RICHARD GRASSO UPDATE….Remember Richard Grasso, the ex-CEO of the New York Stock Exchange who
was fired resigned a couple of years ago after his, um, unseemly pay package became public? Here’s the nut graf from a report on his compensation that was written in 2003 but not released publicly until today:
The level of benefits that Grasso accumulated during this period [1995-2002] was excessive by any reasonable standard. By August 2003….[Grasso’s pension] translated into a lifetime annuity of at least $7.4 million per year….This translated into a total lump sum present value…of about $126.4 million.
Applying appropriate executive compensation analysis and benchmarking criteria, an appropriate pension for Grasso would have been in a range of about $875,000 per year, which would translate into a lump-sum pension benefit of about $12.8 million.
Ownership society, baby, ownership society!
So the bottom line is that Grasso’s pension was excessive by $113 million. But that’s not all. The report estimates that his regular old pay was inflated by $43 million as well. What’s more, his pay in 2001-2002 wasn’t merely “excessive,” it was “grossly excessive.”
But why was it so excessive? The report runs through several tedious explanations, all of which boil down to the usual factors of greed and cronyism. But here’s my favorite part:
Only a handful of people knew about Grasso’s pension accumulation, and Grasso’s compensation awards were not disclosed outside the Board. Many Board members agreed that, had Grasso’s compensation and benefit levels been disclosed outside the Board, they would never have reached such excessive levels.
In other words, sheer embarrassment would have kept Grasso in line if anyone outside his own circle had known about his compensation. As usual, secrecy is the enemy of good governance.
UPDATE: In other news of CEOs gone bad, Martha Stewart’s stint in prison appears likely to make her richer and more famous than ever. When she gets out, she’ll be hosting the latest extension of Donald Trump’s “Apprentice” empire. Since my wife loves both Martha and The Apprentice, she’s going to be thrilled!