“New York Stock Exchange Chairman Dick Grasso, whose nearly $140 million retirement package has been criticized as excessive, was entitled to an additional $48 million in future compensation, a payout that came as a surprise to some NYSE directors and raised new questions about governance at the Big Board,” writes Kate Kelly in today’s Wall Street Journal.

“Mr. Grasso said Tuesday that he won’t take the extra money, which he was entitled to receive over the next four years. He said his compensation had become a distraction for the exchange and that he was forgoing the additional payments to bring greater “focus” to the institution. People familiar with the situation said Mr. Grasso decided to give up the additional cash after hearing the concerns of board members.”

“H. Carl McCall, chairman of the NYSE’s compensation committee, said the board remains committed to Mr. Grasso’s leadership. But some compensation experts say the flap could undermine Mr. Grasso.”

“The exchange revealed the additional compensation Tuesday as part of a broader response to a demand by Securities and Exchange Commission Chairman William Donaldson that it outline how Mr. Grasso was paid $139.5 million in combined retirement benefits for his 36-year tenure at the exchange, the last eight years as chairman. The existence of the huge package was first reported in May.”

“Mr. Grasso’s compensation, especially the portion related to accumulated deferred retirement benefits, sparked sharp reactions from both the SEC and from compensation experts. Mr. Donaldson, the chairman of the SEC, which regulates the Big Board, sent a sternly worded letter to Mr. McCall on Sept. 2, demanding that the NYSE provide a detailed accounting of its decision to approve Mr. Grasso’s new contract and compensation package. He said the package ‘raises serious questions regarding the effectiveness of the NYSE’s current governance structure.’

“People familiar with the situation said Mr. Grasso’s additional $48 million in future pay was a source of tension at the board because some directors hadn’t been informed of this additional compensation until recent days. One board member explained that Mr. Grasso’s employment contract is so complex that it was difficult to decipher his deferred compensation, and the additional pay package had not specifically been drawn to the attention of directors. In an indication of the contract’s complexity, some members thought in reviewing the documents that the additional payments owed to the exchange chairman were as low as $26 million — only to be told during Tuesday’s meeting that in fact it was $48 million, according to people familiar with the matter.”

“Kenneth Langone, an NYSE director and former chairman of the compensation committee, wouldn’t comment on what was discussed at Tuesday’s board meeting but said he believes the entire board knew about the $48 million. Still, he said: ‘If you talk to 20 people you will get 20 answers. I knew about it. They can speak for themselves.’ “

“Mr. Langone said the facts were common knowledge on the compensation committee and that the full board had ‘unanimously approved’ the pay package.”

“Asked whether certain board members felt they were left in the dark about the details of his future compensation, Mr. Grasso referred questions to Mr. McCall, who he said had held an ‘extensive session’ at the early-August board meeting ‘without management.’ “