| Poor Boy |
29 December 2003
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NYSE Wants its Money Back
The New York Stock Exchange wants its former chief, John Grasso, to give back some $50 million that it paid him. He says he's entitled to more. Normally, one has little patience with greedy business types. Here, though, the NYSE needs to admit it screwed up and pay the price.
The demand for the money stems from the belief that performance and pay should be linked. And one cannot think of a single reason why it should not be so linked. If a $7 per hour worker can lose his or her job for making a costly mistake, why should a $700,000 a year suit get a huge bonus for making a truly boneheaded blunder?
Business, however, is also about making deals. If one makes a bad deal, there is very little sympathy or recourse. This is particularly true on Wall Street, where every fortune rests on someone else having lost money. Bought Enron at the top? Too bad.
So, why does the exchange think it's entitled to a penny back? Mr. Grasso may have been greedy, and he may even have done a poor job (although that is a matter for debate), but the NYSE Board of Directors approved of his compensation. Although he appointed them, the shareholders are the ones who let him do it. And now they want their money back.
Caveat emptor is an apt concept for Wall Street. Let the buyer beware. And when one is buying the skills of a business strategist, or whatever Mr. Grasso is, then one ought to make sure that the compensation package actually requires results.
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