NEW YORK - The state attorney general's office sued former New York Stock Exchange chief Richard Grasso Monday, accusing him of bullying and manipulating his way to a $187.5 million compensation package that was "wholly inappropriate and illegal."
Attorney General Eliot Spitzer, seeking the return of "well in excess of "$100 million" from Grasso, also sued the exchange itself and a former NYSE board member following a four-month investigation into the controversial pay package. Grasso resigned as chairman and CEO last September amid intense criticism of his pay.
The suit asked that a State Supreme Court judge rescind the pay package and determine a reasonable level of compensation for Grasso. It names Grasso, the NYSE and Kenneth G. Langone, a former NYSE board member and ex-chairman of the exchange's compensation committee.
"This case demonstrates everything that can go wrong in setting executive compensation," 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."
Spitzer maintained that Grasso, Langone and former NYSE human resources executive Frank Ashen misled compensation committee members by omitting retirement accounts and other aspects of Grasso's pay package. The attorney general said he singled out Grasso and Langone because they allegedly actively misled the other board members, although the entire board could have been held responsible for approving the compensation.
"I drew the line based on those who misled and those who were misled," Spitzer said.
Spitzer claimed the exchange's directors were given inaccurate and misleading information before approving Grasso's contract, and that certain deferred compensation plans and benefits were entirely left out of documents given board members.