Add Back the Legal Fees: Interesting juxtaposition of articles in today's Wall Street Journal.

Grasso Lawyers, NYSE Exchange Letters

By KATE KELLY
Staff Reporter of THE WALL STREET JOURNAL


The attorney representing former New York Stock Exchange chairman Dick Grasso has penned a strongly-worded letter to the Big Board, stating that he has no plans to return the $139.5 million retirement pay that forced his departure last fall, according to exchange representatives.

The letter, written by Williams & Connolly trial lawyer Brendan V. Sullivan, was first reported this morning by The Washington Post and the Financial Times. In it, according to published reports, Mr. Sullivan states that Mr. Grasso "has no intention of returning any portion of his compensation to the Exchange," and that "if the Exchange believes it has a valid claim, it should file it, rather than conducting a campaign through the press…in an attempt to pressure Mr. Grasso."

Mr. Sullivan's letter, which was sent yesterday, was in response to a Feb. 12 letter written by interim Big Board chairman John Reed, demanding that Mr. Grasso, who left under pressure last September amid an outcry over his compensation package, return $120 million of the nest egg to the exchange, according to the representatives. Mr. Reed wasn't immediately available for comment, and a spokesman for the Big Board had no comment.

The correspondence highlights the fact that despite referring its investigation of how Mr. Grasso's pay was set and given out to state and federal regulators last month, NYSE officials -- namely Mr. Reed -- are still working to take back some or all of Mr. Grasso's nearly $140 million compensation. On Jan. 8, the NYSE board voted to pass a report prepared by former prosecutor Dan K. Webb on Mr. Grasso's compensation on to both New York State Attorney General Eliot Spitzer and to the U.S. Securities and Exchange Commission to determine whether state not-for-profit laws (under which the NYSE is incorporated) or federal securities laws were violated.

At issue is not only the $139.5 million that Mr. Grasso received last year, but an additional $57.7 million he believes he is owed -- $48 million in future retirement pay that he was contractually slated to receive, and another $9.7 million in severance pay that would be due him if his ouster were deemed tantamount to being fired.

Until recently, NYSE officials had remained largely silent on the compensation flap, despite Mr. Reed's past statements that the pay flap was "an embarrassment" to the exchange that he would try to resolve. But earlier this week, in his first pointed comment on the Grasso pay dispute, newly-installed NYSE chief executive John Thain said that he would like the NYSE to obtain a "very substantial return" of the "excessive" payout made to Mr. Grasso. Mr. Thain has refused to elaborate on the NYSE's plans to take back any of the pay, beyond saying in previous meetings with reporters that the exchange would cooperate with the regulators who are involved.

Write to Kate Kelly at kate.kelly@wsj.com

Updated February 27, 2004 1:21 p.m.

AND:

Freddie Mac Paid Parseghian,
Ex-CEO, $19.4 Million for Job


DOW JONES NEWSWIRES

WASHINGTON -- Freddie Mac, the mortgage powerhouse under investigation for possible securities violations, paid Gregory Parseghian roughly $19.4 million in salary, cash bonuses, stock and other compensation for his six-month stint as chief executive of the company.

Mr. Parseghian stepped in as CEO in early June 2003, after Freddie's board forced out the company's top three executives amid an accounting scandal that resulted in a massive reaudit and net increase in earnings for 2000 through 2002 of $5.1 billion.


But the company's primary regulator, the Office of Federal Housing Enterprise Oversight, started calling for his removal in August after investigations revealed his involvement in many of the most egregious accounting abuses, while he ran the company's investment strategy.

New data released by the company Friday show that Freddie rewarded Mr. Parseghian and others handsomely for helping to steer the company out of its current crisis.

Richard Syron, who succeeded Mr. Parseghian in the top spot at the beginning of the year, was awarded $8.8 million in restricted stock and just over $100,000 in other compensation in 2003.

Freddie also disclosed that it has paid about $2.2 million in legal fees for current and former employees who have provided testimony in regard to the numerous lawsuits and federal investigations affecting the company and its executives.

Write to Dow Jones Newswires editors at djnews@dowjones.com

Updated February 27, 2004 11:16 a.m.


I think Grasso got ~139 Millions for 8 years; At Parseghian's rate over 8 years we're talking 310 millions. Again Grasso is working cheap!

The contributor wishes to point out that as of this posting he had no position in the shares of Mr Grasso. But wishes he did.