If you've worked at the world's largest and best-known stock exchange for 35 years -- during eight of which you were the CEO, including after 9/11, when you provided unparalleled leadership -- you think you'd be entitled to end your tenure nicely compensated for a job well done.
For former New York Stock Exchange CEO Dick Grasso, it wasn't that easy. Back in 2003, his deferred compensation package from what's now known as NYSE Euronext (NYSE: NYX) totaled $187.5 million. That figure drew a wave of attention, and it eventually led to his ouster, not to mention a lawsuit attempting to withhold a chunk of the pay.
But after years of antics, it now appears that Grasso will get to keep his millions. On Tuesday, the New York Supreme Court threw out two claims against Grasso that will let him hang on to his nine-figure payday.
Good for him
CEO compensation always sparks a hot debate. From former Home Depot (NYSE: HD) CEO Bob Nardelli's $210 million golden parachute, to former Countrywide CEO Angelo Mozilo's nearly $200 million take in 2007, there's rarely a short supply of overwhelming pay for underwhelming performance.
Grasso's case might be a little different. Never mind that the original lawsuit was waged by then-Attorney General Eliot Spitzer, who, ahem, isn't exactly known for his integrity and moral standards. Here's what's important in Grasso's case:
- The NYSE was a private organization when the dispute arose.
- Grasso had been CEO for eight years before he left, during which time the NYSE earned more than $900 million.
Contrast that with another headlining pay package only two months before Grasso's dispute. In June 2003, high school basketball star LeBron James signed a $90 million contract with Nike (NYSE: NKE) before he had ever stepped foot on an NBA court. Yes, he was very promising, but his resume as a professional athlete was empty. Grasso had worked at the NYSE for nearly twice as long as LeBron James had been alive, but that fact seemed to elude the millions who disputed Grasso's pay -- including, no doubt, Nike shareholders who cheered the deal with King James.
The rationale behind executive (or athlete) pay is simple here, people. If what you produce exceeds your compensation and what the next person in line could achieve, more power to you. Nobody ever seems to scold Warren Buffett for his monstrous wealth, probably because it's readily apparent that he's made Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) investors a bloody fortune over the years, and that few people, if anyone, could replace him.
Heck, if Grasso ran a hedge fund, he'd practically be eligible for food stamps. His retirement package is equivalent to what hedge-fund manger John Paulson made every two and a half weeks last year. Grasso worked hard. He benefited the company. He deserves his pay.
Enjoy your golden years, Richard.
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