NYSE releases report on former chairman Grasso
NEW YORK (AP) – Former New York Stock Exchange Chairman Richard A. Grasso had too much control in setting his controversial $187.5 million compensation and took advantage of personal connections with a board of directors that had unusually high turnover, the NYSE claimed in a previously confidential report released Wednesday. The NYSE released the so-called Webb report, named for attorney Daniel Webb who compiled it, after a judge overseeing New York Attorney General Eliot Spitzer’s suit against Grasso ruled last week that the report was not subject to attorney-client privilege. Webb was retained by the NYSE’s new leadership in late 2003 to investigate Grasso’s pay. “This could have ended up in an almost endless litigation with regard to its confidentiality,” said Michael York, an attorney for the NYSE. “So we decided to release it, so we can move forward with the case and have it judged on its merits.” However, the documents used in compiling the report – e-mails, interviews with executives and board members and NYSE internal documents – were not released. York said those materials would be part of the discovery process in the case and would not be made public unless a judge compelled the NYSE to release them.
York would not comment on whether the report would aid Grasso’s case or Spitzer’s.
In a statement, Grasso spokesman Eric Starkman said: “Mr. Grasso’s attorneys received a copy of the Webb report only moments ago. The New York Stock Exchange is clearly trying to spin its contents before Mr. Grasso’s attorneys have had an opportunity to review it.”
Spitzer has already had access to the report prior to his filing suit against Grasso, former board member Kenneth Langone and the NYSE on May 24. His office had no immediate comment on the release of the report.
The Webb report details the board meetings and other activities that led to Grasso’s pay package. It maintains Grasso received unreasonable levels of compensation and benefits, and blames not only Grasso for having had direct control over the people and processes used in setting his pay, but also blames certain board members for failing to properly monitor Grasso’s activities.
Spitzer claims Grasso and Langone hid information from the board’s compensation committee in approving Grasso’s pay package, which the Webb report also cites. Grasso resigned as chairman and chief executive of the NYSE in September 2004, one month after the pay package was approved and amid growing criticism of his compensation.
In Friday’s ruling, State Supreme Court Justice Charles E. Ramos noted that Grasso and Langone wanted the Webb report made public.
The exchange itself was also named as a defendant in Spitzer’s case, but the attorney general said he would not seek damages from it, and offered assurances that any money he did win back would be returned to the exchange. The exchange itself has not sued Grasso for the return of any funds.
Grasso filed a counterclaim against the NYSE in July, seeking damages for breach of contract and defamation. York said the NYSE will move to have Grasso’s counterclaim dismissed.
AP-ES-02-02-05 1246EST