NYSE director resigns position

Friday, September 26, 2003

NEW YORK -- H. Carl McCall resigned Thursday from the New York Stock Exchange board, the first director to leave since chairman and chief executive Dick Grasso was ousted a week ago because of public outrage over his lavish pay.

In a letter to interim chairman John Reed, McCall said he hoped the exchange could "move forward without being encumbered by the past." He said his resignation would take effect Monday.

An uproar over a nine-figure pay package obliged Grasso to resign Sept. 17, and changes in the board that approved his compensation had been expected.

McCall had been the public face of the board as the controversy grew and was made lead director when Grasso left.

"I've done the job, the job has been done well and it's time to move on," McCall said Thursday evening in an interview on the New York cable news station NY1.

"I want to make it very clear to everybody that John Reed will have an opportunity to do what's necessary to bring about needed reforms at the exchange," McCall said. "I don't want anybody in the way that represents the past or gives the impression that we're still trying to do business as usual."

It was not clear whether other directors would follow McCall's lead, though dramatic changes seem inevitable for the NYSE board. About half of the board's 27 seats are filled by executives of large investment banks, floor trading firms and brokerage houses -- the very businesses the NYSE is charged with regulating.

The NYSE, a not-for-profit organization owned by members who hold seats on its trading floor, is charged with monitoring and disciplining the brokerage industry.

A former Democratic New York state comptroller who made an unsuccessful run for governor last year, McCall said he been unaware of important details of Grasso's $139.5 million payout of accumulated benefits and other savings and an additional $48 million that Grasso said he would forgo.

McCall, an NYSE board member since June 1999, had been chairman of the board's compensation committee since June, when it was revamped to include only independent directors. The bulk of Grasso's pay had been in place well before then, getting approval by the board in May 1999.

Sean Harrigan, president of the California Public Employees' Retirement System, said he was surprised by the resignation, which came a day after Harrigan spoke before McCall's special committee on governance.

"We felt based on the meeting yesterday and the conversations we had privately ... that he was the one board member who really did get it and understood the importance of transparency and having significant representation from members who are truly independent," Harrigan said.

In the two-page letter to Reed, a former Citigroup co-chief executive who was named Sunday to temporarily lead the exchange, McCall said he had tried to provide leadership during the crisis.

McCall said he would stay through the end of business Monday so he could preside over a meeting where directors would hear public testimony and consider recommendations on how to improve the NYSE. Later that evening, he said he planned to present the recommendations to Reed.

He said he hoped the exchange's board would be changed to include greater representation of the investing public and require annual election of directors. He also suggested the directors think about separating the regulatory and trading functions of the NYSE.

McCall said only independent directors should be on the human resources and compensation committees, and the exchange should disclose details about the compensation for the top five executives.

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