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SO now its wrong to get paid a lot????

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Officials Call for Grasso's Resignation

Tuesday September 16, 9:42 pm ET

By Brendan Intindola

NEW YORK (Reuters) - State officials responsible for investing hundreds of billions of dollars in pension funds launched an assault on New York Stock Exchange (News - Websites) Chairman Richard Grasso on Tuesday, demanding his resignation while arguing his $140 million pay package compromised his role as regulator.


New York Comptroller Alan Hevesi demanded Grasso's resignation and issued a statement criticizing the controversial pay package. Hevesi is the sole trustee overseeing the roughly $105 billion New York State pension fund.

Earlier in the day, California Treasurer Phil Angelides and the heads of the California Public Employees' Retirement System and the California State Teachers' Retirement System (News - Websites) sent an open letter to Grasso asking that he step down as head of the world's largest stock exchange.

"We seriously question whether you are able to continue to effectively lead this important financial institution and whether, if you remain in your current position, the NYSE will have the requisite moral authority to provide critical leadership in the arena of corporate reform," said a joint letter from Angelides and the heads of the massive funds.

Angelides, a Democrat who sits on the boards of both pension funds, told reporters that Grasso's pay package had been too large given his role as a regulator with influence over listing standards.

As for a $5 million bonus the board granted Grasso after he was instrumental in quickly getting the exchange up and running after the September 11 attacks, Angelides said no other public servants, including police and firefighters, got that much money "for doing the right thing by America."

NYSE spokesman Ray Pellecchia declined to comment.

The California officials said they were confident other large investors would join in their calls that would lead Grasso to resign but promised "concrete" follow-up steps if Grasso does not step down.

"We have clout in the marketplace and we are always willing to use it," Angelides said.

North Carolina Treasurer Richard Moore joined his New York and California counterparts, demanding Grasso's resignation.

Moore, sole trustee of his state's $56 billion public pension fund, told Reuters in a telephone interview, "on Main streets across America, people continue to be outraged at cliquishness on Wall Street."


California State Controller Steve Westly joined the chorus of protest late in the day. In a statement calling for Grasso's resignation, Westly said the NYSE chairman's "excessive" pay package stood in the way of reforming corporate governance practices and restoring public trust.

Since the NYSE divulged on Aug. 27 that Grasso was compensated with a mammoth pay package, the exchange has faced public outcry and intense media and regulatory scrutiny, with many saying the chairman receives far too much money for someone serving as a regulator of stock markets.

"The enormous amount of his remuneration is inappropriate for a regulator," Hevesi said in a statement. "It is also very troubling that the exchange did not publicly disclose his extremely complicated contract until it was forced to."

Grasso "has lost the ability to implement needed reforms at the NYSE and to regulate and monitor its members and listed companies," Hevesi said. "While in many ways he has done an excellent job, his effectiveness on the key issues of fighting corporate corruption and improving corporate governance has been shattered."

The federal government has also stepped into the fray.

U.S. lawmakers said on Tuesday they are prepared to grill the head of the Securities and Exchange Commission (News - Websites) about Grasso's compensation at a hearing this week.

"His pay package is clearly excessive ... The way he and the board have handled this leaves a lot to be desired," Rep. Harold Ford told Reuters when asked about the Grasso matter.

"It really raises questions about the judgment of many on Wall Street today ... It's a reflection of how out of touch their priorities are," said the Tennessee Democrat.

SEC Chairman William Donaldson, himself a former head of the NYSE, is scheduled to testify before the House of Representatives Financial Services Committee on Wednesday and before the Senate Banking Committee on Sept. 30.


Kenneth Langone, an important ally of Grasso's on the NYSE board, said earlier on Tuesday that Grasso's job as Big Board chairman is not in peril, and he'll run the NYSE for as long as he wants to.

"Dick is going to be fine," Langone told Reuters in front of the midtown Manhattan skyscraper that houses his office. "Dick is going to be there as long as Dick wants to be there."

Langone, a multimillionaire and founder of investment firm Invemed Associates LLC, was chairman of the NYSE's compensation committee in recent years, when many of the details of Grasso's controversial compensation package were worked out.

Grasso, NYSE chairman since 1995, has worked for the Big Board his entire career, joining the exchange 35 years ago.

On Thursday the board of the exchange will dispatch three directors with close ties to the trading floor to hold an "unofficial meeting" with many floor members, where they are expected to try to quell the rising tide of dissent.

NYSE directors Robert Fagenson, Christopher Quick and James Duryea will sit down with many floor members."

"There's going to be a tremendous amount of frustration, anger and disappointment that's going to be expressed," Fagenson told Reuters. "But we have to filter that and translate that into where people think we ought to be going and whether or not they see a direct impact on the business of the stock exchange, which is our primary concern." (Additional reporting by Jonathan Stempel, Chris Sanders, Greg Cresci, Elizabeth Lazarowitz Nicole Maestri and Michael Kahn)

So now its wrong to get paid a lot of money? Especially when DIck Grasso had no say in how much money the board was going to give him? Wow, this is absurd. Only part wrong on his part was accepting the 5mm bonus after sept 11, other than that, NYSE decides to give him a ton of money that they think he deserves, and people start getting all jealous and yelling thats bad. Hmpf!

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Grasso $48 Mln Giveback Could Have Been $20 Mln: Graef Crystal

Sept. 16 (Bloomberg) -- Dick Grasso's new employment contract is impenetrable, yet an analysis shows that without intervention from his bosses to amend it, that ballyhooed $48 million in previously undisclosed pay he said he'd forego would have been closer to $20 million.

The agreement, as written, would have reduced his future pension to zero in exchange for his receiving a cash payment of $7.14 million a year in each of four years. He agreed to forego those payments totaling $28.6 million as part of that $48 million giveback. However, according to the zanily complex formula incorporated in his employment agreement, his retirement payment would have bounced back to -- guess what? -- $28.6 million.

How zany is Grasso's retirement formula? Well, consider this:

Failure to make those payments modifies a retirement formula in Grasso's employment contract. In that case, the contract says the exchange must compute a lump-sum retirement benefit for the 57-year-old Grasso based on a ``final average compensation'' of $12 million. The four-step calculation, which takes into account his four decades of service at the exchange, yields an identical $28.6 million retirement benefit, payable at the end of Grasso's contract in 2007.

Talk about taking away with one hand and giving back with another other.

Amending the Deal

Enter the NYSE, where spokesman Ray Pellecchia confirmed yesterday that the exchange indeed would amend Grasso's contract so he's not eligible to receive the additional retirement funds, thus preventing that $48 million giveback from essentially being $20 million ($19.3 million to be exact).

Had all that stuff not been amended and Grasso had been fired before age 60 when his new contract expires, he would have received somewhat less than the $28.6 million because of a discount factor of 2 percent per year for each year the termination occurs before age 60. That's an amazingly low discount.

Without the contract being amended, Grasso had another way to get that $28.6 million. And that would have occurred if his board, in a sort of a compromise and face-saving gesture, were to bring someone in from the outside as non-executive chairman, while leaving Grasso as CEO, as some have been saying might occur.

According to his employment agreement, any diminution of his duties would permit him to resign for ``good reason.'' In that case, he would get the same benefits as if the NYSE had fired him for other than cause.

I'm not alone with this analysis of Grasso's contract. It's supported by several conversations I had with Joseph Bachelder, in my opinion the top lawyer in the country when it comes to drafting executive employment agreements, as well as his associate, Tony Razgaitis, who is a mathematician, holds an MBA degree and a New York Law School degree.

Though that potential mine in Grasso's employment agreement is about to be defused by being amended, there's still a feeling of unease over the whole issue of Grasso's pay.

The Growing Doubts

Among other things, growing doubts have been raised over his declaration that: ``One decision I have never played a role in is the determination of my own compensation.''

An examination of the written record suggests strongly that the statement, taken literally, is incorrect.

For openers, until this August, Grasso not only nominated all the members of the NYSE's board compensation committee, albeit with board approval, but he also decided who would chair the committee, without anyone else's approval. That put him in a position to exert some influence over his own pay.

There is also the report made to the compensation committee by Vedder Price, a Chicago law firm. In that report, there is abundant evidence that Grasso was making proposals to the compensation committee about the way he wanted his future compensation package to be shaped. As it turns out, it was his idea to have the NYSE dispense to him $139.5 million of cash he had already earned.

A significant part of that cash consisted of the lump sum equivalent of his vested pension. As Vedder Price noted, to get your pension paid while you are still employed is ``rare.''

The Net Effect

On the other hand, the net effect of Grasso's recommendations concerning his future pay was to save the NYSE $3.6 million compared to doing nothing at all.

There's also the matter of Grasso's agreeing to give up the famous $48 million in future compensation that, it seems, completely eluded H. Carl McCall, the NYSE board's compensation committee chairman. McCall should certainly have known about all this, given his background as the former comptroller of New York State and his evident familiarity with large sums of money.

Granted the record seems to show that Grasso didn't give up that $48 million without having his arm twisted. But he could have said ``No.'' If he had, and if the board responded by showing him the door, he would nonetheless have been $48 million richer.

The bottom line for me is that Grasso did indeed have some influence over his board compensation committee, and he did indeed take an active role in the determination of his future pay. That's pretty damning, but for the fact that his own proposals for his future pay -- including his later decision to give back $48 million of future pay -- saved the exchange money

It seems to me that Grasso made two fundamental errors. First, he figured that by getting the $139.5 million payment out of the way, the whole matter would blow over. Instead, it has caught fire and blown up in his face. And second, he clearly overdrew his case when he said that he had had nothing to do with his own pay. He surely did put in his two cents worth -- make that many millions worth.

Nonetheless, I can't draw the unequivocal conclusion that, at the end of the day, he is the richer for having done so.

Last Updated: September 16, 2003 00:03 EDT

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Canada's Parliament Endorses Gay Marriage

Narrow Defeat of Motion on Traditional Matrimony Underscores National Divide

By DeNeen L. Brown

Washington Post Foreign Service

Wednesday, September 17, 2003; Page A23

TORONTO, Sept. 16 -- Canada's Parliament today endorsed the government's plan to legalize same-sex marriage, rejecting an opposition attempt to preserve the traditional notion of matrimony.

The non-binding vote -- 137 supporting the government and 132 for the opposition -- on the Canadian Alliance party's motion to reaffirm the definition of "marriage as the union of one man and one woman to the exclusion of all others" was symbolic, but it shows how deeply divided this country is over whether marriage should be redefined.

In June, hundreds of gay couples were married in Ontario after a provincial appeals court declared that denying same-sex couples the right to marry violated their rights and offended "the dignity of same-sex relationships." The ruling took effect immediately. Soon after, Prime Minister Jean Chretien announced the government would not appeal the court's decision to allow gay marriages, opening the way for legalizing same sex marriages throughout the country.

Chretien said the government decided not to appeal the Ontario court decision, citing "an evolution in society." The government sent the draft legislation to the Supreme Court for a constitutional review. Chretien has said the same-sex legislation would not require religious groups to perform same-sex marriages.

Recent opinion polls have shown Canadians, known for their tolerant views, to be split on this issue, with younger people saying they are in favor of same-sex marriages and many older Canadians against them. Polls found that more people in urban areas favored same sex marriages than those in rural areas. Church leaders and conservative groups have protested in Ottawa against the change in the definition of marriage.

Roman Catholic bishops are collecting signatures urging the government to drop the issue entirely. "If marriage simply becomes a union of two persons who love each other, must we then permit marriage between a brother and a sister? Between a father and his daughter? Between a mother and her son?" said Cardinal Jean-Claude Turcotte, the archbishop of Montreal. Last week, the Canadian Conference of Bishops issued a pastoral letter saying the government must uphold the definition of marriage as a union between a man and a woman "to the exclusion of any other person." The conference said in the letter, "Such a fundamental change, we are profoundly convinced, will have a serious impact on society."

Last month, Fred Henry, a Roman Catholic bishop in Calgary, Alberta, said that Chretien was putting his eternal soul in jeopardy by advocating same-sex marriage. But Chretien said he was not in fear for is soul. "You know, I'm Catholic and I'm praying," Chretien told reporters. "But I'm the prime minister of Canada. When I'm the prime minister of Canada, I'm acting as a person responsible for the nation. And the problem of my religion, I'll deal with it in other circumstances."

Some members of Parliament have said they hope same-sex marriage will become an issue in the next federal election, which is expected to be called this spring. The motion introduced today demanded the government reaffirm that "marriage is and should remain a union between one man and one woman to the exclusion of all others." The Alliance motion is virtually identical to one introduced in 1999, which was supported overwhelmingly by Chretien's Liberals. But many Liberals said they were influenced by the court decision in Ontario, as well as similar rulings in British Columbia and Quebec.

Vic Toews, spokesman on judicial issues for the Canadian Alliance, said in the House of Commons today that the definition of marriage should not be left to the courts. "This is a complex matter," Toews said. "Send the hot potato back to Parliament and let members of Parliament stand up and make their money."

Paul Martin, considered front-runner to become prime minister when Chretien leaves office next year, said today that he favors allowing gays to marry. "This is an issue I had to wrestle with," Martin told reporters in Ottawa. "I don't believe the government can discriminate in terms of rights."

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