Grasso Gives Up $48 Million

Imagine the surprise of New York Stock Exchange board members yesterday. Conferencing in order to get their thoughts straight about Chairman Dick Grasso's controversial $140 million compensation package, some learned for the first time that he's entitled to an additional $48 million in deferred pay. Woops.

As calls for reform reverberated down Wall Street in the wake of the Enron debacle and other scandals, many looked for the NYSE to institute tougher reforms for its member firms. But Grasso and the board itself have had problems of their own. Former Vivendi Universal (NYSE: V) chairman Jean-Marie Messier, former Salomon Smith Barney (NYSE: C) CEO Michael Carpenter, and Martha Stewart Living Omnimedia's (NYSE: MSO) namesake all resigned from the board after troubles at their own companies.

Grasso has been a lightning rod for criticism, and not just for his salary. He's a member of Home Depot's (NYSE: HD) board of directors, for example, an NYSE company that he's supposed to regulate. But his total pay -- which surprised many NYSE floor members when it was first revealed in May -- draws the most attention. His $140 million package is "enough to pay the salaries of the heads of the Federal Reserve Bank and the Securities and Exchange Commission for 445 years," according to Bloomberg. As SEC Chairman William Donaldson, who makes about $142,500 a year, said last week, "The approval of Mr. Grasso's pay package raises serious questions regarding the effectiveness of the NYSE's current governance structure."

Donaldson's probe into Grasso's salary is the reason the board was meeting yesterday. It turns out Grasso has decided to forgo the extra $48 million in pay, but is ignoring calls for his resignation. Why would he give up $48 million? Probably because accepting it would almost surely lead to his ouster.

Stay tuned.