New York sues Grasso for return of $189m

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The Independent Online

State regulators last night took strong action against Dick Grasso, the former chairman and chief executive of the New York Stock Exchange, suing him over the $188.5m (£105m) compensation he received last year before scandal over the exorbitant payment forced his resignation last September.

State regulators last night took strong action against Dick Grasso, the former chairman and chief executive of the New York Stock Exchange, suing him over the $188.5m (£105m) compensation he received last year before scandal over the exorbitant payment forced his resignation last September.

The Attorney General of New York, Eliot Spitzer, said he considered the pay package to be "wholly inappropriate and illegal" and said he was asking a Supreme Court judge to order that it be repaid by Mr Grasso and that the judge set a more reasonable level of compensation. Further reinforcing his reputation as a tough policeman of Wall Street, Mr Spitzer also filed suit against the exchange itself and against a former director of the exchange, Kenneth Langone, who chairedits compensation committee.

Mr Spitzer said he was challenging Mr Grasso on three counts: that the level of pay was "simply too much", particularly since the exchange is meant to be a not-for-profit entity; secondly that the process for determining the amount was "rigged" because of conflicts of interest between Mr Grasso and the board members; and thirdly because important information was deliberately withheld from the board.

Calling the process by which Mr Grasso sought such excessive reward for his work at the exchange ­ over eight years, he earned the equivalent of $50,000 every working day ­ as "unsavoury", he said it should also serve as a warning to corporate America that such inflated pay deals should not stand.

"This case demonstrates everything that can go wrong in setting executive compensation," Mr Spitzer said. "The lack of proper information, the stifling of internal debate, the failure of board members to conduct proper inquiry and the unabashed pursuit of personal gain resulted in a wholly inappropriate and illegal compensation package."

Mr Grasso said he would fight the suit. "I look forward to complete vindication in court," he added.

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