Greenmail?
I’ve never heard the term before either, but from the context of what’s been said in this thread, I’d say that bribe might be a synonym.
Greenmail is a term straight from the Gordon Gekko-style Wall Street raider lexicon. What happens is this: a hostile bidder starts buying up shares of an undervalued company, ostensibly to take it over. Management and the board don’t want the takeover to happen because they know they’ll be canned if the raider succeeds. So the raider tells management and the board that he will go away if they will buy the shares he’s acquired to date for some price well above the prevailing market price. He basically extorts cash from the company in exchange for letting management keep their jobs.
This happens less frequently these days because many companies have adopted defensive measures to prevent or discourage hostile takeover bids, including staggered boards and shareholder rights plans (aka poison pills).
The Grasso payment isn’t really greenmail, but I get the point that Scylla is making. The NYSE is a de facto regulator of its constituent companies – it uses the threat of delisting to force companies trading on the Big Board to conform to its rules (which are in place because they help insure the integrity, and thus the value, of the NYSE as an institution). The board that approved Grasso’s pay package is made up of folks from NYSE companies. What Scylla is saying is that the large pay package presents the unhealthy appearance that the board members might have approved the large package to prevent unfavorable regulatory treatment by the NYSE. No one’s credibly accused Grasso or the NYSE of that kind of blackmail, but there is nonetheless a very real appearance of impropriety problem present that can’t be glossed over.
I think the term ‘greenmail’ has evolved quite a bit from what you’re defining, Dewey. While it certainly started out that way I’ve seen it used (and had it applied to myself) for far less evil behavior. It’s sort of a generic term for cashing oneself out of a situation whether through salary or a business deal or pension or whatnot.
As far as Grasso goes I’m with AD here. If I were Grasso I’d have laid into them with everything I had to keep that package. Someone offered it…he accepted. Nothing short of an act of God could make me break that. Screw ‘perception’…if just takes one contract like that to make sure all of your grandchildren go to Harvard.
And speaking with no inside knowledge at all…
Grasso went too easily. Watch his future moves. Dollars to donuts one of those ‘directors’ who encouraged him to resign (largely to protect their own asses) will offer him some very high paying gig in their firms. He won’t be hurting and he won’t be doing it in the public eye.
The Chicago Tribune is. In an article from Sept. 18, “Connections bond Grasso, pay committee” (by Andrew Countryman, Tribune staffer), the allegation is made that there were too many close bonds between him and members of the committee.
The article goes on to list boards that he served on with these people (prohibited under current rules I guess), list various contributions, long-time personal friends on the committee, and so forth.
(Article available online at http://www.chicagotribune.com/ for free from 7 days from publication, but requires registration to read. Sorry.)
Blood splatters on board members:
http://money.cnn.com/2003/09/19/markets/grasso_nyseboard/index.htm
D.C.U. Makes an excellent case point, with a keystone assumption that I happen to agree with: Was his position that of CEO of a private going concern or was he a Regulator? If he was a CEO, this would be a non-issue. As a Regulator, this would be considered inappropriate.
That being said, I don’t disagree with J.C. assessment that he will end up on his feet and quietly accept a high level position with one of those firms down the road. He left quietly (on his part) and quickly, with no burned bridges. This can’t be prevented…and even if it could, what would you have us do? Permanently unemploy him? That’s not the America any of us has grown up in.
I guess I don’t understand why Grasso should be expected to take lower pay because the markets have been volatile. Unlike CEOs of corporations, Grasso’s job isn’t supposed to make any particular stock go up or down. His job is to make sure the markets function efficiently. The board said he exceeded all his targets. If the targets are the wrong ones, then that should be the issue–not how much he makes.
Plus, how much would he have made if he worked in a major corporation? He doesn’t have the huge stock options that many CEOs do. To get someone good in his position, you’d have to be somewhat competitive in what you pay.
Finally, if what he got paid is an issue, why go after Grasso before going after those that voted him that pay? It seems what they did is far more offensive than accepting the offer he was given.
Yay. We’ve now seen conclusive proof that it’s possible to create a blog before learning that it’s easier to destroy than to create. Is there some other reason for that particularly sick and offensive comparison that I’m missing?
It’s satire.
Extraordinarily inapt and sick satire, at that.
We already knew what religious fanaticism allied with nationalism could do.
I’ll take greed over murder every time.
Yeah, that was dorky.
Question: Is there any evidence that, other than appointing members, Grasso had direct influence on those members developing his pay package?
I did read he received about 5Mil for his expediency in opening the stock market within the week, after the EPA had said all was well.
Martha Stewart should replace him!