Grasso Pay fiasco could lead to reforms at public institutions.

DICK Grasso and his clumsy cohorts at the New York Stock Exchange have done investors an enormous favor. Inadvertently, of course.

The shenanigans involving Grasso's pay as chief executive of the exchange make an excellent case for full disclosure of the activities of public enterprises to their constituents.

Surely, if the interested parties--floor members of the NYSE, companies that fist their shares on the exchange and the top U.S. markets regulator, the Securities and Exchange Commission--had known Grasso was accumulating $187.5 million in deferred and retirement benefits, that much money could never have been paid.

No hint of what Grasso, a career NYSE employee at 57, was getting to entice companies to list their shares on the exchange and then regulate them had been given until last month. Imagine the shareholders of General Electric Co., which Grasso oversaw until his resignation last week, allowing the company to hide the pay of CEO Jeffrey Immelt.

When it did come, the NYSE's disclosure was anything but full. The exchange said Aug. 27 that Grasso's contract had been extended into 2007 with a salary of $1.4 million a year plus an anticipated bonus of at least $1 million.

About what you might expect for the job. Give him nice bonuses for keeping the exchange up technologically and recovering from Sept. 11. But buried in the middle of the press release were some much bigger numbers. The exchange said it had distributed a total of $139.5 million to Grasso from a savings plan and in retirement benefits.

How were these figures derived? There was no explanation. William Donaldson, chairman of the Securities and Exchange Commission and Grasso's predecessor at the NYSE, asked the exchange to justify the pay numbers.

NYSE officials said, Oops, we forgot to tell anybody that Grasso had yet another $48 million in benefits coming. Grasso immediately said he would forego that money.

Documents released by the NYSE show that in 1993, it had become concerned that its pay was too low to keep executives on "board. Its plan allowed Grasso to get bonuses of more than $20 million in both 21300 and 2001 and to collect 8 percent interest a year on deferred savings.

Grasso is entitled to everything. Still, if the NYSE had reported Grasso's pay and accrued benefits each year--as companies it regulates must--the pay plan would have been scuttled.

Disclosure isn't a panacea. It was public knowledge that the NYSE board was loaded with CEOs of companies on the exchange. And it was no secret that Grasso was a director of Home Depot Inc., an NYSE-regulated company.

The Grasso affair by itself won't lead to CEO pay reform. But the NYSE's obfuscation will spotlight the need for more disclosure of vital information, not just from exchanges, but from companies and mutual funds as well.

David Pauly is a columnist with Bloomberg News.