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The state treasurers and pension managers who chased Dick Grasso out of the


chairmanship say they're not through yet.

The politicians and money managers are demanding major structural changes in the way the 211-year-old institution operates, and they want Grasso to give back some of his eye-popping $139.5 million pay package.

The group, which controls nearly $500 billion in state pension funds, presented their demands to the NYSE board at a morning meeting, then discussed them at an afternoon press conference.

Topping the coalition's list of demands is a call for an independent investigation of the inner workings of the NYSE, including the process the led the exchange to award Grasso a $139.5 million pay package. They also want the NYSE's current 27-member board to be replaced with a smaller board that includes directors who represent the interests of investors.

Additionally, the group wants the NYSE to separate its regulatory and enforcement division from the exchange's business operation.

"We're not just talking about arranging chairs and furniture in the boardroom,'' said California State Treasurer Philip Angelides, one of the organizers of the coalition and first elected officials to call last week for Grasso's resignation as chairman and chief executive of the NYSE. "It's important to take the tarnish off the New York Stock Exchange."

Angelides and the other elected officials described their meeting with 10 NYSE board members as productive. The officials from states such as New York, North Carolina, Iowa, Connecticut and Oregon said they believe the NYSE board is serious about reforming itself in the aftermath of the Grasso pay debacle.

"What they said is, 'We get it,'" said New York State Comptroller Alan Hevesi.

Hevesi, meanwhile, had some harsh words for the

Securities and Exchange Commission

, which the treasurers asked to oversee the investigation of the NYSE. He said the flap over Grasso's salary has put both the leadership of the NYSE and the SEC on trial. He said the SEC has been part of the "problem'' in the corporate governance failures at the Big Board.

Some of the NYSE board members who met with the state treasurers and pension managers included lead director and former New York State Comptroller Carl McCall,

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Chairman and Chief Executive Henry Paulson, Silicon Valley attorney Larry Sonsini and Kenneth Langone, an investment banker and co-founder of

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Langone may be the most controversial NYSE board member since he led the compensation committee that negotiated most of Grasso's pay package in 1999. He also is a close confidant of the former Big Board chairman.

The board's new interim chairman, John Reed, did not attend the meeting. Reed, a former


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executive, is traveling in Europe and won't officially take over his new assignment until next week.

The treasurers did not reveal any specific reactions of NYSE board members to their demands. They did, however, say the NYSE recorded the meeting and they would not object to the Big Board releasing a transcript to the public.

For its part, the NYSE called the meeting with the group "very constructive'' and said "there were a number of helpful recommendations.''

The Big Board had been scheduled to unveil a series of corporate governance reforms at its next board meeting on Oct. 2. But exchange officials said the release of that report may be delayed to give Reed more time to study the proposals.

The delay would also allow the board to give consideration to some of the proposals put forward by the state treasurers.