In this refreshing Wall Street Journal ($) op-ed, Home Depot co-founder Ken Langone, who chaired the New York Stock Exchange compensation committee that approved Richard Grasso’s $140 million pay package, throws down the gauntlet regarding New York Attorney General Eliot Spitzer’s lawsuit against Grasso and Langone to recover alleged overcompensation to Grasso. In essence, Langone says “bring it on.”
First some background. When the Grasso pay package first came to light, both men sat on compensation committees that determined pay for the other — Grasso on Home Depot’s and Langone on the NYSE’s. Grasso decided to leave Home Depot’s board and Langone stepped down as head of the NYSE committee.
Moreover, according to a research firm report issued last year, Langone has been active on compensation committees with a history of granting large executive compensation despite poor share performance. As recently as late last year, Langone served on the compensation committees of each of the five public companies of which he is a director: ChoicePoint, General Electric, Home Depot, Unifi, and Yum! Brands.
Research firm Glass Lewis rates the executive compensation practices of many public companies, comparing the amount executives receive with the company’s financial and stock performance. Of the companies on which Langone served as a director, ChoicePoint received the highest rating, a “C.” The other companies received a “D” or an “F.” “For some reason [Langone] seems be a compensation committee favorite,” one sage observer noted. “We think we know why: He tends to overpay people.”
So, I think it’s fair to say that Mr. Langone is, as we put it in business circles, “a player.”
And is Mr. Lagone quaking in his boots over Mr. Spitzer’s lawsuit? Not a chance:

At a showy, televised news conference recently, New York Attorney General Eliot Spitzer announced a lawsuit that attacked my business integrity and my character. Accustomed to bullying settlements, mistaking bluster for substance, Mr. Spitzer apparently expects I will capitulate, to the tune of $18 million. But his claims were false and his suit will fail.
At any point I could have caved. Settled. Paid whatever money was claimed I owe. Avoided a trial. Walked away and licked my wounds. Most people think that simply cutting a check would be the easy way out. Expedient? Sure. Resolute? Hardly.
Here’s why. It was baseless that I, as chairman of the New York Stock Exchange compensation committee from 1999 to June, 2003 had somehow failed to inform the NYSE board of a benefit they themselves had approved. Having been there, I know the records will prove it was all above-board, well-vetted and fair. It is absurd to suggest that the brightest minds and keenest thinkers on Wall Street were befuddled by the complexity of Richard Grasso’s compensation package — especially one composed just like their own. Might as well say NASA couldn’t launch a Goodyear blimp.

And it was thick-sliced baloney how this case came to be defined by some: Wall Street cop takes on greed. I gained not one nickel. Mr. Grasso earned his pay, over the course of years, as the members themselves affirmed, time and again.

Mr. Langone then goes on to compare Mr. Grasso to A-Rod and Nicole Kidman:

The value that Richard Grasso brought to the NYSE was remarkable and helped generate value out of all proportion to what he himself earned. He did a stellar job. Under his leadership, the value of seats on the exchange increased several-fold, new companies joined the exchange in droves and healthy revenue stayed consistent even through rough economic waters. That was the studied opinion of the board and, yes, even Mr. Spitzer himself.
Good thing, too, since members belong to the NYSE for one reason — the opportunity to maximize wealth. Such high performance was the hope when, nearly 10 years ago, board member Stanley Gault was tasked with defining the organization’s leadership qualities. He urged that, “If the organization is to remain successful, we will need to staff the Exchange with what the compensation committee has come to call ‘world class talent.’ To attract and retain this talent, we will be competing directly for people with world class organizations — particularly at senior management levels.”
Yankee infielder Alex Rodriguez is paid a nine-figure salary not for his winning smile but for his value to the franchise. Actress Nicole Kidman reaps tens of millions per film not for her fashion sense but for her ability to sell movie tickets. Executive Paul Tagliabue, head of the NFL (yes, a nonprofit, and yes, funded by the members) reportedly also makes around $10 million a year and is clearly worth every penny.

And Mr. Lagone then turns to Mr. Spitzer’s alleged selective prosecution:

Reasonable observers are far more likely to see through the political cynicism of Mr. Spitzer and his cheerleaders. This is a man, after all, who sent out photos of himself wielding a flaming baseball bat, asking people to pony up $100,000 apiece for his political bank account. Is it coincidence, everyone is asking, that Mr. Spitzer’s Democratic Party colleague, Carl McCall, who chaired the compensation committee after me and signed Mr. Grasso’s contract, was shielded from the lawsuit?

Read the entire WSJ piece because it is delicious stuff. This lawsuit is going to be the legal equivalent of of a free-for-all, and it’s going to be fun to follow. The New York courts could sell tickets to this trial. Stay tuned.