GOING AFTER GRASSO’s MONEY - I
Court, Consent, or Common Cause?
Lawsuits have come flying in Mr. Richard Grasso’s retirement money. The New York State’s Attorney General, Mr. Eliot Spitzer, already has filed a suit on May 24. Not to be outdone, Grasso the next day pledged to file a countersuit. The two, Spitzer and Grasso, are of course aiming for two different things.
Spitzer for “over $100 million (as is claimed in his suit) of the $200million-plus in salary, retirement pay, bonuses, benefits and potential severance payments the Big Board paid Grasso or promised him”. Grasso’s suit is for justifying not only $139.5 million which the Big Board when disclosing his accrued benefits in August last year decided he could withdraw, but also the remainder of $48.5 million out of the package due to him. This amount he said last August he would let go since the Big Board had not disclosed it as part of his dues. But now he wants to claim it.
At the center of these claim and counterclaim lies however the contentious issue of Grasso’s package on retirement as Chairman and Chief Executive of the New York Stock Exchange. “My vindication will come in courtroom,” says Grasso. Spitzer believes the court will uphold his contention that Grasso’s payment stands in excess of norms.
It is open to question where court comes into Grasso’s package. Yes, inasmuch as he claims what is still due, court would decide whether Grasso has claim to the undisclosed amount of $48.5 million. But Spitzer, prima facie, has no claim to Grasso’s pay.
It is Spitzer’s case however that the NYSE in awarding the huge package to Grasso has violated the state law governing not-for-profit groups. He has further alleged in his lawsuit that the package resulted from Grasso’s “manipulation and intimidation of the exchange’s unwitting and incurious board of directors”.
Spitzer’s claim to half of Grasso’s pay rests on these two of his contentions.
To support his standpoints Spitzer has made two specific moves. Together with Grasso, he has also sued the NYSE, too, in addition to the exchange’s former head of compensation committee, Mr. Kenneth Langone. Secondly, before filing suit, he got two different parties in the exchange’s human resources agreeing to admit they provided “inaccurate and incomplete information” about Grasso. This by implication to show the board was misled in deciding Grasso’s pay.
“You can’t do a whole lot better than that to prove a decision was suspect,” Spitzer said on filing the lawsuit.
Spruced up, Spitzer is smug. To boot, Spitzer has struck at Grasso at the behest of no other than NYSE’s boss, Mr. John Reed, who succeeded Grasso. Reed asked him to investigate the circumstances surrounding Grasso’s pay package. Spitzer spent four months investigating before filing the lawsuit.
But all that the AG with all his expertise has achieved is to articulate and, moreover, to allege, instead of making a clear case as would stand before court. He has asserted that the NYSE board erred in deciding Grasso’s pay by contract, rather than by the exchange’s not-for-profit status by which Grasso’s terms could be set to reasonable level. Calling this a mistake, he has alleged that Grasso manipulated and intimidated the board to fix his pay. On these premises, he has then questioned all of Grasso’s payments and laid claim to at least half of his $200 million take.
What is important is that in his lawsuit the AG has required the court to rule first that the NYSE’s status is governed by the state’s not-for-profit law, and secondly to annul the contracts the exchange made with Grasso (what about other executives, since Spitzer does not mention it).
But when did it dawn on Spitzer to discover the not-for-profit status of the NYSE? After the exchange rewarded Grasso with millions? And even then why did the activist AG wait till Grasso got his dues? Could he not have intervened earlier? How come he did not even when he had the chance to do so in the intervening period from the time when the Board announced in August Grasso’s award to the time when Grasso was made by the Board to resign in September?
Spitzer would have been perfectly in place to step in at that time in his dual capacity as the regulator of the financial markets and the Attorney General of the New York State. Spitzer did not. Nor did also the Securities and Exchange Commission. This was regardless of the SEC’s chairman, Mr. William Donaldson, a Grasso predecessor at NYSE, having worked behind the scene to get Grasso out over his paycheck.
When those placed in authority and paid to do their part decided to sit back, why must the court rise to the occasion?
Against Spitzer’s suit, there is to be Grasso’s countersuit. The legal row will take long to resolve. It will also cost some millions. Spitzer on his part will be spending money out of public coffers. These and such other related issues will need to be considered in getting after Grasso’s money.
If logic suggests recourse to court is not the right course to do this, can other recourses be considered?
Like, say, for instance, consent or common cause to serve.
Lawsuits have come flying in Mr. Richard Grasso’s retirement money. The New York State’s Attorney General, Mr. Eliot Spitzer, already has filed a suit on May 24. Not to be outdone, Grasso the next day pledged to file a countersuit. The two, Spitzer and Grasso, are of course aiming for two different things.
Spitzer for “over $100 million (as is claimed in his suit) of the $200million-plus in salary, retirement pay, bonuses, benefits and potential severance payments the Big Board paid Grasso or promised him”. Grasso’s suit is for justifying not only $139.5 million which the Big Board when disclosing his accrued benefits in August last year decided he could withdraw, but also the remainder of $48.5 million out of the package due to him. This amount he said last August he would let go since the Big Board had not disclosed it as part of his dues. But now he wants to claim it.
At the center of these claim and counterclaim lies however the contentious issue of Grasso’s package on retirement as Chairman and Chief Executive of the New York Stock Exchange. “My vindication will come in courtroom,” says Grasso. Spitzer believes the court will uphold his contention that Grasso’s payment stands in excess of norms.
It is open to question where court comes into Grasso’s package. Yes, inasmuch as he claims what is still due, court would decide whether Grasso has claim to the undisclosed amount of $48.5 million. But Spitzer, prima facie, has no claim to Grasso’s pay.
It is Spitzer’s case however that the NYSE in awarding the huge package to Grasso has violated the state law governing not-for-profit groups. He has further alleged in his lawsuit that the package resulted from Grasso’s “manipulation and intimidation of the exchange’s unwitting and incurious board of directors”.
Spitzer’s claim to half of Grasso’s pay rests on these two of his contentions.
To support his standpoints Spitzer has made two specific moves. Together with Grasso, he has also sued the NYSE, too, in addition to the exchange’s former head of compensation committee, Mr. Kenneth Langone. Secondly, before filing suit, he got two different parties in the exchange’s human resources agreeing to admit they provided “inaccurate and incomplete information” about Grasso. This by implication to show the board was misled in deciding Grasso’s pay.
“You can’t do a whole lot better than that to prove a decision was suspect,” Spitzer said on filing the lawsuit.
Spruced up, Spitzer is smug. To boot, Spitzer has struck at Grasso at the behest of no other than NYSE’s boss, Mr. John Reed, who succeeded Grasso. Reed asked him to investigate the circumstances surrounding Grasso’s pay package. Spitzer spent four months investigating before filing the lawsuit.
But all that the AG with all his expertise has achieved is to articulate and, moreover, to allege, instead of making a clear case as would stand before court. He has asserted that the NYSE board erred in deciding Grasso’s pay by contract, rather than by the exchange’s not-for-profit status by which Grasso’s terms could be set to reasonable level. Calling this a mistake, he has alleged that Grasso manipulated and intimidated the board to fix his pay. On these premises, he has then questioned all of Grasso’s payments and laid claim to at least half of his $200 million take.
What is important is that in his lawsuit the AG has required the court to rule first that the NYSE’s status is governed by the state’s not-for-profit law, and secondly to annul the contracts the exchange made with Grasso (what about other executives, since Spitzer does not mention it).
But when did it dawn on Spitzer to discover the not-for-profit status of the NYSE? After the exchange rewarded Grasso with millions? And even then why did the activist AG wait till Grasso got his dues? Could he not have intervened earlier? How come he did not even when he had the chance to do so in the intervening period from the time when the Board announced in August Grasso’s award to the time when Grasso was made by the Board to resign in September?
Spitzer would have been perfectly in place to step in at that time in his dual capacity as the regulator of the financial markets and the Attorney General of the New York State. Spitzer did not. Nor did also the Securities and Exchange Commission. This was regardless of the SEC’s chairman, Mr. William Donaldson, a Grasso predecessor at NYSE, having worked behind the scene to get Grasso out over his paycheck.
When those placed in authority and paid to do their part decided to sit back, why must the court rise to the occasion?
Against Spitzer’s suit, there is to be Grasso’s countersuit. The legal row will take long to resolve. It will also cost some millions. Spitzer on his part will be spending money out of public coffers. These and such other related issues will need to be considered in getting after Grasso’s money.
If logic suggests recourse to court is not the right course to do this, can other recourses be considered?
Like, say, for instance, consent or common cause to serve.
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