• This is a partial transcript from Your World with Neil Cavuto, September 24, 2003, that was edited for clarity.

    Watch Your World w/Cavuto weekdays at 4 p.m. and 1 a.m. ET.

    NEIL CAVUTO, HOST: You know, with its credibility severely damaged, the New York Stock Exchange (search) held top-level, closed-door meetings today with very some powerful state treasurers and comptrollers. The message: The NYSE better clean up its act now or else.

    California Treasurer Phil Angelides headed up today’s meeting. Also joining me is Bill George. He is the former head of Medtronic who also sits on the boards of Goldman Sachs (GS), Target (TGT), and Novartis (NVS).

    Welcome to both of you.

    Phil, to you first. I guess really congratulations are in order. It was your original call to shake up the institution, to address Grasso by saying get out, Grasso, that got this waterfall going. Were you happy today?

    PHIL ANGELIDES, CALIFORNIA STATE TREASURER: Well, I’m not sure "happy" is the word because what we have here is one of the real gems of the American free-enterprise system, the New York Stock Exchange, where 80 million Americans invest in our economy, with credibility that’s been damaged and a lot of work to do to restore the public trust.

    CAVUTO: Did they restore it today?

    ANGELIDES: Well, today was a step, and I will tell you I was personally pleased. I think the board members understand the severity of the situation, understand how much work there is to do and that there can’t be any half measures. This isn’t just about rearranging the chairs in the boardroom.

    And today -- I’ll just say very quickly -- we called for an independent examination, an audit top to bottom of the New York Stock Exchange by a credible third-party, because I don’t think the board can do it themselves, and then some sweeping reforms to make sure it can serve the public and fulfill its regulatory mission.

    CAVUTO: Bill George, you have a long history of just being honest in the boardroom, making sure boards are accountable. Should this board go?

    BILL GEORGE, FORMER MEDTRONIC CEO: No, I think it would be a disaster for the whole board to step aside. However, I think it has to look at its independence, its transparency, and, frankly, adhere to its own guidelines.

    The exchange was away ahead of the game a year ago or 15 months ago when they set the standards for the rest of the world for all listed companies, and the rest of the world’s been following the exchange, and now they don’t follow their own standards.

    And so the first thing, I think, the board should do is adopt its own listing requirements of having at least 50-percent independent and having transparency, revealing all its compensation, and I think, ultimately, you’re going to see a split of the chair and CEO roles.

    CAVUTO: All right. Let’s say that happens. So the problem for a lot of just regular folks I talk to and not so regular folks, big mucky mucks like yourself, is they say, hey, I don’t care what New York Stock Exchange is, private, quasi-public, public institution, $149 million, $189 million for the top guy too much.

    ANGELIDES: Well, first of all, I think we all care that investors view it as fair, open, and transparent, a place where people can put their money at risk for market risk, not honesty risk.

    But I think there’s another story here. I really believe the beauty of the American free-enterprise system is that people can work hard, put their capital...

    CAVUTO: I know, I know, but come on.

    ANGELIDES: But he didn’t do that, and see, entrepreneurship, financial success by taking risks and growing our economy is different than being part of a management class that gets these outrageous compensation...

    CAVUTO: Or that writes off on it.

    ANGELIDES: And, I might add, I believe the latter, the Grasso package, is the very kind of thing that undermines confidence in the fairness of the economy.

    CAVUTO: All right. Now you’ve got John Reid of Citigroup (C) fame taking over, Bill. Do you have confidence that he can shape up this ship?

    GEORGE: I think John Reid is an inspired choice. I think the board will quickly...

    CAVUTO: He’s taking a dollar for this.

    GEORGE: Well, that’s right, and I think...

    CAVUTO: Is that what we should pay the new guy, a dollar?

    GEORGE: No, but I do think the whole compensation system needs to be re-looked and brought in line with....

    CAVUTO: Bill, what’s a fair salary to you?

    GEORGE: A million. Two million. Salary a million and bonuses on top. But not the kind of things we’ve been looking at. It ought to be brought in line with the size of the exchange and, also, its quasi-public role as a regulator.

    CAVUTO: Yes, because you know the answer you get from a lot of folks. This sounds incredible to folks outside the New York City area. They’re having trouble filling this job with that kind of pay, but that’s what it comes down to.

    ANGELIDES: But I think it’s legitimate. You know, it used to be in America to make $100 million you really had to hit it out of the ballpark, a heck of an idea, building a company, and I do think this culture of entitlement to riches is badly askew, and I think it damages the notion of a lot of small business people, ordinary citizens that the economy’s not for everyone.

    CAVUTO: But you trust that it will right its ship?

    ANGELIDES: Well, I will say in some sad and odd way this saga may send us on our way.

    CAVUTO: Bill, do you agree?

    GEORGE: I think the board has a message, and it’s been moving swiftly now, and I think the right person, Neil, is not going to do it for the pay. They’re going to do it as a public service. They should be fairly paid, but...

    CAVUTO: Yes, but if you’re in Sex and the City like Grasso did, you’ve got some bennies with this job, right?

    Bill George, thank you very much.

    And, Phil Angelides, thank you very much.

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