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Richard A. Grasso had too much control in setting his controversial $187.5 million compensation as chairman of the New York Stock Exchange and took advantage of personal connections with board members to push it through, the NYSE claimed in a previously confidential report released Wednesday. The result, according to the report, was “excessive” and “unreasonable” compensation for Grasso, 58, who headed the world’s largest stock market for eight years before resigning under fire a month after signing a new contract in 2003. The report claims up to $156.7 million of the pay package for Grasso was excessive. A Grasso spokesman responded by noting that all of his compensation was approved by the board and said Grasso did an outstanding job running the exchange, which is a nonprofit organization owned by its seat holders. 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 it 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.” The report maintains that Grasso’s contracts in the years after he was named chairman and chief executive in 1995 included large lump-sum payments that were supposed to be part of his retirement fund, and that his compensation was excessive compared to most U.S. corporations. The pay package not only included a higher-than-average salary and retirement benefits, but also the use of a car service, security and a private plane for personal use. It also noted an instance in 1999 when the board approved a nearly $800,000 payment to Grasso to cover Medicaid taxes on a $30 million lump-sum payment Grasso had already received. The report said Grasso took advantage of high turnover of board members to push through his contracts, and placed close friends on the compensation committee, including former committee chairman Kenneth Langone. It also said board members failed to properly monitor his activities. Spitzer gained access to the report before he filed suit against Grasso, Langone and the NYSE on May 24. His office had no immediate comment on its release. Spitzer is seeking more than $100 million from Grasso and $18 million from Langone, claiming the two conspired to hide information from the board’s compensation committee in approving Grasso’s pay package. Grasso spokesman Eric Starkman said the report could help exonerate his client, noting that it does not show Grasso speaking directly to the NYSE board of directors or its compensation committee about his pay. “Every dime of compensation was voted on unanimously by a compensation committee that, working with its consultants, decided that Dick Grasso was worth a great deal to the NYSE,” Starkman said in a statement. “The Webb report does not take issue with Dick Grasso’s exemplary performance as CEO of the NYSE, but questions the business judgment of some of the most sophisticated men and women in the financial world.” Langone spokesman Jim McCarthy said his client believed the Webb report helps his case, as it detailed breakdowns in the board’s approval of Grasso’s pay package after Langone had left the board’s compensation committee. Langone believes the committee chairman who replaced him, former state comptroller H. Carl McCall, was at fault for not fully understanding Grasso’s pay package before it went to the board for approval — an assertion backed up in the Webb report. The report noted that McCall admitted not reading the entirety of Grasso’s contract before signing it on Aug. 27, 2003. According to the report, McCall said he relied on a summary from Frank Ashen, an NYSE human resources executive, who omitted $48 million of deferred payments to Grasso in his explanation. Ashen has cooperated with Spitzer’s investigation as part of a $1.3 million settlement for his part in getting the pay package approved. “For Mr. Spitzer to single out Mr. Langone, while omitting his political colleague, Mr. McCall, it’s not only irresponsible, but defies the facts in the report,” McCarthy said. Both McCall and Spitzer, who has announced plans to run for governor next year, are Democrats. McCall did not respond to phone messages seeking comment. 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. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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