How much money is too much? Apparently $140 million. That's what it took to bring down New York Stock Exchange Chairman Dick Grasso.
Grasso resigned yesterday amidst a swirling mess that began on Aug. 27 when word got out he was due to receive a lump-sum $140 million in deferred compensation. The fire was further stoked as the chairman graciously offered to give up an additional $48 million in incentives owed to him and as he took criticism due to the fact that his compensation was set by NYSE board members he recommended.
By yesterday, everybody from presidential candidate Joe Lieberman to Kermit the Frog was calling for Grasso's head. He did the right thing and stepped down, a symbol of the greed and underhandedness that marked the bull run of the late '90s and subsequent fallout of the last three years.
It's a shame, really. I always thought seeing his shiny head up there on the exchange was comforting. There was something about that glow about him, his sheer exuberance and confidence in the market, that made one feel a little more at ease even in the worst of times. Who can forget Sept. 11, 2001, when his compassionate conviction guided Wall Street through one of its scariest moments. If we investors knew we were paying him $140 million back then, we might have thought otherwise, but he was a rock at the time.
Dick Grasso was a lifer. He started working on the New York Stock Exchange in 1968, becoming chairman in 1995. Since then, the exchange has more than doubled its number of listed companies. Their market value has risen to $13.4 trillion from $9.2 trillion in 1996. Since 1998, the NYSE has also brought in 90% of the proceeds from initial public offerings -- something it used to avoid -- raking in a record $17 billion in 2002.
Hey, if Grasso helped bring in billions in business, isn't $140 million a paltry sum to pay him? Why are we so tweaked off?
I'll tell you why. Because the NYSE is an institution that needs to be held in the public trust. Certainly, it represents the clubby, fat-cat world of the Wise, depicted in movies like Trading Places and Wall Street, as well as in our news media every day. But it also represents the individual investors who will never aspire to own gold-plated toilets and yachts with our third ex-wife's name on them, who want our little share of the American dream nonetheless.
The NYSE is a democratic institution. We vote with our dollars, placing our investments in those companies we think will build our economy, and our own wealth. The exchange's chairman is its steward and there should be something philanthropic about that. Hell, we only pay the president of the United States $400,000.
We're about making money here at The Motley Fool. And we don't begrudge anyone who earns it. But there comes a time when enough is enough. Anyone in a position such as NYSE chairman must recognize that, especially now after so many investors have been chewed up and spit out in this post-Enron era.
It is our greatest hope -- an idealistic one for sure -- that Dick Grasso's fall from grace will serve as a bookend to the greed, corruption, and hubris that have plagued our markets from bull to bear, through the late '90s to now. We hope reform will follow quickly on the heels of his exit.
Bob Bobala is managing editor of The Motley Fool. The Motley Fool is investors writing for investors.