NEW YORK -- New York's attorney general sued former New York Stock Exchange chairman Richard Grasso yesterday, accusing him of bullying and manipulating his way to a $187.5 million pay package that led to his ouster last year.
Eliot Spitzer demanded the return of well over $100 million, calling Grasso's compensation ''wholly inappropriate and illegal."
The lawsuit also named the stock exchange itself and former board member Kenneth Langone, a close friend of Grasso's who was chairman of the exchange's compensation committee.
In a statement, Grasso said he looked forward to a ''complete vindication in court and fully expect that my fellow NYSE directors and I will be adjudicated to have acted completely in accord with our fiduciary responsibilities and always in the best interests of the exchange."
Grasso has received $139 million of his compensation package, and recently told Newsweek he would forgo the rest if the exchange would apologize for tarnishing his name.
Grasso resigned as NYSE chairman and chief executive in September amid intense criticism of his pay.
The attorney general asked that a judge rescind the pay package and determine ''reasonable" compensation. ''This case demonstrates everything that can go wrong in setting executive compensation," Spitzer said. ''The lack of proper information, the stifling of internal debate, the failure of board members to conduct proper inquiry, and the unabashed pursuit of personal gain resulted in a wholly inappropriate and illegal compensation package."
Spitzer said the NYSE board of directors was given inaccurate and misleading information before it approved the contract.
Spitzer accused Grasso, Langone and former NYSE human resources executive Frank Ashen of misleading compensation committee members by failing to inform them of retirement accounts and other aspects of Grasso's pay package.
Ray Pellecchia, an NYSE spokesman, responded to the lawsuit by saying, ''We are supportive of attorney general Spitzer's efforts in this matter." Earlier this year, the NYSE asked Grasso to return $120 million of his compensation. Grasso refused.
Langone, who left the NYSE board last year, said he was being unfairly singled out from the rest of the board.
Spitzer also revealed a settlement yesterday with Ashen and Mercer Human Resource Consulting Inc., which prepared a financial analysis of the pay package. Ashen will return $1.3 million to the exchange, and the consulting firm will return the fees it charged the NYSE in 2003, Spitzer said.