Reed Considered Past Pay of Board Nominees
John S. Reed, interim chairman of the New York Stock Exchange, said he kept a close eye on past pay when deciding whom to nominate as independent directors of the NYSE.
That’s no surprise, given that his predecessor Richard Grasso’s ouster was triggered in part by revelations about exorbitant salary and benefits.
“I avoided people who had been highly compensated as CEOs,” Reed said at a news conference Wednesday. “Clearly they were well compensated, but I avoided people who appeared to have a high-compensation profile, for obvious reasons.”
However, high compensation -- or high-profile compensation -- is a relative term, said Paul Hodgson, senior research associate at the Corporate Library, a corporate governance Web site.
Reed himself earned $300 million in his final year as chief executive of Citigroup Inc., largely by exercising stock options, Hodgson noted.
Past salary data were not readily available for three of Reed’s nominees: Madeleine K. Albright, a current NYSE director and secretary of State in the Clinton administration; James S. McDonald, president of the private Rockefeller & Co.; and Dennis Weatherstone, a former chairman of J.P. Morgan & Co. who has served on the board of the Financial Services Authority in England.
Hodgson was able to compile pay information about the five other nominees from government filings:
* Herbert M. Allison Jr., another current NYSE board member, has been president and chief executive of pension plan giant TIAA-CREF for too short a time -- since November 2002 -- to have disclosed his salary there. In 1999, his final year at brokerage firm Merrill Lynch & Co., where he was president and chief operating officer, he earned $5 million in salary and departed with vested stock options worth $76 million, Hodgson said.
* Euan Baird, chairman of aircraft engine maker Rolls-Royce, retired from oil services company Schlumberger Ltd. in 2002. That year, he earned about $15.8 million. In his current post, he takes home about $400,000 annually.
* Marshall N. Carter, who retired as chairman of institutional investment services firm State Street Corp. in 2001, took home slightly more than $31 million that year, Hodgson said. He also retired with vested stock options worth $14.5 million.
* Shirley Ann Jackson, president of Rensselaer Polytechnic Institute, serves on eight public company boards and 12 noncorporate boards. Although her salary at the university and on the noncorporate boards was unavailable, Hodgson estimated that she earned at least $1.1 million in director fees from the public companies.
* Robert B. Shapiro, former CEO of Monsanto Co. and former chairman of Pharmacia Corp., received a severance package worth about $14 million in 2001 after the companies merged. He is earning $480,000 annually from his former employer as a consultant through year-end and gets a pension of $1 million a year.
