wo years ago this week, Richard A. Grasso, chairman of the New York Stock Exchange, presided as the bell rang to reopen trading six days after the Sept. 11 terrorist attacks. As the defiant face of the financial markets on that troubled day, he was heralded as a national hero for leading a wounded Wall Street back into action.

Mr. Grasso was in his perch again when the closing bell halted trading last Friday afternoon. But his public image had changed significantly. He had spent much of the week explaining to government officials and reporters how he stood to walk away from his career at the exchange with almost $200 million in compensation — before he agreed on Tuesday to forgo $48 million of it.

His slide from paragon of steadfast leadership to the newest symbol of runaway greed is not an unfamiliar story. John F. Welch Jr., the former chairman of General Electric, was a business icon with a sterling legacy until revelations about his post-retirement perquisites drew so much criticism that he agreed to pay for some of them himself.

But Jack Welch ran a company. Dick Grasso, as overseer of the world's most important stock market, is a regulator, with a duty to the federal government to safeguard the interests of all investors. In the wake of the recent corporate scandals, the exchange has claimed to be leading the cause of Wall Street reform by demanding clear standards for how listed companies are managed and pushing for greater independence of corporate boards.

Yet Mr. Grasso's own compensation was set by the people he is charged with regulating — a board of directors filled with chief executives of big brokerage firms and companies listed on the exchange.

"They're paying the policeman," said Sarah Teslik, executive director of the Council of Institutional Investors in Washington. "The board is composed to protect Dick Grasso and broker-dealers, not investors."

The disclosures about his pay, made in response to demands from the Securities and Exchange Commission, triggered calls from some current and former members of the exchange for Mr. Grasso to resign or be replaced by the board.

But Mr. Grasso says he is not budging. In an interview in his cluttered office in the exchange's pillared fortress on Friday, he made no apologies for his compensation and said he would survive the controversy and serve out his new contract, which runs until 2007.

"I don't determine, nor have I ever determined, what the awards to me would be," Mr. Grasso said, his fingers clasped around a doubled-up paper coffee cup.

As for the calls for his resignation, he said, "I believe that I am the right person to be in the position that I'm in." He added, "That is my commitment and it's unwavering."

His only regret about his pay, he said, was that he did not take it sooner. Mr. Grasso had deferred so much of his past pay that when he decided to take it all out this year, the number was staggering. By not taking all of his pay annually, he had let portions of it grow, before taxes, at interest rates as high as 8 percent. That compounded sum, combined with his accrued pension, amounted to the $139.5 million Mr. Grasso withdrew from his accounts at the exchange this month.

Mr. Grasso said that the decision to surrender his claim to the additional $48 million was made by him and not the exchange board. But he had been prepared on Tuesday to convince the board that he should take the money, which was, after all, contractually his.

"People now, all of a sudden, have a different impression" of his motives, he said, surrounded by rows of photos of him with a constellation of luminaries. "I'd be less than candid if I didn't say that hurts me."

Mr. Grasso, 57, does not hide his belief that some critics begrudge him his millions because of his working-class background. Unlike many of the chief executives he associates with, he does not have a college degree. He grew up in Queens and attended Pace University before joining the exchange 35 years ago. He rose through its insular operation all the way to the top, becoming, in 1995, the first career employee to be named chairman.

Three years later, the board approved the employment contract that has so enriched him. The contract set a new standard of measurement for Mr. Grasso, benchmarking his pay against that of other top financial executives on Wall Street. Some directors felt they had to pay him as much as he might earn at a large company.

His annual pay rose to a peak of $31 million in 2001 — including a $5 million bonus for his handling of the reopening of the market after Sept. 11 — a sum that was double what most of Wall Street chief executives received that year and a large multiple of what regulators typically earn.

William H. Donaldson, the previous head of the exchange, made at most around $1.85 million a year in salary and bonus. Mr. Donaldson, who has been critical of Mr. Grasso's pay, currently earns $142,000 a year as the chairman of the Securities and Exchange Commission.

The board that approves Mr. Grasso's pay comprises 12 representatives of the securities industry, including the chairmen of Goldman Sachs, Morgan Stanley and Merrill Lynch, and 12 directors who are supposed to represent the investing public. Mr. Grasso and the presidents of the exchange, Robert Britz and Catherine Kinney, are also on the board. Only a few directors are chosen from among Mr. Grasso's actual employers, the 1,366 members who own shares of the exchange. Each share, known as a seat, is currently valued at $2 million

Many of the members work on the floor of the exchange trading stocks for their own accounts or making markets in shares of listed companies for others to buy and sell. Their main interest is to perpetuate the 211-year-old exchange as the primary marketplace for stocks of the world's biggest companies.

As a regulator, Mr. Grasso and his team of managers have authority over the members, carrying the clout to punish them, with fines and even expulsion, for violations of securities laws and exchange rules. The exchange has been investigating the trading practices of several of its market-makers, known as specialist firms, for most of this year.

But critics have complained about the coziness between Mr. Grasso and the powerful people he is supposed to regulate, and for his failure to judge how outsiders would react.

In the last year, Mr. Grasso's critics successfully assailed him for sitting on the boards of two companies whose shares trade on the exchange. He resigned as a director of Computer Associates in July 2002, when that company was under investigation for accounting problems. In June, he said he would leave the board of Home Depot, and Kenneth G. Langone, a founder and director of Home Depot, left his position as the exchange's compensation committee.

In late March, the exchange nominated Sanford I. Weill, the chairman of Citigroup, the world's largest bank, as a director. Mr. Weill was not going to take one of the 12 seats reserved for representatives of the securities industry, but as one of 12 members of the investing public.

Mr. Weill swiftly withdrew his nomination after Eliot Spitzer, the attorney general of New York, vowed to oppose it vehemently because Citigroup had just agreed to pay $400 million in penalties as part of a broad settlement between regulators and major brokerage firms.

The public flap over Mr. Grasso's pay also underscores the clubby nature of the board. Directors who were present at a board meeting that day said that Mr. Grasso argued that to give up the money would "repudiate the process" through which it had been awarded. To bolster his case, Mr. Grasso called in two influential friends.

The first was Martin Lipton, an influential partner of the Wachtell Lipton Rosen & Katz law firm, who provided his view on the matter. Mr. Lipton, who also chairs the Big Board's legal advisory committee and who has served as the lawyer of choice for such Wall Street notables as Sanford Weill and Felix Rohatyn, the former Lazard Frères banker, said the system that produced the pending payments was legally sound. Mr. Langone, a director who played an important role in formulating the 1998 contract that so enriched Mr. Grasso, supported Mr. Lipton's view.

Right or wrong, that logic was lost on other directors, especially the chief executives of Wall Street firms. Highly paid themselves, those directors feared a public relations fiasco if Mr. Grasso accepted the $48 million. They argued forcefully that Mr. Grasso had to give up the money for the good of the exchange, directors who were there said.

Despite that episode, directors of the exchange remain, for the most part, united in support of Mr. Grasso. Mel Karmazin, president of Viacom, said Friday that Mr. Grasso had done nothing wrong in accepting the pay the board had awarded him.

"I absolutely feel as committed to Dick as ever," Mr. Karmazin said.

Another director who declined to be identified said the board's backing was likely to hold, barring further criticism from the S.E.C. or any significant erosion in support for Mr. Grasso from brokers on the floor of the exchange, where emotions are mixed.

Robert M. Murphy, a former exchange director and the chief executive of LaBranche & Company, a specialist firm, said, "I would say that one-third want his head, one-third are disgusted but think there is no one better for the job and one-third still love him."

But he said, "I would hate to imagine the N.Y.S.E. without Dick."

Some shareholder advocates are predicting Mr. Grasso's departure, and with much less sympathy about his rapid fall from grace.

"It's a shame because he was such a man of the people, up from nothing," said Nell Minow, editor of the Corporate Library, a research firm in Portland, Me. "It's a shame that this is going to be on the first line of his obituary. But he should have thought of that before he accepted that level of pay."