When I was very young I remember my grandmother using the phrase “Bold as Brass” to describe certain individuals either in the news or that we may have had occasion to observe. It did not strike me as a derogatory term, but rather a descriptive one that seemed to identify an unusual set of behavioral standards and a manner of social interaction possessed by that person. As I grew, and she continued the use of the phrase, I started to form a fairly solid idea of the various character traits meant by the terms use. A sort of simple and probably inadequate description would be a cross between the bare-faced duplicity of Eddie Haskel in television’s “Leave it to Beaver” and the over-confident charisma of the character Otter in the movie “Animal House.” I am sure we have all met someone who we may, for instance, have lent $10 until Monday. On Wednesday that person finds you, and with no mention of the $10 already owed and overdue, cheerfully requests another $10 until next Monday. It is almost like they honestly believe that they are doing you a favor by allowing you the further chance to invest in their no doubt bright future. Not only are their ambitions and needs the most important thing in the world for them, but should be for you as well. Bold as Brass.
    
My first experience with a CEO showing some of these traits goes back again to my days at Pullman. Pullman had a CEO that retired and the position was going to be filled by a fellow from Texas on an interim basis. (This was not the same person in the post at the time of the takeover by Wheelebrator-Frye.) Pullman had a policy providing for an extra months’ pay to an employee that had been transferred permanently to another city. It was a tradition that recognized that most transferees were not used to itemizing all expenses or may be a little reluctant to put every expense down on paper for all to see. In fact the policy was named the “Drapery Cleaning Reimbursement,” and at the time amounted to about $2,200 for the average transferee. Along comes the somewhat interim transfer of this high executive making roughly $250,000 per year. While I did not begrudge this fellow the same policy in normal circumstances, it did strike me as rather ludicrous to receive the same stipend when the company was providing the high-end furnished apartment, the cleaning service, and was paying for all laundry - drapes or otherwise. I was probably a little extra sensitive because the $20,000 plus extra month check was a full years salary for many that I worked with. Most people would have been a little reluctant to invoke this policy given the circumstances, but not this fellow. Yes, the company continued to pay routine living expenses after the check was cashed. I also became very aware that it seemed to be no one in particulars job to say, “Hey, this is a little much.” Bold as Brass.
                
That is a nice story, but what does it have to do with anything current? Nothing, other than the “Bold as Brass” group is still with us. How many caught the story in the WSJ last week about the Chairman of the New York Stock Exchange, Mr. Richard Grasso, being named to the Board of Directors of Home Depot, an NYSE listed firm? In fact it is the second directorship of an NYSE listed company for Mr. Grasso, the first being Computer Associates. It seems that the Board of the NYSE has bought into the story that Mr. Grasso will recuse himself from any meeting at which Home Depot is the subject, and that this promised recusal is enough to balance any feelings of impropriety or inappropriateness, especially in today’s sensitive news environment.
                
Wow, shades of déjà vu. It just so happens that I shared a similar occurrence to this when I was on the Board of the CBOE. One day we were presented with the desire of the Chairman to enhance his resume and career by becoming a board member of some outside company. It is sort of an odd feeling when presented with such a personal type request, as two things immediately come to mind. The first is that it is probably not such a good idea, and the second is how awkward it would be for the Chairman if the board said no to the request. It would be akin to saying, “We do not believe you possess the judgment to not let it affect your mission here.” Those of us who were uncomfortable with the idea thought we were off the hook when someone discovered a rule in the constitution of the exchange that the Chairman could only hold this one position. You would think that the fact that the rule was brought up would indicate to most that there was some discomfort by some board members with the request, and maybe a discrete withdrawal would be warranted. There I go thinking like a non-Bold person again. Just like the fellow owing the $10, this obvious discomfort and the rule were ignored while the request remained on the table. Amazingly enough, several board members took up the torch to support the idea, even though it seemed more that they did not want to say no, not that it was a great idea. I found myself being talked into going along with this request, mostly because at the time it did not seem like the fight worth spending huge political capital to win, if indeed winning was possible. I still think that it was inappropriate to ask and not a good idea, and maybe I should have caused a stink. However, as a derivative exchange the CBOE is fairly distant from communication with listings or potential listings, and I have to admit that probably no harm was done by saying yes.
                
The current situation with Mr. Grasso in today’s environment is much more serious. Those not “Bold as Brass” would have quietly found a way to resign from the Computer Associates BOD, not add another one to the list. With all the questions swirling about even the appearance of impropriety, wouldn’t you think that the Chairman of the NYSE would have better served to say, “As you know I have been honored with the invitation to serve on the BOD of Home Depot. Given the current climate I feel that my first and only responsibility is to insuring the integrity of the NYSE and its many functions, and therefore must decline.” Appearances aside, there is much greater chance of an actual conflict here than in the CBOE case.
    
The NYSE actually recruits companies to be listed on their exchange, and charges those companies listing fees for the privilege. There are minimum listing standards for a company to qualify for a listing, and as such the NYSE has much greater regulatory responsibilities for and communication with listed companies than the CBOE. Even if Mr. Grasso personally were to recuse himself from potential exchange meetings regarding Home Depot, what effect might it have on the normal activities of the NYSE staff. Does anyone really think that if the NYSE has an issue or questions regarding Home Depot, that Mr. Grasso will be as surprised as the rest of the Home Depot BOD when the issue is addressed? Woe to that NYSE staff member.
    
The conflict could go the other way as well. The mission of the NYSE is to provide for an orderly market, and usually that includes protecting the ability of their members to perform that function. What if Mr. Grasso hears at a Home Depot board meeting a secret report that Wal-Mart is thinking of selling lumber? Does he tell the specialist to be careful? Does he not tell him and watch him get buried, with someone else obviously leaking the news?
    
Did the NYSE board think that this was a good idea, or like some of us at the CBOE, were they too reluctant to say no? The situation is much more serious for them, and times have changed. As a solid member of the “Bold as Brass” group, it is probably too much to expect that Mr. Grasso would ever let outside opinion temper individual ambition, but some group or someone must provide some sobering counsel. It obviously is not the NYSE BOD. Is it SEC Chairman Harvey Pitt, is it the New York Times or Wall Street Journal editorial staff (mindful of all that NYSE advertising), or is it a Congressional committee? Maybe it is John Wayne or the Lone Ranger, but aren’t they both dead? We better find someone, and soon.
      

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