Exchange’s throes continue: Nevada treasurer supports reforms

Kevin Rademacher

Thursday, Sept. 25, 2003 | 11:09 a.m.

From his office in Carson City, Nevada State Treasurer Brian Krolicki was watching closely on Wednesday as a group of state treasurers descended on the office of the New York Stock Exchange, clamoring for reform.

Krolicki, also the president of the National Association of State Treasurers (NAST), said the calls for reform are critical in the effort to protect the trillion dollars state treasuries and pension funds invested in U.S. capital markets each year.

Nevada's stake in that massive investment includes $14 billion from the Public Employees Retirement System and another $2 billion in long-term investments controlled by the Treasurer's Office, Krolicki said. The retirement system alone represents about 100,000 people, he added.

Wednesday's meeting of NYSE directors and a coalition of treasurers and pension fund leaders, including representatives from California and New York, called for the exchange to reduce the number of board members and increase investor representations. Coalition members also called for the separation of the exchange's regulatory and administrative functions.

While the group was operating independently of NAST, Krolicki said the effort is parallel to that of the larger organization.

"We know what they were doing and we don't disagree with it," he said.

The activities of state treasurers have been credited, in part, with forcing the resignation of NYSE Chairman Richard Grasso, who left the post this month amid a scandal surrounding a highly publicized $140 million compensation package.

Krolicki testified on Sept. 5 before the newly created NYSE Special Committee on Governance. That testimony came minutes after Grasso's appearance before the same committee to answer questions about his controversial pay package.

Krolicki said NAST's testimony, which was delivered behind closed doors, called for swift action on the issue of Grasso's pay.

"As the leading exchange and largest capital market, the NYSE is the most visible symbol of the strength of the United States economy," Krolicki said in a statement released after the Sept. 5 appearance. "Thus, the exchange must be unimpeachable in its operations and governance and must continue to set high standards for itself and its listed companies."

The salary scandal made headlines about a week later as exchange members and traders called for changes and demanded Grasso's resignation.

The controversy started when Grasso's contract was extended in August. The deal included a $140 million buyout of benefits accumulated since he took the exchange's top post since 1995.

Krolicki said he will return to New York on behalf of NAST in November, but he had no idea whom he would meet.

"We will be meeting with the people running the exchange, whoever that is at that time," he said. "I say that because I don't think the bloodletting is done."

Krolicki added that similar discussions will likely take place on Capitol Hill and with the U.S. Securities and Exchange Commission.

"The better we complete this task of evolving corporate governance, the more likely it will evolve into higher values for all investors," he said.