The Grasso Files

Wall Street Journal ^ | August 13, 2004 | Editorial

[OESY]

We'd like to direct readers to Kimberley Strassel's scoop nearby on New York Attorney General Eliot Spitzer's suit against former New York Stock Exchange head Dick Grasso. The press has tended to present Mr. Spitzer's side of the Grasso pay package tale, but Ms. Strassel dissects a number of heretofore unexamined NYSE documents that tell a very different story.

Mr. Spitzer's charge is that Mr. Grasso and former compensation committee head Ken Langone managed to dupe the Exchange's distinguished directors into paying Mr. Grasso millions. We've argued that this is none of the AG's business, the stock exchange being a private company that signed a private contract with its CEO. But even if one were to bow to Mr. Spitzer's creative claim that he has authority over this matter, he still must show that the people in charge didn't know what they were doing.

In that regard, the papers are instructive to say the least. They include minutes of a compensation committee meeting in which members discuss the "overall level" of Mr. Grasso's compensation and "the history of [the retirement plan] and how it works." Most embarrassing is an excerpt from a meeting a week before the board ousted Mr. Grasso in which directors laud him for doing a "great job in leading the Exchange" and then go on to worry about the PR fallout of having voted him so much money.

All this helps to explain why Mr. Grasso and Mr. Langone are fighting back in court, in contrast with other Spitzer targets. Both men say the process for awarding compensation was above-board, well-vetted and fair.

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[OESY]

Mr. Grasso's Money, by Kimberley A. Strassel