Grasso in line for extra NYSE £35m

NEW York Stock Exchange chief Richard Grasso could leave the job with as much as $57m (£35.2m) on top of the controversial $140m pay package that led to his resignation.

His contract says that if the board forced him out 'without cause' he is entitled to four years' worth of salary and bonuses worth $9m plus the $48m in bonuses he waived in an attempt to save his job.

While Grasso decides whether to pursue a pay claim through the courts, the NYSE board has arranged a hasty meeting for Friday in an effort to restore the Big Board's credibility and to find a replacement for Grasso.

But that may not be enough to satisfy regulators clamouring to take over regulation of the secretive organisation and more heads may roll as the focus shifts to the role played by the board in the Grasso fiasco.

The Exchange was already in the sights of Securities and Exchange Commission chairman William Donaldson for potential conflicts of interest arising from its dual role as regulator and representative of its member firms.

'In my view the approval of Mr Grasso's pay package raises serious questions regarding the effectiveness of the NYSE's current-governance structure,' Donaldson has told the Exchange in a letter.

He has also been highly critical of what he says are outdated trading systems in use at the NYSE and a lack of proper representation for its members and greatest users.

One of the biggest changes to come out of Grasso's departure may be more electronic automation for the Exchange, which is one of the few major stock markets in the world still using a physical trading floor instead of a purely electronic network.

Meanwhile, the NYSE board was in damage-limitation mode. Carl McCall, who has been appointed leading director by the board in the absence of a chief executive, was quick to outline plans to speed up the process of strengthening and reforming the way the Exchange is run.

He says that a report on governance reforms scheduled for consideration early next month, will now be put to the board immediately before being presented to the Securities and Exchange Commission.

So far there is little indication as to who may be in line for the top job, although several prominent potential candidates have already ruled themselves out.

They include Robert Rubin, former US Treasury Secretary, and Larry Sonsini, one of Silicon Valley's most powerful lawyers.