The NY State Attorney General has pulled the trigger, and filed a lawsuit against former NYSE President Richard Grasso. In the lawsuit, Spitzer alleges that Grasso violated the New York Not-For-Profit Corporations law in receiving too much compensation. Spitzer also sued the Exchange Compensation Committee Chairman Kenneth Langone, alleging that Langone crafted contracts that led to the payout while keeping other board members largely in the dark about details of Grasso's pay. Spitzer also announced a settlement with the NYSE's former head of human resources, who admitted to providing the NYSE board with information that obscured Grasso's total compensation.
This promises to be a slugfest, with Grasso taking the position that he has done nothing wrong, and that Spitzer is using the lawsuit for his own political ambitions.
In an interesting note, the Washington Post is reporting that Spitzer said "You can't pay the head of a not-for-profit that much money," and "It's simply too much. It's not reasonable. It's not right. It violates the law."
There are interesting issues raised by Spitzer's willingness to use his office to resolve a pay dispute between private litigants. The debates will center around whether the involvement in the dispute is proper, why the State is spending its money and scarce resourses, rather than the Exchange bringing suit, and whether it really matters whether Spitzer thinks the compensation is "too much."
The Washington Post stories are at:
http://www.washingtonpost.com/wp-dyn/articles/A53030-2004May24.html
http://www.washingtonpost.com/wp-dyn/articles/A55761-2004May25.html
