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Last Updated: Tuesday, 16 September, 2003, 21:52 GMT 22:52 UK
Heat turned up on NYSE chief
Richard Grasso
Mr Grasso is increasingly beleaguered
The chairman of the New York Stock Exchange (NYSE), Richard Grasso, is under mounting pressure to resign over his $140m pay package.

The pay deal, which shocked investors when it was revealed by the NYSE last month, is under investigation by share watchdog the Securities and Exchange Commission (SEC).

Now New York's state comptroller and California's state treasurer have joined a growing chorus of high-profile figures calling for Mr Grasso's resignation.

They say his continued presence at the head of the NYSE damages the credibility of the exchange, which is under pressure to set an example on corporate governance.

But at a recent international conference, Mr Grasso defended his record.

"We've done... more reform than existed throughout the period of the New Deal era in the US in the 1930s," he told BBC World Business Report.

'Enormous amount'

California State Treasurer Phil Angelides said Mr Grasso should not only quit as chairman, but should give back a large chunk of the controversial pay package.

When an official is paid an extraordinary amount of money by those he is supposed to regulate, there is an obvious conflict of interest
Alan Hevesi, New York state comptroller
New York Comptroller Alan Hevesi, who is the sole trustee of the state's $105bn pension fund, said: "I join with those calling on Chairman Richard Grasso to resign in the best interests of the NYSE.

"Unfortunately, (he) has lost the ability to implement needed reforms at the NYSE and to regulate and monitor its members and listed companies.

Describing Mr Grasso's package as "inappropriate, he said: "When an official is paid an extraordinary amount of money by those he is supposed to regulate, there is an obvious conflict of interest."

Mr Hevesi went on to say he was troubled by the lack of timely disclosure of the details of Grasso's "extremely complicated contract".

"It would not be enough to change the leadership of the NYSE without implementing reforms that will ensure the exchange is an effective regulator and leader in corporate America," the comptroller said.

A NYSE spokesman declined to comment.

'Moral authority'

Mr Angelides and the heads of the huge California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System also sent a joint letter of protest to Mr Grasso on Tuesday.

Phil Angelides and Calpers' Sean Harrigan
Mr Angelides (left) says Mr Grasso is no longer fit
"We seriously question whether you are able to continue to effectively lead this important financial institution and whether, if you remain in your current position, the NYSE will have the requisite moral authority to provide critical leadership in the arena of corporate reform," the letter said

Speaking later on CNBC television, Mr Angelides said "the average American worker would have to work 5,200 years, at 40 hours a week" to earn Mr Grasso's annual salary.

If America's state pension funds start turning their backs on the NYSE and shifting their stock portfolios to other trading systems, it could spell serious trouble for the exchange.

'Going to be fine'

Earlier Mr Grasso appeared to be in the clear after Kenneth Langone, a key director of the NYSE, said his job was not in danger.

"Dick is going to be fine," Mr Langone told Reuters news agency.

"Dick is going to be there as long as Dick wants to be there," he added.

Mr Grasso, NYSE chairman since 1995, has spent his entire 35-year career with the exchange.

New York Stock Exchange chairman Richard Grasso
"We've done... more reform than existed throughout... the New Deal era in the US in the 1930s"

SEC questions NYSE chief's pay
02 Sep 03  |  Business
NYSE chief gets $140m payout
27 Aug 03  |  Business
NYSE changes board rules
05 Jun 03  |  Business
New York market dispute heightens
08 Aug 03  |  Business

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