updated 1/20/2004 11:00:41 AM ET 2004-01-20T16:00:41

Former New York Stock Exchange chairman and chief executive Richard Grasso could soon find out whether he will face a fight over what the exchange now says was his excessive pay.

The NYSE board of directors was expected to discuss Thursday whether the exchange should sue to get back some of the estimated $187.5 million in compensation Grasso was awarded before his departure in September.

The board also was expected to consider who might serve as the NYSE's new chairman, and whether to make public an internal report on how Grasso's pay package was approved. Parts of that report, compiled by former federal prosecutor Dan K. Webb, have leaked out, and some members of the exchange have called for its full release _ despite interim chairman John S. Reed's concern that it contains some "embarrassing" details, which he has said could ultimately support legal action.

At stake is $139.5 million in retirement benefits paid to Grasso in a lump sum last year and an additional $48 million in deferred compensation he promised to forgo but did not legally forfeit. He could receive another $10 million in severance pay. Widespread sentiment that Grasso's pay was excessive led to his ouster and prompted calls for sweeping reforms at the exchange.

Also Thursday, the NYSE board was expected to name Richard Ketchum to the new post of chief regulatory officer. Ketchum served as president and deputy chairman of the Nasdaq Stock Market until last summer.

Reed, the retired co-CEO of Citigroup Inc. who was brought in to help restore the exchange's reputation and improve its governance, seems inclined to pursue at least some of Grasso's pay. Reed met with New York State Attorney General Eliot Spitzer on Monday and asked if he'd be willing to get involved in such an effort, a source familiar with the matter said.

The source, who spoke on condition of anonymity, said Reed did not formally ask for help, and Spitzer was not planning to take any action until a request was made. It was likely the exchange would approach the Securities and Exchange Commission with a similar query.

Because the NYSE is a not-for-profit member organization, a legal argument could be made that paying its top executive such a large sum was an abuse of its resources.

Regulators could file a lawsuit or negotiate a settlement with Grasso, or the exchange or its members could pursue legal action against him independently. Some of the board members who approved Grasso's pay package could also end up in court.

Should Reed and the new eight-member board decide to take legal action Thursday, only a simple majority — five 'yes' votes — would be required.

"There aren't a lot of cases where someone has been pursued in the case of excessive compensation," said Grant Vingoe, a lawyer specializing in market regulation at Dorsey & Whitney. "The real question is what the (Webb) report says about whether he used undue influence, or did he withhold information from the board."

Representatives for Reed and Spitzer declined to comment Wednesday. Kenneth Edgar, Grasso's lawyer, did not immediately return calls for comment.

As part of its governance reforms, the exchange agreed to split the responsibilities of chairman and CEO. Former Goldman Sachs Group president John Thain was named CEO last month and will formally move into the job Jan. 15, but so far no new chairman has been appointed. Reed, who insists he is eager to return to retirement, has said naming a permanent chairman would be a top priority for the directors.

Wall Street is also waiting to see how the board deals with the five specialists firms that the NYSE says engaged in improper floor trading. The NYSE said in October that it would take disciplinary action and seek tens of millions in fines from the firms, but no action has been taken yet.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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