KING OF THE CLUB: RICHARD GRASSO AND THE SURVIVAL OF THE NEW YORK STOCK EXCHANGE
By Charles Gasparino
Collins, 400 pages, $27.95
In the fall of 2002, Kenneth Langone, co-founder of Home Depot and head of the compensation committee of the New York Stock Exchange, proposed extending the contract of N.Y.S.E. chairman Richard Grasso. In addition to a $30 million salary, the new agreement gave Mr. Grasso immediate access to more than $120 million in his retirement account. “I got a question,” board member James Cayne, the CEO of Bear Stearns, asked, incredulously. “Where’s the decimal point?”
“When this gets out,” Mr. Cayne predicted, “there’s going to be trouble.” He was right: At the time, the exchange was a nonprofit corporation; state law therefore required that compensation of the top executives be “reasonable and commensurate with duties performed.” Amid a public scandal over the pay package, Mr. Grasso was forced out as chairman in 2003; he became a poster boy for corporate greed.
In King of the Club, Charles Gasparino, a correspondent for CNBC and former reporter for The Wall Street Journal, traces the rise and fall of “The Little Guy in the Dark Suit.” Bent on the rehabilitation and perhaps even resurrection of his subject, Mr. Gasparino relies on interviews with Mr. Grasso and his partisans on the board—and some special pleading—to generate sympathy for the man who “grew the brand like no one before him.”
Mr. Gasparino’s Grasso is not without faults. Autocratic and vengeful, he’s often oblivious to the public relations implications of his actions. Nonetheless, the author suggests that Mr. Grasso was the greatest chairman the Big Board ever had, a supersalesman who raided the Nasdaq for listings and engineered the reopening of the market after Sept. 11, 2001.
Mr. Gasparino’s assessment of Mr. Grasso’s record as chairman sometimes strains credulity. The impressive number of new listings in the 1990’s, he acknowledges, “was a function of the booming economy, particularly for IPOs.” But were Wayne Huizenga and H. Ross Perot really just putty in his hands? Were Mr. Grasso’s enemies, William Donaldson, his predecessor as chairman at the exchange, and Henry Paulson, the CEO at Goldman Sachs, an “empty suit” and a “snake”? Does electronic trading really benefit institutional investors at the expense of small investors—or was Mr. Grasso actually engaged in a rear-guard action to protect his cronies on the floor? Wasn’t Mr. Grasso a reluctant regulator who dragged his feet for fear of delegitimizing the system he was selling to his customers as the most reliable market in the world?
When it suits his purposes, Mr. Gasparino asserts that Mr. Grasso called the shots with the N.Y.S.E.’s board of directors. But regarding his own compensation, his Grasso is Hamlet, deciding not to go ahead, then reversing course when his lawyer, Martin Lipton, and Gerald Levin, former CEO of AOL Time Warner and an N.Y.S.E. board member, told him to take the money.
More and more securities traders, Mr. Gasparino reports, now support Mr. Grasso’s suit to recover every dime of his pay package. Meanwhile, the pint-size showman with the shaved head is preparing to stage a comeback. The king is dead, long live the king.
Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University.