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Interview With H. Carl McCall

Aired September 26, 2003 - 13:21   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MILES O'BRIEN, CNN ANCHOR: More upheaval at the New York Stock Exchange to tell you about. First, Dick Grasso resigns after a $140 million pay package came to light. And now the former New York comptroller, H. Carl McCall, is calling it quits. He was on the board there. He's resigning from the board of the New York Stock Exchange and he's with us now from New York to tell us why. Mr. McCall, good to have you with us.
H. CARL MCCALL, NSYE DIR.: Good to be here.

O'BRIEN: Did you jump or were you pushed?

MCCALL: I jumped. I wasn't pushed. I believe it is time for a change. I am very glad I was able to make a contribution to the New York Stock Exchange. I brought in some new standards for listing companies, new governance practices at the exchange including a commitment to disclosure.

In fact, because of that, I was able to disclose the compensation package Dick Grasso had received over a number of years. And when it was clear that those disclosures to the public made it clear that there was time for a change, Dick Grasso has departed and we've brought in John Reed, who will be the interim chairman and will have an opportunity now to implement some of the governance practices that we have been working on and that we are now passing on to John Reed.

(CROSSTALK)

O'BRIEN: Some of the Dick Grasso pay package you inherited, some of it you signed on to. Do you have some regrets about that? Do you wish...

MCCALL: Not at all. Let me tell you what happened. The Grasso pay package was something that was accumulated over a number of years. He had been there for 36 years, 20 years as one of the top executives. So over the number of years, he had various benefits and compensation and it was never aggregated. When he decided to aggregate it and take it all at once, we put that number together...

(CROSSTALK)

O'BRIEN: ... you guys never did the math?

MCCALL: The point is that there was no reason to do the math because the fact is that there wasn't any intention of Dick Grasso taking all that money until he asked for it. When he asked for all of that money, then it was all aggregated. And when we found out what that number was, I insisted that that number be disclosed. And it was the disclosure of the number that brought about the fire storm.

But the most important thing is that there is a commitment there to transparency. If, in fact there had been transparency and disclosure all along this never would have happened. So that's the lesson that's to be learned.

O'BRIEN: All right. Let's talk about that issue for just a moment.

MCCALL: Sure.

O'BRIEN: In the wake of Enron, in the wake of WorldCom, you have the sense that this Old Boys Club on Wall Street there just doesn't get it.

MCCALL: Well, that's not true. I think they get it. They understand exactly what needs to be done. They've listened to a lot of people who have come in, made suggestions. And as a result of that, we've put together some very significant recommendations for reform.

For instance, I think there should be a separation between the regulatory function and the trading function at the exchange. I believe that the board ought to be restructured so there are more representation from the investing public on the board. I believe the nominating process has to be changed so that people know how people get on the board and there can be more import in terms of recommendations to board.

And the governance committee that will put together these recommendations, I believe that ought to be expanded, to bring on it some investors, people who represent some of our large public pension funds.

So the -- we -- we get it. We're passing on what we have recommended to John Reed. And I think John Reed is the person coming with the integrity and the independence to put these things in place.

(CROSSTALK)

O'BRIEN: ... we put some of these recommend recommendation, kind of distilled them down. Sort of what you're just talking about there. And as we read through them, my first reaction is why isn't this in place in the first place? Why in this era are we just now talking about things like allowing investors to be -- to play a bigger role, have better representation on the stock exchange?

MCCALL: Sure. The fact is that there's a very complicated process there, that many of these changes have to be approved by the 1,400 people who own seats on the exchange. Nobody controls them. They make the rules. But we have been able now to put these rules together, to bring them to them. And I believe with the kind of public support we have, these changes will be made.

O'BRIEN: All right. The first of many. Do you expect mass resignations from the board? And do you think it's appropriate?

MCCALL: I don't know. I did what was important for me. I wanted to make sure that John Reed was unencumbered, that there was nobody there who could suggest that something be done that had been done in the past, that there had been change.

And having encouraged John Read to come, I felt that it was time to step aside and give him a very clear mandate to go forward and put these recommendations in place. Whether other board members will do that, they will have to make that decision.

O'BRIEN: H. Carl McCall, outgoing member of the board of directors of the New York Stock Exchange. Thanks very much for your time, appreciate it.

MCCALL: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired September 26, 2003 - 13:21   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: More upheaval at the New York Stock Exchange to tell you about. First, Dick Grasso resigns after a $140 million pay package came to light. And now the former New York comptroller, H. Carl McCall, is calling it quits. He was on the board there. He's resigning from the board of the New York Stock Exchange and he's with us now from New York to tell us why. Mr. McCall, good to have you with us.
H. CARL MCCALL, NSYE DIR.: Good to be here.

O'BRIEN: Did you jump or were you pushed?

MCCALL: I jumped. I wasn't pushed. I believe it is time for a change. I am very glad I was able to make a contribution to the New York Stock Exchange. I brought in some new standards for listing companies, new governance practices at the exchange including a commitment to disclosure.

In fact, because of that, I was able to disclose the compensation package Dick Grasso had received over a number of years. And when it was clear that those disclosures to the public made it clear that there was time for a change, Dick Grasso has departed and we've brought in John Reed, who will be the interim chairman and will have an opportunity now to implement some of the governance practices that we have been working on and that we are now passing on to John Reed.

(CROSSTALK)

O'BRIEN: Some of the Dick Grasso pay package you inherited, some of it you signed on to. Do you have some regrets about that? Do you wish...

MCCALL: Not at all. Let me tell you what happened. The Grasso pay package was something that was accumulated over a number of years. He had been there for 36 years, 20 years as one of the top executives. So over the number of years, he had various benefits and compensation and it was never aggregated. When he decided to aggregate it and take it all at once, we put that number together...

(CROSSTALK)

O'BRIEN: ... you guys never did the math?

MCCALL: The point is that there was no reason to do the math because the fact is that there wasn't any intention of Dick Grasso taking all that money until he asked for it. When he asked for all of that money, then it was all aggregated. And when we found out what that number was, I insisted that that number be disclosed. And it was the disclosure of the number that brought about the fire storm.

But the most important thing is that there is a commitment there to transparency. If, in fact there had been transparency and disclosure all along this never would have happened. So that's the lesson that's to be learned.

O'BRIEN: All right. Let's talk about that issue for just a moment.

MCCALL: Sure.

O'BRIEN: In the wake of Enron, in the wake of WorldCom, you have the sense that this Old Boys Club on Wall Street there just doesn't get it.

MCCALL: Well, that's not true. I think they get it. They understand exactly what needs to be done. They've listened to a lot of people who have come in, made suggestions. And as a result of that, we've put together some very significant recommendations for reform.

For instance, I think there should be a separation between the regulatory function and the trading function at the exchange. I believe that the board ought to be restructured so there are more representation from the investing public on the board. I believe the nominating process has to be changed so that people know how people get on the board and there can be more import in terms of recommendations to board.

And the governance committee that will put together these recommendations, I believe that ought to be expanded, to bring on it some investors, people who represent some of our large public pension funds.

So the -- we -- we get it. We're passing on what we have recommended to John Reed. And I think John Reed is the person coming with the integrity and the independence to put these things in place.

(CROSSTALK)

O'BRIEN: ... we put some of these recommend recommendation, kind of distilled them down. Sort of what you're just talking about there. And as we read through them, my first reaction is why isn't this in place in the first place? Why in this era are we just now talking about things like allowing investors to be -- to play a bigger role, have better representation on the stock exchange?

MCCALL: Sure. The fact is that there's a very complicated process there, that many of these changes have to be approved by the 1,400 people who own seats on the exchange. Nobody controls them. They make the rules. But we have been able now to put these rules together, to bring them to them. And I believe with the kind of public support we have, these changes will be made.

O'BRIEN: All right. The first of many. Do you expect mass resignations from the board? And do you think it's appropriate?

MCCALL: I don't know. I did what was important for me. I wanted to make sure that John Reed was unencumbered, that there was nobody there who could suggest that something be done that had been done in the past, that there had been change.

And having encouraged John Read to come, I felt that it was time to step aside and give him a very clear mandate to go forward and put these recommendations in place. Whether other board members will do that, they will have to make that decision.

O'BRIEN: H. Carl McCall, outgoing member of the board of directors of the New York Stock Exchange. Thanks very much for your time, appreciate it.

MCCALL: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com