Saturday, February 25, 2006

Eliot Spitzer, Tom Suozzi and Ken Langone

New York State Attorney General Eliot Spitzer has earned many admirers -- and made a few enemies -- in his crusade to clean up corporate America. Now, one enemy, former Home Depot CEO Ken Langone, is doing everything he can to make life difficult for Spitzer, who is seen as an overwhelming favorite to become New York's next governor. Langone is backing Tom Suozzi in a primary challenge to Spitzer.
What did Spitzer do to earn the wrath of Ken Langone? He decided to prosecute former New York Stock Exchange head Dick Grasso, after Grasso's sky-high compensation became public. Langone was one of Grasso's strongest allies on the NYSE board, and didn't take kindly to Spitzer's legal actions to rein in Grasso's greed.
Judging by his spokesman's comments in the Financial Times, Langone is making it personal:
“As someone who has been irresponsibly targeted by Spitzer, he has come to see the broad harm Spitzer has done to business and jobs in the state,” says James McCarthy, a spokesman for Mr Langone. Mr Spitzer’s campaign points out that Wall Street firms have reported strong results since the settlement of his office’s claims against them.
Just to be clear, working for effective oversight of highly paid executives is not a war against corporate America. To the contrary, corporate governance activists see excessive pay as emblematic of poor board oversight. In the NYSE case, the board (with the possible exception of Ken Langone) was in the dark about the enormity of Grasso's compensation package.


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