The Grasso pay case gets a hearing

The NYT reports on the pending NY Court of Appeals arguments in the Grasso excessive compensation case. The storyline is that Grasso may have the last laugh, after his nemesis Spitzer is down the tubes, and some of the directors who approved his compensation, and who should have taken the heat for it instead of Grasso, have not been treated kindly by the subprime meltdown.

As I have been writing for years, this case is a monument to the ambition of Eliot Spitzer. As I pointed out two years ago:

the main thing to keep in mind is that the pay was approved by a highly sophisticated board. The only issue should be whether that board was informed. This is the way it should and would be in a standard fiduciary duty case (e.g, Disney). There is significant reason to believe it was, according to a detailed review of the depositions in the case* * *

And I added this:

Significant resources of the state of New York (not to mention of the defendants) have been spent on this trial. I can't wait to see what Spitzer will do as governor.

It's worth noting that the NYT’s, Gretchen Morgenson was complicit in letting Spitzer reap political gain.  A couple of years I described slanted coverage by Morgenson of the Grasso pay issue. Interestingly, I noted that three years earlier Morgenson had criticized

the hypocrisy of the New York Stock Exchange directors giving Mr. Grasso his money and then booting him for taking it." After Spitzer decided not to charge the directors for "giving Mr. Grasso his money," Morgenson seems to be focusing on Spitzer's new theory -- that the money was too much and the board was misled. . .

Morgenson, in other words, chose to focus on Grasso's "greed" in taking the money.  This nicely fit both Morgenson's obsession with excessive executive compensation and Spitzer's position in the case. Now, a jaundiced observer might say that it doesn't hurt if you're a crusading columnist to have the attorney general and future governor in your corner -- information, access and all that.  (And if you were even less charitable, you might say that sorta resembles analysts currying favor with companies.) In any event, Morgenson helped give this case its political legs, which in turn got Spitzer to the governor's mansion.  The rest, as they say, is history.

Unlike some of Spitzer’s maneuvers, this one, partly due to Grasso’s determination, is actually getting a court hearing. As I wrote last year ago,

Grasso got an important victory when the lower NY appellate court held that the state attorney general has to prove not only that the pay was illegal but also that Grasso knew he was wrong to accept it.

At that point the case became a legal white elephant bequeathed to Spitzer’s successor. The Court of Appeals is hearing the appeal of that decision.

I'm waiting for Morgenson to continue her coverage of this case -- unless, of course, it's not as newsworthy anymore. Funny how the NYT determines newsworthiness.