Eliot Spitzer’s long-running propaganda campaign and lawsuit against former New York Stock Exchange chairman and CEO Richard Grasso has been a frequent topic on this blog, so I couldn’t help but notice this NY Post article (hat tip to Peter Lattman) in which Grasso is derided for defending his lucrative pay package during a recent television interview. I mean, why should anyone make that much money, right?
Meanwhile, for a much more lucid analysis of the true issues should be in the Grasso lawsuit, check out this Larry Ribstein post:

[T]he main thing to keep in mind is that [Grasso’s] 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, . . .
Alas, this isn’t the end of the matter because the NYSE was a non-profit that comes under Eliot Spitzer’s tender care. Grasso’s trial has been broken into two parts, so that the trial judge first rules on reasonableness separate from board process. In the first part, . . . Spitzer will try to prove “that the pay judgments of executives who worked in the highest echelons of the business community were not ‘reasonable.'” In other words, a NY trial judge may end up substituting his judgment for that of a board that included the likes of the Treasury Secretary and former head of Goldman Sachs.

Thus, while the only issue should be whether the board was properly informed, that rather dry issue does not allow Spitzer to appeal to the dynamic that might win him the case (and, presumably, some votes) — the resentment of large pay packages to allegedly greedy businesspersons. So, what should be a reasonably straightforward case regarding the NYSE’s review of Grasso’s pay package is turned into a morality play where the scapegoat is a greedy executive who allegedly plundered the defenseless non-profit. At least a judge will determine the reasonableness issue in regard to Grasso’s pay package, which probably gives Grasso a better chance than if that issue were tried to a jury.
But the main point here is that the Grasso case — as in dubious criminal prosecutions such as Lay-Skilling, Arthur Andersen, the Nigerian Barge case and many others — is not about the true legal and business issues involved, but whether the government can frame an issue or two in a manner that appeals to the resentment of the jury. Thus, in Grasso’s case, the issue isn’t whether the board was informed, but that Grasso’s compensation violates the “too good to be true rule” and must be the product of cronyism. In Lay-Skilling, don’t get bogged down in the facts of what really happened, just focus on Photofete and Lay’s lucrative company credit line. In Arthur Andersen, don’t worry about whether Andersen actually destroyed any document that was material to the Enron investigation, the firm must have had something to cover up because it was making big bucks from the social pariah Enron. In the barge case, who cares what the documents say about the transaction in question, it’s far more important what an admitted felon said that another admitted felon told him about the deal that really counts. The syndrome goes on and on.
So, what is the greater threat to justice and the rule of law — the greedy businesspersons who are being pursued in these cases or the government officials who are doing the pursuing? My answer is here and here.