NYSE board names committee to search for Grasso replacement

NYSE board names committee to search for Grasso replacement

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NEW YORK - The New York Stock Exchange board named a committee to find its next leader and discussed ways to reform itself Friday, as it began to navigate life after Dick Grasso.

In its first order of business since forcing its chairman and chief executive to resign over a pay scandal, the board named Laurence Fink, CEO of investment group BlackRock Inc., to lead the search committee for Grasso's replacement. Fink did not immediately return calls seeking comment.

The NYSE's directors are considering sweeping changes following the uproar over Grasso's lavish compensation, including a proposal from one board member that calls for all brokerage industry insiders to step down from the board.

After declining $48 million in vested funds, Grasso departs with $139.5 million in accrued benefits and savings.

The NYSE board has come under fire for approving the original $187.5 million pay package and is under pressure from its membership and federal regulators to revamp its practices. Half the seats on the board are held by top executives of investment banks and brokerage firms - the very businesses the NYSE is supposed to monitor and regulate for fraud.

To address the conflict of interest concerns, Goldman Sachs CEO Henry M. Paulson Jr. has suggested that those affiliated with regulated companies eventually be excluded from the board so it could consist entirely of independent directors. A Goldman spokesman said Paulson has discussed the idea several times with other directors.

Paulson's plan envisions an advisory panel composed of securities firm executives and other members who hold seats on the trading floor, so the owners of the exchange would still have a voice.

It was unclear how much support the plan had among other investment banking executives.

There have been several calls for seats to be set aside for institutional investors, including large public pension funds. The California Public Employees' Retirement System, the nation's largest pension fund, called Thursday for the NYSE to trim the 27-member board and allot more seats to investors outside the securities industry.

Friday's meeting was the first time the board had convened formally since Wednesday when it asked Grasso to resign as public fury swelled over his multimillion dollar payout.

Copyright 2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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