Dick Grasso---Jud
>> wal-mart said total sales at wal-mart and sam’s club stores in the u.s. were up more than 6% at stores open more than a year, ahead of forecasts. sales gaining a boost last month from warmer weather and tax refunds bigger than a year ago. consumers are more confident about jobs and the economy. it’s not just wal-mart reporting stronger-than-expected sales today. gap said february sales rose 12% helped by its banana republic and old navy units. analysts expected 4.7% and target said february sales came in at 7.5%, ahead of its forecast, up as much as 7%. j.c. penney said department store sales were up 12.1%. looking at retailers and how they traded today, all but penney’s finishing higher on the day on good retail news. the securities and exchange% commission has expanded its investigation into the pay package of former new york stock exchange chairman richard grasso. people familiar with the investigation tell bloomberg news the commission subpoenaed many of the exchange’s former directors. regulators want to know how the board approved three contracts that resulted in last year’s payment of $140 million to grasso. joining us with more, bloomberg reporter jud horwitz. why is the s.e.c. involved now?
>> i’ll tell you, the new york stock exchange asked the s.e.c. and new york attorney general eliot spitzer last month to kind of carry the ball for them on the issue of reclaiming some of the money from the former chairman, dick grasso. as you know, it was a controversy over his pay that set off a whole chain of questions about corporate governance at the exchange and their ability to regulate themselves.
>> if the s.e.c. is asking these directors for information, is it because they want to take action against grasso or because they want to take action against the directors? is there a jeopardy for the directors there?
>> that is a question that everybody is asking. i mean, clearly grasso is the chief target because he’s already collected $140 million. he was actually entitled, under his contracts that these directors approved, to $188 million. and about a week before he was forced out in september, he said, i’ll give up $48 million. what’s at stake for the directors is they―people, some of them tell me, is more reputational risk than it is actual compensation, paying something out of their own pockets.
>> is there any precedent for this kind of investigation of a not-for-profit organization?
>> there was a case several years back in which the new york state attorney general before eliot spitzer sued for excessive compensation at adelphi university, a school in long island. in that case, it never actually went to litigation, which some of the directors say is not a good precedent, but in that case, the president of the university agreed to give back some money and the board actually did cough up a little bit but as i said, in this case, grasso already has most of what they’re looking for.
>> eliot spitzer said he wants grasso to give a big portion of the money back. what are the chances of that happening?
>> actually, john reed, who replaced grasso as chairman, sent a letter, we think at spitzer’s bidding, saying give back as much as $120 million. the response from grasso’s lawyer was, there’s no way he’s going to return anything, these were sophisticated―some of the most sophisticated people on wall street and in corporate america. it wasn’t only wall street executives on these boards over the last nine years. they knew what they were doing. he’s entitled to every penny and what’s more, if you sue us, we’ll sue you for at least another $50 million that he’s entitled to.
>> so those two going at each other and then the s.e.c. may step in?
>> the s.e.c., it’s a little unclear whether the s.e.c. doesn’t want spitzer to get all the credit in the regulatory turf battle or what their role is. we do know that spitzer is expected to do the litigation.
>> thank you very much, bloomberg news reporter jed horowitz talking about the new york stock exchange and richard grasso’s pay package. profit jumped at the world’s biggest office supply retailer. staples giving investors an annual cash dividend for the first time ever.
>> staples, the world’s biggest office supply retailer said earnings last quarter rose nearly 30% from a year ago. sales rose 10%, coming in ahead of analysts’ estimates. staples announced it’s giving investors a cash dividend for the first time ever and authorizing the buyback of as much as $1 billion worth of stock.
>> i think we feel very strong about our future. but also we had a great year in 2003. our cash flows were $740 million from operations, free cash flow. therefore, we have more than enough cash to be able to fund the growth that’s been―the hallmark of staples’ history and at the same time return some to shareholders.
>> the annual dividend of 20 cents a share will be payable may 17. john mahoney, chief financial officer at staples, says the retail business is hitting on all cylinders, gaining market share and adding to evidence of
