The move comes just a week after Spitzer filed a civil lawsuit against Grasso demanding that he fork over most of the $139.5 million in pay he received last year under the provisions of a state law that governs not-for-profit entities such as the NYSE. Spitzer filed the suit after Grasso made it clear he wasn’t prepared to return any of the money, which was granted by the NYSE board. Grasso was forced out as chairman of the exchange last September amid the controversy.
According to a person close to his office, Spitzer could reduce his demand to $50 million in exchange for Grasso giving up his claim to an additional $48 million he says the NYSE still owes him in retirement benefits. The compromise would allow Spitzer to claim victory because the total would come close to the $100 million threshold he set when announcing his case last week. “Any deal would be really tough unless we get to around $100 million,” a source close to Spitzer says. “If [Grasso] gives up the $48 million and gives back $50 million, it gets us there.”
There are other signs that Spitzer is willing to bend. Tuesday in New York City, Spitzer said in a speech that he was preparing for an aggressive fight to force Grasso to give back the money. “We will win,” he said. But in an apparently conciliatory gesture, people in Spitzer’s office have said that the NYSE should not to release a report prepared by attorney Dan Webb that investigated the Grasso pay deal and his expenses, NEWSWEEK has learned. A spokesman for the exchange had no immediate comment.
Like Spitzer, Grasso has also shown some willingness to compromise. While Grasso says he is planning to sue the NYSE and the board members who helped approve his deal and then forced him from his job last year, but, as previously reported by NEWSWEEK, Grasso has said he is willing to give up any claims to the additional $48 million if the NYSE donates it to charity. In return, he would be willing to make a donation of his own, somewhere around $10 million. A spokesman for Grasso had no comment.
Although both sides have appeared at loggerheads since Spitzer filed his suit, this marks the first time that both Spitzer and Grasso appear willing to compromise. Wall Street is eager for such a deal. Grasso’s probable lawsuit against board members who forced him from his job is likely to drag several major brokerage firm officials through the mud. High on his hit list are Goldman Sachs CEO Hank Paulson, who served on the NYSE board that approved one of Grasso’s biggest single-year pay packages of $30 million. Also a target is former New York State comptroller H. Carl McCall, one of Spitzer’s political allies. Paulson later led the effort to oust Grasso amid the controversy over his pay; McCall headed the compensation committee that voted to allow him to take the $139.5 million pay package.
McCall has said he didn’t know the size of Grasso’s pay deal, but, as previously reported by NEWSWEEK, he received a summary of the pay deal before a meeting in August of last year when the pay deal was approved.
All along, Grasso has maintained that he did nothing wrong and has argued that his pay was based on his record at the exchange, including an increase in the number of companies listed to trade on the exchange and price of seats at the NYSE.
