Grasso Probe Report: NYSE Pay Process 'Multiflawed'

February 2, 2005 ( - Former New York Stock Exchange (NYSE) chief Richard Grasso had too much sway over the people who determined the size of his paycheck resulting in him getting $144 million to $156 million too much in a hugely controversial compensation package, an investigative inquiry has found.

Grasso was also accused of taking deliberate steps to keep his high-profile board in the dark about his soaring pay by the stinging summary document released Wednesday by the exchange, according to news reports.

The news reports said that the document found that Grasso’s $187.5 million pay and retirement package was “the result of a multiflawed executive compensation process” affected by a high NYSE board turnover and Grasso’s control over the board.

The investigative summary was prepared by former federal prosecutor Dan Webb, who was hired by the exchange to look into whether there was anything improper in the events surrounding Grasso’ gargantuan compensation package. Webb undertook the review in the aftermath of the controversy over Grasso’s pay that led his to his ouster in September 2003 (See  NYSE Chairman Grasso Resigns ). The report concluded that Grasso received “unreasonable levels of compensation and benefits.”

The document was released under court order to lawyers for Grasso and former NYSE director Kenneth Langone who ran the exchange’s compensation committee during Grasso’s tenure. The order, by a New York state court judge, came in a case brought by New York Attorney General Eliot Spitzer, who alleged that aspects of Grasso’s compensation were obtained illegally and without knowledge of the NYSE board (See  Spitzer Slaps Former NYSE Head Grasso with Pay Suit ).

The report also concluded that there was a lack of “appropriate involvement” with the pay consultants NYCE hired to review its chairman’s pay. Interviews with 64 people were conducted for the report, including with Grasso and 38 NYSE board members.

A copy of the full report is  here .