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July 20, 2005
More on the NYSE's failed corporate governance
In what cannot be construed as an endorsment of the oversight abilities of some of the most prominent business executives in the country, this Wall Street Journal ($) article reports that nine of the 12 New York Stock Exchange directors who served on the board's compensation committee in 2001-2002 admit in Eliot Spitzer's lawsuit against former NYSE Chairman and Chief Executive Officer Dick Grasso that they did not understand until later the extent to which the big pay raises awarded to Mr. Grasso would cause his retirement benefits to increase to the extent that they did.
Which begs the question: Why is Mr. Grasso the one being sued here rather than the admittedly negligent NYSE board members?
This free Newsweek article addresses essentially the same subject matter, and here are the previous posts on Mr. Spitzer's lawsuit against Mr. Grasso.
At any rate, Mr. Spitzer's lawsuit against Mr. Grasso is really just a publicity vehicle for his gubernatorial campaign and not likely to lead to a solution for the real problem, which is the NYSE's failed corporate governance. For competing views on what it will take to address that problem, see these earlier posts from Professor Bainbridge and Professor Ribstein.
Posted by Tom at July 20, 2005 05:26 AM
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