Here's a story from USA Today that points out how the NYSE's board is comprised of some members that are from companies that are regulated by the board. That's like the fox guarding the henhouse.
NYSE's board is about to change
By Thor Valdmanis and Greg Farrell, USA TODAY
NEW YORK — Embattled New York Stock Exchange directors attend their first full meeting in the post-Grasso era Friday knowing that their days on the board are numbered.
Under a reform plan being pushed by prominent board member and Goldman Sachs CEO Henry Paulson, the dozen Wall Street executives on the exchange's 25-member board will step down before the end of the year, people with knowledge of the situation say.
The mass exodus, which will be discussed at today's meeting, is aimed at addressing one of the key flaws in the NYSE's governance structure: the fact that market participants serve on the board of an institution that is supposed to regulate them.
The change would be the biggest boardroom shake-up in the exchange's 211-year history and potentially give smaller investors a bigger voice in running the NYSE.
It would also rid the board of directors, such as Kenneth Langone of Invemed Associates, who were instrumental in approving Richard Grasso's $140 million pay package. Grasso was forced to resign at an emergency board meeting Wednesday as he faced a flood of criticism over his lavish compensation.
The NYSE board, under enormous pressure to restore investor confidence in the world's largest stock exchange, has also narrowed its search for an interim successor to Grasso and could announce an outside appointment as early as today, people close to the board say.
Proponents of the radical plan to overhaul the board hope it will restore faith in the NYSE as a regulator and give smaller investors a larger role in decision-making as financial chiefs such as James Cayne of Bear Stearns and William Harrison of J.P. Morgan Chase step aside to make way for independent directors.
The NYSE tried to present a new face Thursday. The board's lead director and designated spokesman, H. Carl McCall, held a press conference in which he introduced Grasso's two top lieutenants — Robert Britz and Catherine Kinney. McCall also pledged that the NYSE board was committed to internal reform and would present its list of corporate governance improvements on Oct. 2.
"From today on, the New York Stock Exchange will operate differently," said McCall, adding that the special committee conducting an internal review of the NYSE's governance will consider broad changes, including splitting the role of chairman and CEO, changing the structure of its board and altering its ownership structure. McCall also met with floor traders Thursday to hear their concerns.
To some critics, the firestorm surrounding Grasso's pay package is a distraction from other issues that the NYSE needs to tackle.
"At a bare minimum, the self-regulatory function needs to come to an end," says Ken Morris, a former trader at Morgan Stanley. "If they really want to put this to rest, they need to go and conduct an audit of the system."
NYSE's board is about to change
By Thor Valdmanis and Greg Farrell, USA TODAY
NEW YORK — Embattled New York Stock Exchange directors attend their first full meeting in the post-Grasso era Friday knowing that their days on the board are numbered.
Under a reform plan being pushed by prominent board member and Goldman Sachs CEO Henry Paulson, the dozen Wall Street executives on the exchange's 25-member board will step down before the end of the year, people with knowledge of the situation say.
The mass exodus, which will be discussed at today's meeting, is aimed at addressing one of the key flaws in the NYSE's governance structure: the fact that market participants serve on the board of an institution that is supposed to regulate them.
The change would be the biggest boardroom shake-up in the exchange's 211-year history and potentially give smaller investors a bigger voice in running the NYSE.
It would also rid the board of directors, such as Kenneth Langone of Invemed Associates, who were instrumental in approving Richard Grasso's $140 million pay package. Grasso was forced to resign at an emergency board meeting Wednesday as he faced a flood of criticism over his lavish compensation.
The NYSE board, under enormous pressure to restore investor confidence in the world's largest stock exchange, has also narrowed its search for an interim successor to Grasso and could announce an outside appointment as early as today, people close to the board say.
Proponents of the radical plan to overhaul the board hope it will restore faith in the NYSE as a regulator and give smaller investors a larger role in decision-making as financial chiefs such as James Cayne of Bear Stearns and William Harrison of J.P. Morgan Chase step aside to make way for independent directors.
The NYSE tried to present a new face Thursday. The board's lead director and designated spokesman, H. Carl McCall, held a press conference in which he introduced Grasso's two top lieutenants — Robert Britz and Catherine Kinney. McCall also pledged that the NYSE board was committed to internal reform and would present its list of corporate governance improvements on Oct. 2.
"From today on, the New York Stock Exchange will operate differently," said McCall, adding that the special committee conducting an internal review of the NYSE's governance will consider broad changes, including splitting the role of chairman and CEO, changing the structure of its board and altering its ownership structure. McCall also met with floor traders Thursday to hear their concerns.
To some critics, the firestorm surrounding Grasso's pay package is a distraction from other issues that the NYSE needs to tackle.
"At a bare minimum, the self-regulatory function needs to come to an end," says Ken Morris, a former trader at Morgan Stanley. "If they really want to put this to rest, they need to go and conduct an audit of the system."
