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updated 5/26/2004 1:17:05 PM ET 2004-05-26T17:17:05

In his op-ed piece in yesterday's Wall Street Journal predicting his "vindication" in court, Richard Grasso, former chairman and chief executive of the New York Stock Exchange, says he never misled the exchange's board and that he "never negotiated with any of the committees or boards over an annual bonus or award." It seems, in Grasso's view, the increasingly majestic bonuses were simply awarded.

In his lawsuit, New York State Attorney General Eliot Spitzer names only Grasso and a single director, as well as the NYSE itself. Grasso blasted Spitzer for not suing former New York State Comptroller H. Carl McCall, who was chairman of the NYSE compensation committee at the end of Grasso's tenure, or "the powerful CEOs who voted for my compensation," whom Grasso does not name. Many have followed Grasso's lead in wondering about the failure to sue McCall, a fellow Democratic politician, and other board members in general.

In fact, McCall joined the compensation committee late in the day, well after Grasso's pay had been determined (though before he was allowed to take nearly $140 million in a lump sum). Stalwarts of the committee included Kenneth Langone, chairman of Invemed, an investment banking firm, who was named in Spitzer's suit; Richard Fuld Jr., CEO of Lehman Brothers; Maurice Greenberg, CEO of American International Group; Mel Karmazin, president of Viacom; David Komansky, then CEO of Merrill Lynch; Gerald Levin, then CEO of Time Warner; Robert Murphy, CEO of LaBranche & Co., a specialist firm; and Alex Trotman, then chairman of Ford Motor. In 2002, they were joined by James Cayne, CEO of The Bear Stearns Cos., Laurence Fink, CEO of BlackRock, Juergen Schrempp, chairman of DaimlerChrysler and Henry Paulson, CEO of The Goldman Sachs Group. These are the executives who, in Grasso's words, "evaluated [his] performance [and] were well aware of the market for executive compensation on Wall Street."

Whether they were generally aware is an open question. But surely each knew about his own compensation, and it may be that Grasso's genius was in picking salary-setters who would think a $9.9 million bonus — what Grasso got in 1999 — or even a $25 million bonus was no big deal. So it's a fair question how the compensation committee members were themselves paid in Grasso's fat years.

Of the Wall Street executives on the compensation committee in 2001 and 2002, the average total 2001 compensation was nearly $28.8 million. Grasso's 2001 bonus was $29.15 million, about the same.

According to Spitzer, and Grasso does not dispute the point, Grasso's bonuses were derived in part by comparing his pay to top Wall Street CEOs. The comparison group is not the same as those on the NYSE board or the compensation committee.

Still, familiarity breeds contempt. And (assuming the board members understood what they were doing) the fact that they were getting the same might have made Grasso's pay seem ordinary or "reasonable" to them. This is, according to Spitzer's lawsuit, what the law requires, though his view of reasonable may be somewhat different from Grasso's or Grasso's board's.

Grasso's public position is highly unusual in that his lawyer has been silent and his public relations man has had little to say. Indeed, if Grasso's spokesman Eric Starkman knew about his client's op-ed a day before it was published, he didn't say. Grasso is doing his own talking, announcing his intention to fight and file a counterclaim.

At this point, a trial in this case seems inconceivable, though let's hope it occurs. Spitzer is prone to settling, and Grasso will have few friends if he drags them to court. If it happens, Grasso's defense will be, as he says, "The men and women who set my compensation knew exactly what they were doing." Of course, there were only men; Grasso is indulging in some unearned political correctness here. If a trial reveals what these men were doing, it would raise welcome light on how and why Grasso--and his buddies on the board--made millions more annually, even as fraud was on the rise and the financial markets were starting to dive.

© 2012 Forbes.com

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