With trial set, can Grasso save reputation?
He's credited with transform-ing the stock exchange for the better, but haunted by the scandal over his compensation.
By ASSOCIATED PRESS
Published August 22, 2006
NEW YORK - Richard Grasso's entire life has been defined by a never-say-die attitude: He never knew his dad, he dropped out of college, he flunked the eye test to become a New York cop, but he still worked his way to the top of the world's largest stock exchange.
His street savvy and sales skills were visible as he helped lead the financial community through the Sept. 11 attacks while working tirelessly - sleeping on a couch in his office - to reopen the stock market only six days after Wall Street's historic shutdown.
Grasso must now summon that same mettle as he prepares a comeback from the scandal over his $187.5-million compensation package. The public furor over the package forced his resignation in 2003 as New York Stock Exchange chairman after an eight-year reign.
"For a kid like me who was booted out the door, I just have to come back," Grasso told the Associated Press. "This fight is not about money, it's about my good name."
"I come from the gutter in Queens," Grasso said. "I captured the American dream, but I did nothing wrong. I intend to fight to get the truth out. That is the American spirit."
Grasso is embroiled in a legal battle with New York Attorney General Eliot Spitzer, who filed a lawsuit against Grasso in 2004 seeking return of at least $100-million of the compensation. A trial is scheduled to begin Oct. 16 in state Supreme Court in Manhattan.
The 60-year-old Grasso spends more time with his wife, Lorraine, and their four children at their home in Long Island, where financial television reports on Bloomberg and CNBC constantly run like background music. Friends from the old neighborhood - a fireman, a former FBI agent, a steam fitter, some of whom go back 55 years with Grasso - are frequent visitors. He has yet to ride his Harley-Davidson since the scandal, but dabbles in gourmet cooking and lifts weights daily.
He has done work for friends in the business world. But he won't begin his next step, opening a firm or accepting a corporate position, until his legal problems are behind him. Grasso also says the thought of politics has crossed his mind, including a possible run for governor in 2010.
"I have been privileged to develop relationships with people from the world, but I would never ask them to do things with me until the sun comes out again," Grasso said.
The lawsuit alleges that the pay was excessive and not commensurate with the services provided, and that Grasso and others misled board members on aspects of the pay package. Furthermore, Spitzer contends the pay was voted on by an NYSE compensation committee stacked with Grasso's cronies.
"This case will be decided on the facts and the law. We are confident of both," said Darren Dopp, a spokesman for Spitzer.
Grasso argues that he did nothing wrong. He says he never negotiated a contract. He said he was presented with a contract approved by committee members in his absence and then was fired because he was making too much money.
"There is no doubt that it's an extraordinary amount of money," Grasso said. "But that was their judgment, not mine. Each of the board members were asked during depositions, 'How much did Grasso ask for?' and there is a blast of silence."
The board members are some of the most respected and powerful corporate leaders in the nation, Grasso noted.
"I didn't have my Aunt Rose or Uncle Louie on the compensation committee," he said. "Oh yes, committee member Madeleine Albright was intimidated by Dick Grasso. She wasn't intimidated by Slobodan Milosevic, but that Grasso must be a powerful guy."
Grasso has countersued for the $50-million he contends is still owed him.
If he wins the countersuit, he plans to give away the entire sum. He and his wife have chosen two cancer charities they are active in to receive some of the money. They will also set up a college trust fund to assist police, fire and construction workers to send their children to college.
"He is probably the most effective leader the New York Stock Exchange has ever had," said Ken Langone, chairman of the compensation board when it approved Grasso's contracts. "We got value and he got what he was worth, and what he deserved." Langone is a co-defendant in the case.
Grasso is credited with transforming what some considered an ailing, out-of-step stock market into a big money machine for many Wall Street firms.
His position took him to the corners of the globe to discuss capitalism with financiers, including meeting with machine gun toting rebels in Colombia at the request of the country's president to try to get them work.
Grasso said he thinks the uproar over this pay package would have been avoided if he had taken his compensation as it was awarded instead of deferring payments into retirement funds to let the portfolio grow.
"My biggest mistake, besides deferring all that money, was I should have quit after 9/11," Grasso said. "I should have said, 'I cannot do it better than this.'"
[Last modified August 21, 2006, 23:49:05]
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