Spitzer’s Dick Grasso Summons

Eliot Spitzer’s summons of Dick Grasso is here. Noteworthy in all of this is the heated rhetoric being deployed by Mssr. Spitzer. He has called Dick Grasso’s compensation process “rigged”, among other such things.

The specific allegations are these:

  • The NYSE Board of Directors was misled on various aspects of the Grasso compensation contract.

Inaccurate and misleading information in the form of incomplete and incorrect analyses were provided to Board members. Frank Z. Ashen, a top deputy to Grasso, admitted providing “incomplete, inaccurate and misleading” information in documents to the Board. In one example, the Board was not aware of $18 million in so-called Capital Accumulation Plan (CAP) bonus awards to Grasso for 1999-2001. In addition, Mercer Human Resource Consulting, Inc., a consultant asked to prepare a financial analysis of a proposed $187.5 million payment to Grasso, has admitted that its report to the Board contained “inaccuracies and omissions.”

  • The compensation formula that generated huge payments for Grasso was flawed and under Grasso’s control.

The compensation formula was inappropriately driven by a comparison with the salaries of top executives in the world’s largest corporations. In addition, the investigation found that Grasso, in effect, set his own performance targets, which he easily exceeded. In any event, the NYSE disregarded its own formula on numerous occasions and awarded Grasso funds well beyond the formula’s product.

  • The compensation provided to Grasso was not “reasonable” according to state law.

New York Not-for-Profit Law requires that compensation for executives be “reasonable” and “commensurate with services provided.” In this case, however, the compensation far exceeded what would have been permitted by that standard. Indeed, the amount expended by the NYSE for Grasso’s compensation and benefits for 1999 through 2001 nearly equaled the NYSE’s total net income for those years.

  • Grasso’s dual role as regulator and NYSE employee raised a conflict of interest.

Heads of major Wall Street investment banks were also members of the Compensation Committee. During the same period they approved Grasso’s excessive pay packages they had joined him in a private SEC-sponsored meeting at which they were assured that analyst conflicts of interest were “for the industry to resolve” without regulatory action.


  1. joshua frankamp says:

    I read a news article about you aggregating hard drive pricing data mined from the internet. I was wondering if the feed you referred to was available to the public.

  2. Kevin H. Stecyk says:

    PMFJI, but I believe the answer is yes. Have a look at Paul’s “Search” facility on the right hand side. Just below the search are the orange XML buttons. If you use a rss newsreader reader (I like FeedDemon – http://www.bradsoft.com/feeddemon/index.asp), you can imported the results easily and readily. If you don’t want to use FeedDemon, Google RSS Newsreader to discover other alternatives.
    Hope that helps.