The New York Stock Exchange's embattled board of directors could soon be very different -- and much smaller -- if a group of influential state officials get their way.
The officials, who played a key role in knocking Richard Grasso off his perch at the top of the exchange last week, proposed an array of reforms for the exchange on Wednesday, with New York Comptroller Alan Hevesi leading the charge for the board to get much slimmer.
In a drive led by Hevesi, California Treasurer Phil Angelides and North Carolina Treasurer Richard Moore, the group -- which is responsible for nearly US$600 billion of public pension funds -- prescribed a massive overhaul at the exchange.
The state officials called on the exchange to shrink the size of its 27-member board, allow greater investor participation on the board, separate the exchange's regulatory and business arms, submit to an independent review and separate the positions of chief executive and chairman.
The group met with NYSE directors on Wednesday morning and presented its views in a report titled Restoring the Public's Trust in the New York Stock Exchange.
Grasso quit last week in the wake of a firestorm of criticism over his US$140 million compensation package.
On Wednesday, Angelides said Grasso should give some of the money back.
"We sent a clear message that it's time to clear the air and restore the credibility of the New York Stock Exchange," Angelides told a news conference after meeting with 11 of the Big Board's directors.
"The saga of Richard Grasso is more than one man ... It is also about the breakdown of accountability by the New York Stock Exchange," he said.
Without specifying an amount, Angelides said Grasso's pay should be revised to reflect a level that was "rational and appropriate."
Hevesi was particularly critical of former Securities and Exchange Commission chairman Harvey Pitt, who resigned under fire last year, saying that during his tenure the government watchdog did not provide sufficient oversight of the markets.
The exchange's response to the meeting was conciliatory. Carl McCall, lead director of the embattled board, said in a statement the gathering was "very constructive."
"It was clear that their interests are aligned with ours regarding governance issues at the exchange," added McCall, who is co-chairman with Leon Panetta of the NYSE's Special Committee on Governance.
McCall said he would discuss the meeting with John Reed, who was named interim NYSE chairman on Sunday. Reed, the former co-chief executive of Citigroup Inc, is due to start at the NYSE next Tuesday.
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