Juvenal Justice
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
The resignation of Richard Grasso as chairman and chief executive of the New York Stock Exchange leaves us with a bit of the feeling we had when Howell Raines stepped down as editor of The New York Times. Mr. Grasso may have run into trouble for reasons entirely different than those that ensnared Mr. Raines. But the departure of each leaves many asking Juvenal’s famous question: Who watches the watchman? Or, in the case of the Stock Exchange, what about the board that hired Mr. Grasso in the first place and paid him the package of $140 million that got him into so much trouble?
No doubt there will be many pointing out that in the latest drama, there was, in fact, a certain amount of watching of the watchman. The United States Securities and Exchange Commission, after all, did play a role in forcing the disclosure of Mr. Grasso’s pay, which many then concluded was far too high for a man who was, in part, a regulator, albeit not a government official. And the di rectors of the exchange did play a role in forcing his ouster; he stepped down at a hastily called board meeting after it became clear that he had lost the support of major figures on the board, including some who had been supporting him when the controversy first erupted.
But, while we don’t carry a brief one way or another for Mr. Grasso himself, one doesn’t have to make too many phone calls around town to discover that there are many who reckon the board of the exchange comes out looking worse than the man who just resigned. Nor is it a question of fairness or proportion. We’re not particularly shocked at $140 million in compensation at the end of a long career. But there has grown up around the exchange the sense of a clubby relationship between the directors and the chief executive. And there is no sense that they went about determining the pay of Mr. Grasso by a method designed to obtain the best management at the cheapest price.
Now board member Larry Sonsini will probably take over at least on an interim basis and a search will begin for the right replacement. All sorts of names are being bandied about, including, as our Dan Dorfman reports on Page 1 today, that of the former mayor, Rudy Giuliani. But before the exchange sets about hiring a new chief executive officer, its owners might want to see about hiring new directors. Or getting from the existing ones an accounting of what they were thinking when they set the compensation for Mr. Grasso.
