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The Wind Among the Reeds & Grassos

By Ailish M. Nic Phaidin
Brevard Technical Journal

Maybe you recognize that "The Wind Among the Reeds" is taken from a series of poems by William Butler Yeats. Maybe you don't. If you don't, there is some cause for concern because therein lies the soul of your managerial ability and alacrity. Not so, bellowed one corporate mandarin whose ability to fearlessly dispose of all opposition was, without ceremony, recently bumped into the everlasting flames of managing a household budget on a mere $187.5 million. Dreadful, just dreadful, mourned a few, a very few, cronies who still sit on the Board of Directors of the Big Board.

We can always count on an Englishman to put matters into such definitive language that our understanding of issues such as corporate governance (there goes that dazzling term again) is blessed with minimalism. Edward, the First Baron Thurlow (1731-1806) said of corporations, "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?" That's why the English are great diplomats, the Irish are great poets, and the United States of America is great at kicking butt. And, Eliot Spitzer is our prima donna at kicking butt.

The renewed debacle in the U.S. over the complex, yet simple, issues of corporate governance was recently aired again when the Big Board accepted the resignation of Richard A. Grasso - after a protracted and protuberant bubble of secrecy. The lengthy weeping and gnashing of teeth of the Board of Directors of the Big Board, followed by Grasso's resignation, was all about as unseemly as we can get. 'Unseemly' is a diplomatic term for skullduggery at the highest levels in the land of corporate governance and corporate oversight.

The New York Stock Exchange proclaims loudly that its "ultimate constituency" (see their website: www.nyse.com) is the public who invests in their members. That may require a definition of what "is" is. Corporate definitions by their very nature are difficult, since cultural, social, financial, linguistic, political, and Board of Director influences are brought to bear on all matters. Thus, with the stroke of a pen, huge swathes of the "ultimate constituency" are excluded from the decision-making ability that has such a profound effect on their potential for counter-terrorism (dare I say the word?) measures.

Muriel Siebert, Chairwoman and Chief Executive Officer of Siebert Financial Corporation, and the first woman to own a seat on the New York Stock Exchange, recently had an Op-Ed piece in the New York Times with which I heartily agree. One of the many sanguine and sage matters she raised in her piece was when she said, "How will we know whether the exchange is serious about reform? Look for action in three crucial areas: the exchange's board, its management and its transparency." To this simple strategy I would, with great deference to Ms Siebert's superior knowledge, add a fourth area - that of accountability.

The accountability of the Chairman and Chief Executive Officer (one and the same person in the case of the Big Board) to the Board of Directors of the Exchange is the very first issue that should be dealt with by the new Chairperson and/or the CEO of the Exchange. The hand-picked - oft hen-pecked if the absurdity of the remuneration package is anything to go by - Directors of the Board must dispense with the nonsense of years and years of secrecy as a measure to set a standard of governance that may be followed by other Boards of Directors. This transition will not be easy, but it is essential if the New York Stock Exchange is to regain its clout and leadership in the world of finance.

The conflict of interest, or even the merest perception of conflict of interest, amongst Board members and the reason d'�tre for the Exchange's existence, is a commingled matter that deserves leadership, courage, strength, diplomacy and some arm-twisting if it is to be conquered.

The Board has appointed John S. Reed for the handsome sum of $1.00. Reed is the former co-Chairman and Chief Executive Officer of Citicorp, who apparently quit Citicorp and Citibank after losing a tussle with his co-chairman, Sanford I. Weill. He is reported to take over the reins of the Exchange on September 30th as interim chairman and Chief Executive Officer. The appointment of Reed to both positions is, I believe, the first error of the Board of Directors in their new role of standard-bearer for the world of finance. Shame on them.

I would recommend that Reed immediately be empowered by the Board of Directors to ensure that the search for and appointment of a new leader be as open, transparent and accountable as possible. To ensure that his, and the Board's, wishes in this area are fully carried out ethically, he should appoint a new Communications Director who is untainted by the demise of Mr. Grasso. This should ensure a modicum of trust in an establishment that has served our country almost well for many, many years.

The wind among the Reed's and the Grasso's may not be sufficiently strong as yet to blow away the cobwebs of years of secret dealings and incestuousness that has been the hallmark of the New York Stock Exchange. This is a remarkable opportunity to deal the final death bell to avarice at executive level in our corporate sector. Unfortunately, a golden opportunity may have been lost. The $1.00 salary does not cut through the genuine perception that its "business as usual" in corporate United States of America.

Then again, it's an ill wind that turns none to good. Somehow, I'd rather see a little hurricane to dispel some of the myths, legends (in their own mind), and corporate governance malfeasance in our midst. Maybe the Irish poets were right after all. A little soul may need to be added to the diplomacy and butt-kicking.