It’s easy to feel contempt for Dick Grasso, former CEO of the New York Stock Exchange.
Grasso’s $187 million pay package at the exchange came under attack in the media and by New York Attorney General Eliot Spitzer in a suit against the CEO, the exchange and its board. The bottom line, according to many, is that Grasso made too much money.
It’s more complicated than that, certainly. Among the allegations were that some of the details of Grasso’s pay package were withheld from some stock exchange board members. If true, that would be the most serious violation, not the fact that Grasso earned enough to wear $2,000 cufflinks and Cartier watches.
Even without some of the alleged hidden features of his comp package, Grasso’s pay would have been more than the total revenues of some pretty good Pittsburgh companies. The underlying issues, it seems, are how much pay is too much, and what are a person’s skills worth?
The easy answer, of course, is that the marketplace decides. As a wage earner — and in a broad sense, Grasso falls into that category — you’re worth what someone is willing to pay you. As an entrepreneur, in theory, anyway, you’re worth whatever you can manage to produce from your investment, your sweat and your skill, with a little luck thrown in.
Compensation isn’t always measured in dollars, certainly, and that brings to the fore what Spitzer’s long-term plan for his own career might be. Some have questioned his motives in his aggressive prosecution of high-profile alleged corporate wrongdoers, suggesting that he has aspirations for higher office and is seeking only to burnish his reputation in preparation for a bid for a better position.
The legal system will sort out the inconsistencies between Grasso’s version of events, the NYSE’s side of the story and that of the aggrieved board members who say they didn’t get all of the details. In the process, they’ll likely decide whether Grasso really deserved that kind of pay package, and maybe boards of all kinds will be chastened to take a closer look at the finer details of their top executives’ paychecks.
Should Spitzer opt to make a bid for higher office, the voters, who form another kind of marketplace, will decide whether they think he’s worth the price and get a chance to find out for sure.
