New York (May 25, 2004) – New York Attorney General Eliot Spitzer has found another symbol of business excess to target – former New York Stock Exchange chief executive Richard Grasso.
Spitzer announced today that he is suing Grasso in hopes of recovering over $100 million of the close to $140 million in compensation the NYSE paid its former CEO. Contractually, Grasso was due close to $190 million, but resigned last fall in the face of public outrage at his pay package.
Grasso’s compensation was approved by the board of the exchange, but according to Frank Z. Ashen, former head of human resources at the NYSE, he provided the board with “incomplete, inaccurate and misleading” information about the ex-CEO’s pay, leaving out, among other things, an $18 million bonus payment. Ashen has cut a deal with Spitzer, under which he will pay back $1.3 million to the NYSE, and not be charged with a breach of fiduciary duty.
New York law requires that the pay of executives of nonprofit organizations like the NYSE be “reasonable” and “commensurate with services performed.” Spitzer wants Grasso’s pay package rescinded, and one more in line with state law implemented, which would involve Grasso paying back much of the money he has already received.
The lawsuit also named Kenneth Langone, former chairman of the exchange’s compensation committee. In a statement quoted in the Washington Post, Langone defended the compensation decisions, and said, “If Mr. Spitzer wants to grandstand in the press, he’s doing it on a very shaky soapbox.”
-- WebCPA staff
