Ex-Citigroup CEO To Head NYSE

The New York Stock Exchange chose former Citigroup chairman and CEO John S. Reed as its interim leader Sunday for a salary of $1, less than a week after its previous chairman was forced to step down amid outrage about his compensation.

Reed, 64, who left Citi in 2000 after losing a power struggle with then co-chairman Sanford I. Weill, will temporarily replace Dick Grasso, exchange officials announced at a hastily called news conference.

In a phone conference from France, where he was vacationing, Reed said there had been some failures in corporate governance at the exchange and he would make the issue a priority.

"I have seen crises quite comparable to what the NYSE has gone through ... and clearly it did not help anyone," Reed said.

He declined to comment on Grasso or the circumstances of Grasso's departure but said he realized the gravity of the situation. Grasso's pay package of $187.5 million was considered excessive by many on and off Wall Street.

Reed, who said he will be paid $1 for his work, will start at the exchange as interim chairman on Sept. 30, but he said he plans to start talking to other NYSE executives Monday morning.

He said that he hopes to have a permanent NYSE head in "months, and not years," and that he is not a candidate for the permanent job. A search committee led by Laurence Fink, CEO of investment group BlackRock Inc., will look for a permanent replacement for Grasso.

Securities and Exchange Commission Chairman William Donaldson released a statement in which he praised Reed for his "impeccable credentials ... which will be crucial as he works with the NYSE Board to ensure the highest standards of governance."

Reed's appointment is the latest effort by the NYSE to restore its image following the debacle with Grasso, which many said represented a failure of corporate governance at the institution.

The board has come under fire for approving Grasso's pay package and under pressure from federal regulators to revamp its practices. Half its seats are held by top executives of investment banks and brokerage firms — the very businesses the NYSE is supposed to monitor and regulate for fraud. The Securities and Exchange Commission, which oversees the NYSE's regulatory functions, has suggested there could be big changes ahead.

The exchange is expected to release a corporate governance plan on Oct. 2 that will, among other things, address compensation for future CEOs and potential changes in the board's structure and the ownership of the exchange.

Reed said improving the exchange's governance was a priority, but offered few specifics. He said smaller boards of directors of 10 to 12 people were generally easier to work with, but did not indicate whether he would seek to trim the 27-seat NYSE board.

Reed worked at Citi, one of the world's largest investment banks, for more than 35 years before retiring in April 2000. He had been named CEO of Citicorp in 1984, and has been credited with building Citicorp into a corporate powerhouse through the 1990s, developing its technology infrastructure, slashing staff and selling off unprofitable assets.

Reed has only been inside the NYSE once, and has never sat on an NYSE committee — a fact observers said was key because of the pressure on the exchange to clean house.

"They clearly wanted someone who's an outsider, but who's knowledgeable," said Steven Kaplan, a finance professor at the University of Chicago's Graduate School of Business.

Since his retirement, Reed said he has been teaching and writing. He said he is stepping down as lead director of the board of Altria Group, the parent company of tobacco giant Philip Morris, because of his new job.