The New York Times has an article on the $140 Million compensation package for Richard Grasso which caught my eye. The compensation package is for his 36 years of service and the majority of it is retirement benefits and deferred compensation. As expected, there is a lot of controversy around his package given that the NYSE earned $28.1 Million in 2002 according to an article in Yahoo.

Of course, Richard Grasso has done a great job of running NYSE, especially through incredibly challenging times such as 9/11 and the recent blackout. There is also no doubt as to the performance of the NYSE with its current capitalization of $14.8 Trillion, especially when you compare the NYSE to NASDAQ which has had its own share of challenges and blunders as outlined in Business Week.

However, you have to wonder if $140 Million is really justified. Yes, it is something that has accumulated over 20+ years in his role as Executive Vice President and Chairman (at a generous 8% interest), but I don't think that it's in line with his contributions and role in running NYSE. As the article points out, this is an entrepreneurs fortune gained at no risk. Also, when you compare him to his peers in other quasi-public organizations it's definitely not in line, and when you look at the board that was responsible for setting his compensation package, it's all filled with industry insiders. Now it looks like that's being changed with an entirely new board and his new package sounds much more reasonable.

Btw, did I mention that it was $140 Million in CASH?

It's interesting to see a number of articles on who really made all that money during the bubble years. Besides the obvious suspects such as founders of companies, it looks like investment bankers had a license to print money on all the IPO's that they rushed to market. According to an article in SiliconValley.com, investment bankers and venture capitalists received more than $1 out of $4 raised by IPOs and related stock offerings between 1998-2001. In dollar amounts, investment bankers received more than $2 Billion in fees. Insiders and VC's received more than $8.7 Billion for selling their own shares during IPOs.

If you think about the $2 Billion in fees that investment bankers received between 1998 and 2001, it really is a staggering amount. After all, the number of people involved in technology investment banking can't be that large. Considering the performance of these IPO deals, where the median deal fell by more than 60% after the IPO, you have to start wondering if investment bankers were just a little too eager to rush companies to IPO.