"The Board is very pleased that Dick Grasso will remain Chairman and CEO at least through May 2007," said H. Carl McCall, Chairman of the NYSE Human Resources and Compensation Committee. "Under Dick's leadership, the NYSE has experienced tremendous growth and success. It has added 1549 of its 2800 listed companies, including most of our nearly 500 non-U.S. companies. During this period the market capitalization of the companies listed on the NYSE has more than doubled to $14.8 trillion. In the process, Dick revolutionized the Exchange's technological platform, making it the most efficient and sophisticated in the industry. The value of a seat on the exchange has nearly tripled during his tenure. And throughout his term, Dick has shown an unwavering commitment to regulation and the interests of America's 85 million investors. From his commitment to technology and innovation, which has made the NYSE the world's most efficient and reliable equities market, to leading the securities industry out of the tragedy of 9/11, to his unwavering commitment to investor protection, Dick's leadership has been outstanding."
The new employment agreement provides for Mr. Grasso to continue to serve as the Chief Executive Officer and Chairman of the Board for a term ending on May 31, 2007, two years beyond the term of his prior employment agreement that was entered into in 1999. The agreement provides for the same base salary of $1,400,000 and target annual bonus of at least $1,000,000 as his prior employment agreement. As part of his new contract, the NYSE restructured the deferred compensation and savings and retirement plan benefits previously earned by Mr. Grasso, particularly over the past 20 years since his appointment in 1983 as Executive Vice President, Marketing and member of the Management Committee; in 1988 as President, and subsequently in 1995 as Chairman of the NYSE, and made lump sum distributions to him of his vested account balances. The NYSE for many years has maintained several deferred compensation, retirement and savings plans for its executives, including a Supplemental Executive Retirement Plan ("SERP") to supplement benefits under the NYSE Retirement Plan, and a Supplemental Executive Savings Plan ("SESP") to provide the executives with the ability to supplement the NYSE Savings Plan and to defer and invest additional compensation. The NYSE distributed to Mr. Grasso his savings account balance of $40.0 million, his previously accrued retirement benefit of $51.6 million and his previously earned account balance of $47.9 million relating to prior incentive awards.
"I am honored that the Board has asked me to stay on as Chairman," said Mr. Grasso. "For 36 years, I have worked alongside a talented group of 1500 partners here at the NYSE, and I am privileged to continue leading this extraordinarily committed group. They, along with our 2800 listed companies, 260 financial services firms and 1366 members, have made the NYSE the greatest market on earth for more than 85 million investors.
"At this time, I thought it advisable in order to facilitate personal financial and estate planning to withdraw my accumulated deferred compensation, savings and retirement benefits, which are subject to full income taxes, and pay the taxes at this time."
"When Dick Grasso became President in 1988, the NYSE was coping with the market crash of the previous year, the insider trading scandals were still before us, and we were just beginning to get a glimpse of the competitive pressures that were coming," Mr. McCall added. "Additionally, over these years, the NYSE has contended with a growing number of competitive entrants in the marketplace. Under Dick's leadership, as President and then as Chairman, the NYSE has met all of these challenges and many more.
"Most recently, the Exchange has been at the forefront of outlining and spearheading corporate governance reform. It is in that spirit that the Board will undertake an annual review of executive compensation and annually disclose, as previously announced, the compensation of the Exchange's five highest paid executives. It is also why we have decided to make this announcement today regarding the details of Dick's new contract. We look forward to his leadership for another four years."
