Glass Lewis Slams NYSE On Executive Compensation

NEW YORK -(Dow Jones)- Senior executives of NYSE Euronext (NYX) are paid more than their peers despite the exchange company lagging in performance, according to a report from advisory firm Glass Lewis & Co. LLC.

A report issued ahead of NYSE Euronext's April 28 shareholder meeting assigned the Big Board parent a "D" grade in linking compensation to performance and recommended investors vote out a board member overseeing compensation.

"Overall, the company paid more than its peers, but performed worse than its peers," wrote Glass Lewis analysts Daniel Weeks and David Eaton in the report, a copy of which was reviewed by Dow Jones Newswires.

A separate report from Institutional Shareholder Services rated NYSE Euronext's executive compensation as a "medium concern."

The advisory firms' focus on pay comes as NYSE Euronext pushes to seal an agreed merger with Deutsche Boerse AG (DB1.XE) that would see NYSE Chief Executive Duncan Niederauer as CEO of the world's largest exchange group, as part of a senior management team drawn equally from both companies.

NYSE Euronext's board last weekend rejected an unsolicited bid from IntercontinentalExchange Inc. (ICE) and Nasdaq OMX Group Inc. (NDAQ) that placed a $1.6 billion premium on NYSE by targeting higher cost savings from dividing its businesses between the potential acquirers.

Spurning the offer on strategic grounds upset some NYSE Euronext shareholders, and the April 28 meeting is being closely watched for signs of displeasure, potentially by voting against directors.

Glass Lewis recommended shareholders vote against James McNulty, former CEO of the Chicago Mercantile Exchange who heads NYSE Euronext's compensation committee over the past fiscal year, "during which time the company was deficient in linking pay with performance."

NYSE Euronext's rating has climbed since 2008, when Glass Lewis assigned an " F." NYSE Euronext has frozen executives' base salaries for the past three years and in 2010 implemented a new program linking the size of its executive bonus pool to earnings.

Niederauer's 2010 pay of $7.2 million ranked far behind that of Nasdaq OMX CEO Bob Greifeld who in 2009 earned $17 million, according to the Glass Lewis report.

The firm, which has yet to evaluate Nasdaq OMX this year, last year assigned the company a "D" rating for executive compensation, matching the grade assigned NYSE Euronext. Nasdaq OMX in 2008 earned a "C."

A spokesman for NYSE Euronext had no immediate comment.