office in 2003much before his scheduled retirement in 2007when he was accused of maneuvering an excessive compensation package. The case prompted questions on the dual role of the Exchangeas a business and a regulator. It called for a rethinking and reforming of the processes of selection and independent functioning of the Board and Compensation committee, performance evaluation of the chief executives, and the issue of bifurcation of the office of chairman and chief executive at NYSE in particular, and the corporate world in general.
NYSE, one of the world's largest stock exchanges, was born out of the Buttonwood Agreement in 1792. Located in Wall Street, New York city, the Exchange was registered with the US Securities and Exchange Commission (SEC), as a national securities exchange and a Self-Regulatory Organization (SRO), on October 1, 1934. With nearly 2,800 companies listed, the Big Board (NYSE) is governed by the New York state's Not-for-Profit Corporation Law. As a self-regulating body, the Exchange regulates the activities of its 1,366 members.
Grasso joined NYSE in 1968 as a clerk. He was the first in the Exchange's history, to rise through the order and assume the highest job at NYSE (Box 1). He owed his ascent at NYSE to John J Phelan Jr. (Phelan), who became the president of the Big Board in 1980 and later, its chairman. Grasso became the president and chief operating officer of NYSE in 1988. And when William (Bill) Donaldson (Donaldson) succeeded Phelan, "Bill delegated to Dick. He was the advocate, the visionary, the outside person, and Dick was very much the chief operating officer and ran the Exchange"noted Catherine R Kinney, the former co-president of the NYSE and former executive vice-chairman of the board of directors. Grasso took charge as the chairman and chief executive on June 1, 1995. As the chief executive, he endeavored to expand and improve the Exchange.
His main initiatives have been to bring state-of-the-art technology to the Exchange's trading, regulatory and administrative operations and to increase the number of companies whose shares are listed on what is known as the Big Board, focusing primarily on international companies. According to former SEC chairman Arthur Levitt, "He has waved the flag often enough to persuade investors and the world and public opinion to believe that NYSE is an American icon." Analysts felt that, as the chairman and chief executive, Grasso had made NYSE a powerhouse for initial public offering.
|
