The board considers sweeping changes in its makeup and appoints a search committee for Grasso's replacement.
By Associated Press
Published September 20, 2003
NEW YORK - The New York Stock Exchange board named a search committee to find its next leader and discussed ways to reform itself Friday, as it began to navigate life after Richard Grasso.
At its first formal meeting since forcing its chairman and chief executive to resign this week over a pay scandal, the board named Laurence Fink, CEO of investment group BlackRock Inc., to lead a committee to find Grasso's replacement. Fink did not immediately return calls seeking comment.
The NYSE's directors are considering sweeping changes following the public fury over Grasso's $140-million pay package, including a proposal from one director that calls for brokerage industry insiders to step down from the board.
The board has come under fire for approving the original $187.5-million pay package and is under pressure from federal regulators to revamp its practices. Half the seats on the board are held by top executives of investment banks and brokerages - the very businesses the NYSE is supposed to monitor and regulate for fraud.
To address conflict of interest concerns, Goldman Sachs CEO Henry Paulson Jr. has suggested that those affiliated with regulated companies eventually be excluded from the board so it could consist entirely of independent directors. A Goldman spokesman said Paulson has discussed the idea several times with other directors.
Paulson's plan envisions an advisory panel composed of securities company executives and other members who hold seats on the trading floor, so the owners of the exchange would still have a voice.
It was unclear how much support the plan had among other investment banking executives.
There have been several calls for seats to be set aside for institutional investors, including large public pension funds. The California Public Employees' Retirement System, the nation's largest pension fund, called Thursday for the NYSE to trim the 27-member board and allot more seats to investors outside the securities industry.
H. Carl McCall, who assumed the role of lead director after Grasso resigned, said a number of state treasurers and comptrollers have been invited to testify before the board's special committee on governance "to make sure their input is fully considered." The special committee, co-chaired by McCall and former White House chief of staff Leon Panetta, will present its recommendations to the board Oct. 2
The other directors named to the search committee were former Secretary of State Madeleine Albright; Robert Fagenson, vice chairman of Van Der Moolen Specialists USA, a private securities broker-dealer; Viacom Inc. president and chief operating officer Mel Karmazin; Gerald Levin, retired CEO of Time Warner Inc.; John Mack, co-CEO of Credit Suisse Group; and Larry Sonsini, chairman and CEO of Wilson Sonsini Goodrich & Rosati, a large law firm specializing in representing corporate clients in the high-tech industry.