Court Decides ex-NYSE Chairman Can Keep His Pay

July 1, 2008 ( - A New York appellate court shot down the New York attorney general's efforts to force ex-New York Stock Exchange (NYSE) Chairman Richard Grasso to return a portion of his $187.5 million compensation package.

The Wall Street Journal reports that, in a 3-1 decision, the New York Supreme Court’s Appellate Division dismissed the two remaining causes of action against Grasso and one against former NYSE director Ken Langone, saying New York Attorney General Andrew Cuomo can no longer pursue the claims under the state’s not-for-profit law since the NYSE has become a for-profit company. The “Supreme Court erred in concluding that the attorney general’s authority to maintain these causes of action against Grasso and Langone was unaffected by the conversion of the exchange into a for-profit entity,” Appellate Division Justice James M. McGuire wrote for the majority, according to the WSJ.

Also thrown out was a partial summary judgment decision by New York Supreme Court Justice Charles E. Ramos in 2006 that Grasso must return a portion of his pay.

The New York Court of Appeals last week upheld a 3-2 appellate division decision from May 2007 that the attorney general’s office didn’t have the authority to pursue four of six causes of action against Grasso, the news report said.

The case was brought by former New York Attorney General Eliot Spitzer in 2004, alleging Grasso’s pay was excessive for a not-for-profit company (See Spitzer Slaps Former NYSE Head Grasso with Pay Suit ). Grasso resigned in 2003 over the pay controversy (See Grasso Probe Report: NYSE Pay Process ‘Multiflawed’ ).