Some of the big name executives who served on the New York Stock Exchange board are likely to face criticism for their roles in approving former chairman Richard Grasso's contentious pay package.
That is a message from Kenneth Langone, the multimillionaire entrepreneur who is being sued along with Grasso in a high-profile case filed last month by New York Attorney General Eliot Spitzer.
In an interview, Langone denied charges that he misled other former board members about what the pay package entailed, including a $18 million benefit payment.
He has hired a team of seasoned trial lawyers and says he has documentation to disprove claims that he withheld information needed to understand that Grasso's complex retirement package was worth $188 million.
"I've gone out and retained the best (lawyers) there is in the world," said Langone. "They're been told to do one thing by me, do whatever you have to do, but don't come back with anything less than total victory."
The case is increasingly being played out in news articles and editorial columns, where both Grasso and Langone have promised to fight the charges in order to clear their names.
Unlike Spitzer's other cases -- such as charges that major Wall Street banks used fraudulent stock research or that various mutual companies allowed select investors to profit from illegal trades -- both Grasso and Langone are under much less pressure to settle.
That means that the relationships and roles of the former directors -- ranging from Goldman Sachs Group Chief Executive Henry Paulson to New York Democratic party leader Carl McCall to Bear Stearns Cos. head James Cayne -- could be made public at trial through depositions or appearances on the witness stand.
"It seems to me that there are going to be a number of careers, that if not tarnished or damaged, may be destroyed by all of this," said Langone, 68, who spoke with a number of news outlets over the weekend.
Juanita Scarlett, Spitzer's spokeswoman, declined to comment on Langone's comments, saying the case "will be decided in court."
"This case is about one thing: the conduct of the individuals named in the lawsuit," she said. "Our suit seeks to hold accountable individuals who knowingly misled the NYSE's board in negotiating Dick Grasso's enormous pay package."
Potential targets?
Gary Naftalis, who faced off against Spitzer last year when he represented Edward Stern, principal for New Jersey hedge fund Canary Capital Partners LP, in a $40 million settlement for allegedly illegal mutual fund trades, has been retained as Langone's counsel.
He also hired William Taylor, a Washington, D.C.-based lawyer whose clients have included former U.S. President Bill Clinton's chief of staff Mack McLarty during Congress's Whitewater investigation.
Some directors are said to have told Dan K. Webb, a former federal prosecutor who was commissioned to investigate how Grasso's pay was approved, that they weren't informed of all of the details of the pay package.
Langone said he is unaware which of the 27 directors have made the claims, though said that at least one, former head of floor trading firm LaBranche & Co. Robert Murphy, told him he was fully aware of what the compensation package entailed. Murphy voiced support for Grasso when the pay flap first broke.
One executive Langone did single out was Goldman's Henry Paulson, who played a lead role in forcing Grasso out of the exchange last September.
Langone criticized Paulson, who was named to the compensation committee in 2002, for only showing up at about half of the board meetings.
He also said that Paulson told him and others that he had no problem with the size of Grasso's pay, but rather the public's perception of it would damage the exchange.
A Goldman Sachs representative declined to comment on Mr. Langone's remarks, but reiterated that Paulson had strenuously opposed the payout of Grasso's benefits while he was still in office. He said that Paulson's actions after the payout was approved were motivated by a desire to protect the NYSE and help rebuild its reputation.
Langone, who co-founded Home Depot Inc. and is worth an estimated $820 million, also said he was misled by John Reed, the NYSE chairman who was brought in following Grasso's departure. Langone said that he cooperated in Dan Webb's investigation with the understanding that the results would be made public.
The NYSE, which commissioned the Webb report, has declined to release it, and directed Spitzer's office not to release it as well.
Other members of the NYSE compensation committee during the period in question included Richard Fuld, the head of investment bank Lehman Brothers Holding Inc., Maurice Greenberg, CEO of American International Group, and Juergen Schremp, chairman of DaimlerChrysler AG.