Please answer only questions below on here after reading the case.
Read Case - Former CEO of NYSE: Grasso's Pay Package.
Do you think that Grasso's compensation was excessive and feel that a portion of the compensation should be repaid?
Who is hurt by excessive compensation and are there other parties that gain from the excessive compensation?
Why did the board approve the pay and the courts rule that Grasso could keep his pay?
CASE - FORMER CEO OF NYSE: GRASSO'S PAY PACKAGE
Richard Grasso joined the New York Stock Exchange (NYSE) in 1968 as a derk and worked his way up to the executive in charge of listings and then to chairman in 1995. In 2003 he was forced to leave the exchange after earning $187.5 million as chief executive officer.
Subsequently the New York state's attorney general, Eliot Spitzer, sued Grasso to return his pay. Spitzer argued that Grasso's pay was excessive and a breach of fiduciary duty.
The board of directors that approved the pay package included many Wall Street executives such as Henry Paulson, then the head of Goldman Sachs Group Inc. and subsequently U.S. Treasury secretary; Larry Fink, CEO of BlackRock Inc., a private equity firm; and Richard S. Fuld Jr., former CEO of Lehman Brothers Holdings Inc.
The NYSE board had a compensation committee. Ken Langone was the chair of the compensation committee from 1999 until a few months before Mr. Grasso left the exchange. H. Carl McCall became the new chair of the compensation committee in June 2003 and claimed that the committee did not receive detailed information about the compensation. McCall recommended that the full board approve the pay package. Even though board members claimed they were shocked by the size of the package, they approved it anyway. In 2008, the courts ruled that Grasso could keep his pay.