Was Grasso worth it?

Amy Scott Nov 22, 2006

KAI RYSSDAL: At any exchange rate, 187 million American dollars is a lot of money. And for almost two and a half years now New York’s attorney general has been trying to prove it’s more than Dick Grasso deserved. Grasso’s the former chairman of the New York Stock Exchange who departed under the scandal of that huge pay package. Marketplace’s Amy Scott reports prosecutors are getting creative in their efforts to get most of the money back.

AMY SCOTT: Dick Grasso’s critics have long said he was paid too much, particularly for heading what was at the time a nonprofit institution. And that the compensation process was flawed. But the Wall Street Journal reports today that he just didn’t do a very good job, at least according to a report commissioned by New York Attorney General Eliot Spitzer.

A University of Utah finance professor concluded that during Grasso’s highest-paid years new listings on the Exchange declined. So did its market share. Its overall trading volume soared, but so did that of every other stock exchange. The report says Grasso was just riding the wave, says Charles Jones who teaches finance at Columbia University.

CHARLES JONES: Every stock market in the world was doing well in the late 90s. And so the question is should Grasso take credit for that?

Eliot Spitzer says no. But Grasso had a stellar reputation among many of his colleagues. He won praise for bringing the Exchange back on its feet after the World Trade Center attacks. One of Grasso’s attorneys asked today, what are you going to believe, the report of a paid academic witness or the judgment of dozens of business leaders? Dave Larcker teaches accounting at Stanford University.

DAVID LARCKER: You know, like in all legal situations, there’s two sides of it. Both sides have some credibility and I suspect the truth is somewhere in the middle.

Spitzer likely will have moved on before his years-long battle is resolved. In January he becomes governor of New York and his successor Andrew Cuomo will take over the case.

In New York, I’m Amy Scott for Marketplace.

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