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NYSE's lead director resigns

H. Carl McCall, who helped guide the New York Stock Exchange during the uproar over Richard A. Grasso's vast compensation, resigned late yesterday from the NYSE board of directors.

In a letter to interim Chairman John S. Reed, who was appointed Sunday, McCall said he resigned "to ensure that you - and the NYSE - can move forward without being encumbered by the past."

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In an interview with Bloomberg News, McCall said he was not asked to resign and did not do so because of the public furor surrounding Grasso's pay package. "It was my own decision," he said. "I've done my job."

McCall has been the board's lead director since then-chief executive Grasso resigned last week. For months, McCall has been a leader of efforts to reform the exchange's governance, but it proved too little, too late for many critics.

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His resignation is effective Monday, after he presents Reed with additional recommendations on the exchange's governance.

In his letter to Reed, McCall offered a preview, saying it was his "personal hope" the plan will address seven points, including greater investor representation on the board and its governance panel, a revamped nominating committee of independent directors, a move to separate the NYSE's trading and regulatory functions, and compensation standards based on "appropriate industry comparisons."

All have been sought by various institutional investors and other governance experts in the wake of the Grasso affair.

Many experts also have urged the exchange to reduce the size of its board considerably from 27 directors, including one vacant seat, so McCall's resignation may well not be the last.

Sarah Teslik, executive director of the Council of Institutional Investors, said all but a handful of the other NYSE directors also should resign, particularly those who had been on the board for more than three years, Reuters reported.

"It's a good thing, and it was the right thing to do," she said of McCall's resignation, Reuters reported. "There needs to be turnover on the board, and McCall - even though he did help Grasso resign in the last couple of days - had been a strong supporter of his, and particularly of his pay, for a long enough period of time that as long as he stayed, he was an issue. The NYSE has enough issues without having any other lightning rods available for criticism."

McCall, a former New York state comptroller who lost a gubernatorial bid last year, had played an increasingly prominent role on the embattled board in recent months. He was co-chair of a committee appointed to map out new governance standards for firms listed on the exchange in the wake of Enron and other corporate scandals. He also co-chaired a special panel that made recommendations to enhance the exchange's own governance, including disclosing Grasso's pay for the first time, and then took over as head of its compensation committee earlier this year.

A NYSE spokeswoman said yesterday that it was unclear whether McCall might continue as chairman of the special governance committee, or what its status would be once it issues its new report.

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The panel's other co-chair, former Clinton White House chief of staff Leon E. Panetta, stayed after leaving the board this year, and McCall's letter said he looked forward "to continued work with the committee."

In the past month, McCall has been front and center in the maelstrom over Grasso's compensation.

He was charged with disclosing that Grasso had accumulated his now-famous $140 million payout, plus another $48 million that he relinquished, and was responsible for responding to a series of pointed questions on the issue from Securities and Exchange Commission Chairman William H. Donaldson.

On Wednesday, McCall met with several state treasurers and representatives from giant public pension funds seeking reforms in the exchange's governance.

McCall provided the board's public face in the controversy, even though he wasn't a key player in its genesis. He was not on the compensation committee as Grasso's pay soared from $3 million in 1996, Grasso's first full year on the job, to more than $20 million in both 2000 and 2001, amid a brutal market downturn.

In those latter years, the committee was chaired by Grasso's friend, Kenneth Langone. Their connections - including service on the board of Home Depot Inc., which Langone co-founded, and New York University's board of trustees - came under scrutiny in the wake of the uproar over Grasso's pay.

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Exchange documents also revealed that during Langone's tenure on the compensation panel, the NYSE and its foundation made hundreds of thousands of dollars in contributions to organizations affiliated with Langone.

The Chicago Tribune is a Tribune Publishing newspaper.


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