Tuesday, September 23, 2003

NYSE's interim leader no stranger to board politics

By Meg Richards
The Associated Press

NEW YORK - With an interim leader picked at the New York Stock Exchange, attention is turning to the board that approved ousted chairman Dick Grasso's lavish compensation in the first place.

Interim chairman John S. Reed knows well the subtle influences and connections that can exist among directors; in 2000, those forces may have cost him the job he shared with Sandy Weill at the head of Citigroup Inc. following the bank's merger with Travelers Group.

Respected as a senior statesman in the financial services industry and credited with revamping Citi's commercial bank, observers consider Reed a strong choice to reshape the NYSE's board and reform its governance.

"John Reed lost the battle to Sandy Weill, so he's not going to let these people step on him or push him aside," said Muriel Siebert, a seat holder since 1968 who runs a discount brokerage. "He's not going to be railroaded."

The irony of the choice has not been lost on many: It was Grasso's effort to bring Weill onto the board in a public interest capacity earlier this year that prompted regulators to look more closely at the exchange. "I think, in a way, whoever thought of it had a lovely little dirty mind," Siebert said.

Named to the post Sunday, Reed is expected to formally start work Sept. 30, after he returns from a vacation in France. NYSE officials said Monday that he has been in touch by phone with co-chief operating officers Robert Britz and Catherine Kinney about the day-to-day operations.

In the first departures since Grasso resigned, the NYSE said two executive vice presidents would retire in the coming days. Salvatore Pallante, who was in charge of member-firm regulation, and Frank Ashen, who was responsible for the human resources department, will leave at the end of the month. Pallante, 57, had planned to retire for some time. Ashen, 59, was not immediately available for comment.

The NYSE board's special committee on governance is to issue a report on Oct. 2 recommending reforms, including how top executives should be compensated, how the board should be structured and how the exchange itself should be owned. A big question is whether the reshaped NYSE will retain its regulatory function; many have suggested it should be independent from the business.

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