Comments (12)

• Decker

  ...yes, the government should stay out of private wage agreements between employer & employee -- but government also should NOT grant special tax exemptions to favored businesses.

  The New York Stock Exchange (NYSE) enjoys huge tax exemptions as a "Non-Profit" activity. Why ?

  It is outrageous for a 'non-profit executive' like Grasso to be paid such extravagant compensation -- far beyond any comparable measure of private, government, or non-profit... salary & benefits.

  Legally, New York non-profit tax rules require executives like Grasso to receive only "reasonable" compensation. That term is obviously vague, but Grasso's pay was clearly far beyond that of any American executives with similar responsibilities. Thus, there was indeed a valid legal basis for intervening in the NYSE/Grasso pay situation.

  Head bureaucrats at private non-profit organizations (... like Grasso) should NOT be stuffing their pockets with cash from those organizations.

  Cancel the NYSE tax-exemptions today -- and let the NYSE fat-cats pay themselves whatever they want.

  _______

  Published: June 17, 2008 8:28 AM

• EnEm

  As long as this country does not understand or want to understand the difference between a Democracy and a Republic, these types of public-minded fiascos will be an everyday affairs.

  Published: June 17, 2008 8:57 AM

• Fephisto

  To the people that think this is unfair: it's not a zero-sum game.

  Published: June 17, 2008 9:54 AM

• Todd

  Decker:
  You are mudding the issue.
  We should should keep seperate and distinct the issue of contractual obligation and the seemingly baseless "non-profit" status of the NYSE.
  I am not able to understand how a man can negotiate a 180 million dollar payout to run a relatively small yet significant organization nor how a man can demand 300+ million dollars to play 3rd base, the fact that both parties have freely entered into the agreement shoud be enough to keep the government out of it.
  Grasso and NYSE negotiated a "reasonable" level of compensation until they saw it "reasonable" to rid themselves of Grasso at which point they changed their minds and looked to "Big Brother" to bail them out. If they wanted a way to mitigate the risk they should have written that into the contract.
  Non-profits still have to compete for labor and as such have to pay a salary that attracts that labor. It is the organization that is not-for-profit, not the people that work there. The non-profit status is setup as another wealth redistribution scheme and is seen as necessary, I suspect, because altuistic behavior must be encouraged financially due to it's incompatibility with human nature.

  Published: June 17, 2008 10:07 AM

• Decker

  ["You are mudding the issue.
  We should should keep seperate and distinct the issue of contractual obligation and the seemingly baseless "non-profit" status of the NYSE."
  --Todd]

  _______

  No, the basic issue is still voluntary agreements/contracts.

  The NYSE voluntarily entered an agreement with the New York & Federal tax agencies; NYSE received huge tax exemptions in return for meeting several government requirements to qualify as a "non-profit" entity. One of those contractual requirements was "reasonable" pay limits to NYSE executives.

  The NYSE could certainly have chosen to incorporate as a normal 'for-profit' business...thus, completely avoiding any issue with their executive pay.
  But they did not.

  Should the NYSE honor its tax agreement/contract with the NY & Feds ??

  Published: June 17, 2008 11:30 AM

• Curt Howland

  As to the Bill of Rights, is there any element of the bill of rights that has not been violated through legislation or judicial fiat?

  Published: June 17, 2008 12:31 PM

• Todd

  Decker:
  I see your point however, the NYSE willing commited to a contract for labor resources knowing full well they had a contractual obligation to the NY/Feds due to there non-profit status. Should Grasso suffer (term used lightly) because the NYSE wants its cake and eat it too?
  There are a few issues with the way this system is setup. Using the term reasonable to value salary works well when trying to secure labor resources or when the entity, in this case the NYSE, needs the flexibilty to spend money. Yet when they see it necessary, they want the courts to define the term in a way that suits their whims.
  Secondly, if the government is to be in the business of donating our tax dollars to groups as they see fit, shouldn't that go in hand with some active regulation? Now, before I get railed for advocating more intrusive policy from the Feds, let me say that I don't believe there are many instances where the Feds should be giving away our money in the first place especially not to an organization that is so closely tied with the for-profit world. But if they are going to, there should be some mechanisms to avoid vagarities like "reasonable" to define how the money is spent.
  So to answer your question directly, yes the NYSE should be required to fulfill their obligation to NY and the Feds, but not at the expense of an individual that is freely choosing to maximize his utility for his time by entering into an agreement. Grasso has zero responsibility to honor the contract between the State and the NYSE, his only responsibility is to himself. This responsibilty sits solely on the shoulders of the NYSE and if they didn't fulfill that then the non-profit status of the NYSE should be revoked.

  Published: June 17, 2008 1:51 PM

• Walt D.

  I think the issue of tax-exempt status is a red herring. What is at issue is the authority to contract.
  It reminds me of one of the derivatives meltdowns in the UK. Hammersmith entered into a number of swap contracts on which they ended on the losing side. They refused to pay, claiming, ex post, that they did not have the authority to enter into the agreements. The House of Lords concurred.

  Published: June 17, 2008 2:53 PM

• Joshua Katz

  It seems to me that Decker's argument will only work if we assume, for some reason, that the "normal" situation is to pay taxes, and "exemptions" must be justified. However, the reality is the other way around -taxes are unjust, and tax exemptions cannot create liabilities. You don't owe your neighbors anything in exchange for their not breaking into your house.

  Published: June 17, 2008 3:01 PM

• olmedo miro

  i beg to disagree.

  
  in a100% percent libertarian system, government shall never get involved in contracts between individual neither in the making, "nor in the enforcement of them" like Mr. Grasso wants.

  
  yes i agree, NYSE should "honor" Mr, Grassos contract however, is not the business of government to make NYSE (or any other organization) "honor" its word.

  
  in the good old days, when government was less present in our life, contracts like these were a matter of personal honor which was something people wanted to keep as loosing it could be pricier. that is why in those days cosntracts were simple and direct and lawyers less rich.

  now a days, people , like mr grasso, know that government will be the optimate enforcer that why right from the begining they prepare contracts filled whith all kind of legal traps in the "ill see you in court doctrine".

  
  what is NYSE "pound of flesh" worth??? well, ill see you in government court.

  
  olmedo

  Published: June 17, 2008 3:06 PM

• Mike Renzulli

  Great article! I think every libertarian, follower of the Austrian school and Objectivist should send Grasso letter expressing our support.

  Published: June 17, 2008 6:13 PM