The New York Stock Exchange said on August 27, 2003 that it extended Chairman and Chief Executive Richard Grasso's contract through May of 2007 and paid him $139.5 million in accrued savings, benefits and incentives. The exchange said in a statement the new employment agreement means Grasso will serve as the CEO and chairman of the board for two years beyond the term of his prior employment agreement. It also provides for the same base salary of $1.4 million and annual bonus of at least $1 million. Grasso is seen at a press conference in New York on June 5. (Peter Morgan/Reuters)

The chairman of the New York stock exchange has just received a cash payment of $140m (£89m) despite criticism of his management of the world's biggest stock exchange.

The payment to Dick Grasso, who has worked at the exchange for 36 years, includes benefits built up over his career.

Mr Grasso, 57, is a well-known figure in the US financial community and a regular sight on the trading floor of the NYSE.

He received the $140m - on which he must pay tax - after he signed a new contract with the NYSE for the next four years which allowed him to crystallize long-term savings and retirement benefits. The savings amount to $40m, his retirement benefits $51.6m and bonuses for previous years total $47.9m.

Under the new contract he is to be paid a base salary of $1.4m and a potential bonus of $1m. This compares to the £1m earned annually by Clara Furse, who runs the London Stock Exchange.

While Mr Grasso was credited with sound management of the exchange after the terrorist attacks of September 11, he has more recently been accused of cronyism and being over paid. Until yesterday it was thought that he had earned $12m last year, which was already regarded as excessive by a leading US investor group. He also tried to place Sandy Weill, head of US financial group Citigroup, on to the exchange's board even though his company was embroiled in fraud allegations.

The exchange has now pledged to improve its corporate governance and revealing Mr Grasso's pay package was part of that change.

Mr Grasso said he had taken the cash from his long-term savings to "facilitate personal financial and estate planning".

Carl McCall, chairman of the exchange's compensation committee, praised Mr Grasso for overseeing seeing "tremendous growth and success".

But Theresa Gabaldon, law professor at George Washington University, said: "No one needs that much money to motivate them to do a good job."

© Guardian Newspapers Limited 2003

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