SEC calls for details of Grasso's $140m

Wall Street yesterday witnessed the opening of a potentially serious rift between two of its regulatory bodies when the head of the securities and exchange commission expressed concern at the $140m (£90m) awarded to New York stock exchange chief, Richard Grasso.

In an abrasive open letter, SEC chairman William Donaldson said the award "raises serious questions" about the "effectiveness of the NYSE's current governance structure".

The letter asks for information on the decision including minutes of meetings at which it was discussed, who sits on the compensation committee, who recommended them and whether they have conflicts of interest. The SEC wants to know where the money will come from and if it will affect the NYSE's ordinary business.

Coincidentally Mr Donaldson preceded Mr Grasso as NYSE chairman.

It emerged last week that Mr Grasso would receive nearly $140m in deferred compensation, savings and retirement plans after negotiating a new contract through to May 2007. Mr Grasso has worked for the NYSE for 36 years and became chairman in 1995. The contract keeps his basic annual salary at $1.4m and his bonus at a minimum of $1m a year.

The letter, made public by the SEC, also raises questions over the jurisdiction of the securities regulator, which does not have direct authority over pay scales at the exchange.

In March, the SEC asked the NYSE to review its governance policies, the findings of which are still pending. Mr Donaldson said he was "especially concerned" that the new contract had been drawn up before that review had been completed. His letter to Carl McCall, chairman of the NYSE compensation committee, said: "I believe that self-regulatory organisations must be models of good governance."

The NYSE said a response would be sent before a deadline set at September 9.