( This is the second of six posts examining the litigation communications strategies in the lawsuit challenging the $139.5 million paid by the New York Stock Exchange to its CEO, Richard Grasso, shortly before the NYSE Board asked for his resignation. The previous post can be found here.)Richard A. Grasso began working at the NYSE in 1968 as an $81.00-a-week union stock clerk. He worked his way up through the ranks to become the NYSE’s Chairman and Chief Executive Officer in 1995. Throughout Grasso’s tenure as CEO, the NYSE’s Board of Directors had a Compensation Committee that reviewed Grasso’s performance and set his annual compensation. From 1999 to 2003, the Committee was chaired by Kenneth G. Langone, a co-founder of The Home Depot and a member of the NYSE Board of Directors.
While Grasso was CEO of the NYSE, he executed employment agreements in 1995, 1999, and 2003. Each contract fixed Grasso’s annual salary at $1.4 million and permitted him to participate in various compensation and benefits programs designed to attract “world class talent” to the NYSE. These programs included: an incentive compensation plan (ICP), based upon the NYSE’s performance measured against certain targets (Grasso received a $13.6 million ICP award for 2000 and a $16.1 million ICP award for 2001); the capital accumulation plan (CAP), which entitled Grasso to a deferred award equal to 50% of his ICP award and which did not vest until May 2005; a long term incentive plan (LTIP), intended to reward NYSE executives if the NYSE achieved three-year performance targets (Grasso received LTIP awards for the three-year cycles ending in 1998, 1999, and 2000); the supplemental executive retirement plan (SERP), designed to provide a supplemental pension based upon compensation that exceeded federal pension limits (the size of Grasso’s compensation awards in 1999 through 2001 resulted in SERP accumulations of over $100 million); and a supplemental executive savings plan (SESP), which enabled NYSE executives to defer taxation on compensation that exceeded the federal limit on contributions to a 401(k) plan (the NYSE matched up to six percent of the executives’ base salary).
When Grasso signed his first contract in 1995, he received a lump sum payment of $6.6 million, and when he signed his second contract in 1999, he received a lump sum payment of $29 million. However, it was the lump sum payment pursuant to Grasso’s 2003 contract that caused the uproar that led to his termination and his depiction as a symbol of corporate greed. We will take a look at the 2003 contract and its aftermath next week.
While Grasso was CEO of the NYSE, he executed employment agreements in 1995, 1999, and 2003. Each contract fixed Grasso’s annual salary at $1.4 million and permitted him to participate in various compensation and benefits programs designed to attract “world class talent” to the NYSE. These programs included: an incentive compensation plan (ICP), based upon the NYSE’s performance measured against certain targets (Grasso received a $13.6 million ICP award for 2000 and a $16.1 million ICP award for 2001); the capital accumulation plan (CAP), which entitled Grasso to a deferred award equal to 50% of his ICP award and which did not vest until May 2005; a long term incentive plan (LTIP), intended to reward NYSE executives if the NYSE achieved three-year performance targets (Grasso received LTIP awards for the three-year cycles ending in 1998, 1999, and 2000); the supplemental executive retirement plan (SERP), designed to provide a supplemental pension based upon compensation that exceeded federal pension limits (the size of Grasso’s compensation awards in 1999 through 2001 resulted in SERP accumulations of over $100 million); and a supplemental executive savings plan (SESP), which enabled NYSE executives to defer taxation on compensation that exceeded the federal limit on contributions to a 401(k) plan (the NYSE matched up to six percent of the executives’ base salary).
When Grasso signed his first contract in 1995, he received a lump sum payment of $6.6 million, and when he signed his second contract in 1999, he received a lump sum payment of $29 million. However, it was the lump sum payment pursuant to Grasso’s 2003 contract that caused the uproar that led to his termination and his depiction as a symbol of corporate greed. We will take a look at the 2003 contract and its aftermath next week.
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