H. Carl McCall (search), who became the public face of the New York Stock Exchange (search) after Richard Grasso (search) was pressured to resign over his lavish pay, is leaving the board after the organization's interim chairman reports to work next week.

In a letter Thursday, McCall told interim chairman John S. Reed (search) he hoped the exchange could "move forward without being encumbered by the past." The former New York state comptroller is the first director to resign since Grasso stepped aside last week in the face of public fury over his $187.5 million pay package.

"I've done the job, I think the job has been done well and it's time to move on," McCall said in an interview on the New York cable news station NY1.

"I want to make it very clear to everybody that John Reed will have an opportunity to do what's necessary to bring about needed reforms at the exchange," McCall said. "I don't want anybody in the way that represents the past or gives the impression that we're still trying to do business as usual."

Big changes are anticipated for the NYSE board, which has been harshly criticized for approving Grasso's extravagant pay package in the first place. Reed, the former co-CEO of Citigroup Inc. (C), has already suggested the 27-seat board be pared down to about a dozen members.

McCall, an NYSE board member since June 1999 and chairman of the compensation committee for the last three months, has said he was not aware of important details of Grasso's compensation.

Grasso's pay was set in a contract approved in May 1999. Under an August contract revision, Grasso was paid a lump sum of $139.5 million in accumulated benefits and savings, and was owed an additional $48 million in vested funds over the next four years — which Grasso said he would forgo in the face of growing public resentment.

In his letter to Reed, McCall said he would preside over a meeting Monday where directors would hear public testimony and consider ways to reform the NYSE. Later that day, McCall said, he would present the recommendations to Reed.

"What we have learned in the past few weeks is that disclosure is a good thing, and should be done consistently and continually," McCall wrote. He added that his special committee on governance had worked hard to come up with ways to improve the exchange.

The group heard suggestions Wednesday from public finance officials representing seven states, including Sean Harrigan, president of the California Public Employees' Retirement System (search). Harrigan, who said he'd been struck by McCall's sincerity at the meeting, was surprised by his resignation.

"We felt based on the meeting (Wednesday) and the conversations we had privately ... that he was the one board member who really did get it and understood the importance of transparency and having significant representation from members who are truly independent," Harrigan said.

The NYSE, a not-for-profit organization that is owned by members who hold seats on its trading floor, is charged with monitoring and disciplining the brokerage industry. About half of the board's seats are assigned to executives of large investment banks, floor trading firms and brokerage houses — the very businesses the NYSE is charged with regulating.

McCall said he hoped the exchange's board would better represent the investing public in the future, and he suggested it require annual elections and evaluations of directors. He also suggested the directors consider separating the regulatory and trading functions of the NYSE.

McCall said only directors who are not affiliated with the securities industry should sit on the board's compensation committee, and the exchange should disclose details about its top five executives' pay each year.

The board's composition and vulnerability to conflicts of interest have been frequently cited by critics of the NYSE. It was inevitable some directors would step down, said Patrick McGurn, chief counsel of Institutional Shareholder Services, a group that advises large funds on corporate governance issues.

"One by one they are all going to go," McGurn said. "I would be surprised if too many of these individuals are on the board at the NYSE a year from now."

Goldman Sachs CEO Henry M. Paulson Jr., who became a director at the same time as McCall, has suggested that all executives affiliated with the securities industry step down from the board and serve on an advisory committee instead. For now, though, Paulson indicated he would hold on to his seat. "I am grateful that John Reed has taken this assignment and I am going to do everything in my power to assist him," Paulson said Thursday.

Former Secretary of State Madeleine K. Albright, who joined the NYSE board earlier this year, said she was saddened to learn of McCall's departure and credited him with providing the leadership that led to Reed's appointment.

"I trust that he has made a decision that he feels is in the best interest of the New York Stock Exchange," Albright said in a statement. "I have known Carl McCall for many years and he has always conducted himself with dignity and purpose, as he has done today."