Pressure grows for Grasso's scalp

THE chief executive of the New York Stock Exchange is coming under increasing pressure to quit, with more members calling for him to go.

Board directors have organised a special meeting and leading institutional investors are voicing concerns privately that the NYSE's reputation can be restored only if Richard Grasso departs.

The anger over Grasso's near-$200m (£130m) pay package has intensified within the Exchange over the past few days.

Two petitions are circulating at the NYSE proposing to call a meeting of members that would make radical changes to the board. Each petition claims support from around 200 members, though only 175 names are required to call a meeting. The Exchange has 1366 members.

One member, Bernard Herold, said: 'Grasso should go because he is overpaid. He represents greed. He is putting a sign on the Exchange that we are as greedy as Enron and all the other guys who robbed the public.'

The chief executive and managing director of LaBranche & Co, the Exchange's largest specialist stock trading firm, have also called for his resignation. The firm was recently fined $150,000 by the Exchange for not co-operating with an investigation into alleged trading abuses.

Grasso has said he has no intention of stepping down before his contract ends in May 2007.

His support from the NYSE board may also be weakening as three directors scheduled a meeting for Thursday to 'judge the sentiment of the floor'.

It has also emerged that Grasso's decision to pass up an additional $48m payment was forced on him by directors who claimed they had not until then understood how his pay contract worked.

Meanwhile, the Exchange is awaiting the judgment of Securities and Exchange Commission chairman William Donaldson after the SEC last week demanded details of Grasso's pay deal.

The row is likely to affect the SEC's thinking on the governance of the NYSE and its role as a market regulator. The SEC is preparing a report for later this year.