Now, alas, it’s beginning to look like our odd couple may have a fourth thing in common: they seem to have lost their touch. MJ’s abortive comeback with the Washington Wizards was, to be polite, an embarrassment. And Grasso seems to have turned overnight from Mr. PR to Mr. Clueless. This is the man who turned the exchange’s opening bell into MTV happenings, who attracted the likes of Spider-Man to the corner of Broad and Wall streets to mark the start of trading of Marvel Entertainment. But now Grasso, one of the few Wall Streeters willing to inveigh publicly against corporate greed, looks more like a greedhead with each passing day.
He acted like a deer in the headlights when the perfectly predictable uproar started over the $140 million he took earlier this month for his accrued pension accounts and other benefits. When he reacted to the uproar by giving up the rights to $24 million he’d earned but not taken–and walked away from another $24 million that he stood to get–he looked guilty rather than generous. He keeps saying he’s put matters behind him, but he hasn’t. Corporate reformers are beating up on him. Even the image-challenged Securities and Exchange Commission is managing to make itself look tough by punching his lights out.
Ironically, Grasso’s problem is one that he helped create. Last year, when most CEOs cowered in their lavish offices waiting for the uproar over corporate misconduct to abate, Grasso was out pushing corporations to become more accountable.
Last year the exchange forced companies with shares traded on the NYSE to hew to a variety of “good corporate governance” policies. This spring the exchange decided it had to practice what it was preaching, and chose, among other things, to disclose the total compensation of its five highest-paid officers. Companies with publicly traded stock have had to do this for decades; the NYSE, as a private company, had never disclosed executive pay.
Meanwhile, Grasso, 57, and the Stock Exchange board decided after a year of negotiations to tear up his old employment contract, due to expire in 2005, and sign a new one expiring in 2007. As part of the deal, Grasso got the right to immediately take out his 35 years’ worth of retirement savings, deferred compensation and all the investment profits those accounts have earned. Otherwise, he’d have had to wait until his contract ended. So Grasso got a $139.6 million payout, which he said he wanted for estate-planning purposes.
In an interview, Grasso told me he knew that under the exchange’s new “transparency” policy his big payday would become public. And he agreed with the board’s compensation committee to disclose the news immediately rather than waiting for it to leak out. Anyone who’s taken PR 101 would know the uproar that lay ahead–but Grasso seems to have been blindsided when the trouble started. “You tell me why people keep writing the same story over and over again,” he said.
To be sure, the accounts’ existence would have become known even if Grasso hadn’t taken them in cash. Disclosures in the NYSE’s 2003 annual report would have made it clear that such accounts existed, and given sharp-eyed readers a good idea what the accounts were worth. But it would have been a lot easier to defend all that money as the fruits of 35 years of retirement earnings and deferred bonuses–which it is–than to defend getting one big check. It just looks so piggish. And with many NYSE members still hurting, big time, from the slump in business, there’s a rebellion underway that may cost Grasso his job.
Grasso said he had no intention of quitting. “I look forward to scoring points the next four years.” When I asked him if, like Jordan, he’d lost his touch, he said, “Only the next four years will answer that question.”
Sure, the game’s not over yet. But Grasso’s been shooting plenty of air balls lately. If he’s got a second wind, it’s time for a slam dunk that will dazzle us all. If he can’t deliver, his big payday’s gonna get him run out of the gym.