By the beginning of 2001 it was evident the collapse of the NASDAQ was continuing from the previous year. Abuse of analyst coverage came under scrutiny and corporate governance and enforcement begins to take center stage. On September 11, 2001 tragedy strikes and the NYSE closes. But 6 days later, under the leadership of Grasso, the NYSE reopens to much fanfare. Opening the New York Stock Exchange just days after 9/11 was one of the first steps toward rebuilding the financial community. Dick Grasso was celebrated for getting the New York Stock Exchange up and running almost immediately after the attacks of September 11. This year Grasso makes $30 million dollars and is a possible successor to outgoing Treasury Secretary Paul O’Neill. This could well be the beginning of a healthy, strong ego, which enabled Grasso to be a high achiever, turning into a negative, overly narcissistic leader. At the end of 2002, the NYSE wielded perhaps the strongest brand equity to date. In October 2002, as a condition of new contract negotiations, Grasso proposes taking $51 million of deferred earnings from his previous contract and depositing it into his retirement savings account. New compensation committee members vote to retain outside consultant to evaluate the proposal and deferred decision on the plan. Then, in January 2003 Grasso announces he is changing his contract proposal and wants a cash payment of his accrued retirement in the amount of $130 million. In February 2003, when Dick Grasso is appointed to the board of Home Depot Inc., along with his board membership of Computer Associates Inc., the move is criticized as a potential conflict of interest as both companies are listed on the NYSE. (NYSE’s Grasso remains under the gun, 2003). Grasso defended his role as director, noting it helped him “gain perspective on our listed companies.” (Keenan, 2003) This is a good example of narcissistic behavior in Grasso sense of immunity to consequence, manipulation of the environment for personal gain, and an inability to consider the needs of others. "Narcissism gives people a sense that they can do no wrong – it leads to a very narrow view of the world that starts to justify things for the individual, at the expense of other people." (Effective Leadership: What's Wrong with Narcissism?, 2011) On March 23, 2003, the NYSE announced its intention of naming Citigroup Chairman and Chief Executive Sanford Weill to the Board as a public director. The Exchange was publicly criticized for naming a CEO whose brokerage firm (Salomon Smith Barney) was part of a Wall Street research analyst scandal. Two days later, the nomination was withdrawn. It’s clear the view of ethical corporate governance is becoming a clear issue in the eyes of the public and those companies that empathize with sentiment are reacting in a positive way. If Grasso would have been emotionally intelligent, which evidently is not a narcissistic trait, he would have seen the signs of the changing times. On March 26, 2003, SEC Chairman William Donaldson sent a letter to all Self-regulating Organizations regarding corporate governance issues. (Statement by SEC Chairman: Letter to NYSE Regarding NYSE Executive Compensation, 2003) In the letter, the Chairman requests a review of the corporate governance of the NYSE, in a reply due May 15, 2003. On April 17, 2003, the Wall Street Journal broke a story stating the NYSE was investigating front-running on its trading floor, which is a federal offense. In response, the NYSE released a statement indicating that the investigation was regarding treading “ahead” of investors, not front-running. Although the front-running part of the story was inaccurate, the Wall Street Journal’s attention to the issue forced the NYSE to reveal information regarding its investigation of possible specialist violations. This announcement triggered criticism of the NYSE trading model. (Burkowitz, 2003) On May 7, 2003, the Wall Street...
Please join StudyMode to read the full document