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Dick Grasso: The Ten (or more) Million Dollar Man

Critics, their faces sporting incredulous eyebrows that threaten to slide off of their faces, have again taken aim at New York Stock Exchange Chairman Dick Grasso. "Is he the right man to protect investor interests? Is he worth all the money he's paid?" they ask. Good questions.

In a search for answers, let's look at Grasso's recent statements and a partial track record.

At a recent financial services industry dinner, when repeatedly queried about the accuracy of the reports that he makes $10 million a year, Grasso stated that it has been NYSE policy for 211 years not to disclose executive salaries."

That answer might lend one to conclude that Mr. Grasso is grasping at puffs of smoke to avoid the issue. How can a 211 year-old rule justify secrecy in a free marketplace where transparency is supposedly sacrosanct? These ancient edicts -- even if created for good reasons originally, and that's arguable -- are not good rules today. Two hundred years ago, woman and African Americans couldn't vote. In fact, 211 years ago African-Americans were slaves (and women were nearly so). Does Dick Grasso mean to suggest that we need to go back to legislation in affect half a decade before the Civil War? It is precisely this lack of disclosure in the US marketplace and corporate America that has created the crisis in investor confidence. Didn't
corporate governance scandals teach Grasso anything? I'd say that as lousy answers go, Grasso's justification for secrecy ranks right up there.

It seems that at every turn one could make a case that Dick Grasso simply doesn't get it. That he is having a hard time understanding that serving on the board of directors of a NYSE listed
Company -- Home Depot (NYSE, symbol HD) -- and having his own NYSE board made up of those the NYSE is supposed to regulate is, at best, counterintuitive. Or that the lead director of Home Depot-Ken Langone -- chairs the NYSE's compensation committee must seem a grotesque conflict of interest, even to Grasso's most ardent supporters. With such a situation, would one expect Dick Grasso to favor investor interests at HD over Mr. Langone's? On second thought, that's a stupid question.

Eliot Spitzer recently said that anyone not understanding that self-regulation has been an abject, utter failure must have lived on "The Dark Side of the Moon." In an amazingly effective effort to keep everyone forever ensconced in outer space, Mr. Grasso now speaks of a process of hearings, public commentary, and deliberation. He suggests that change will not be radical and might take years to produce change (211 years?). Could this be a euphemism for "nothing done?" The regulatory light will, he might assume (perhaps correctly), eventually dim, as it normally does. If and when that happens, the cockroaches-so to speak -- will be free to roam, unfettered, around the money machine, feeding in peace.

When Grasso says, "Don't believe everything you read," in response to inquiries about his salary, and then smiles and pads away, I imagine he's humored by an inside joke. He doesn't deny the $10 million number, and perhaps is suggesting that media reports are not accurate. That might be. Speculation in some quarters is that he may make twice that number or upwards of $20 million a year. If that were the case-and I don't know if it is or isn't -- then this would be quite a clever play on words-"don't believe everything you read" -- and Grasso, if nothing else, is a clever man.

So, in answering the questions posed at the outset, it would seem that Mr. Grasso's personal and professional interests hardly march alongside the investing public's. With respect to his pay package, whether or not it is excessive depends on who you ask. If the current strategy of obfuscation plays out the way mapped by Dick Grasso and his Big Board family, then the NYSE may yet eke many more years of self-serving enrichment. And since any amount of Grasso pay won't have to be disclosed, Ken Lagone and the compensation committee will be free to give their hero the gigantic raise in pay that, from their perspective, he deserves.