Grasso Co-Defendant Makes Class-Based Appeal
By Ben White
Washington Post Staff Writer
Tuesday, June 15, 2004; Page E03
NEW YORK, June 14 -- Kenneth G. Langone is a Wall Street investment banker worth nearly $1 billion. But for him, the fight over former New York Stock Exchange chairman Dick Grasso's $139.5 million pay package is a class confrontation between blue-collar boys made good and a politically ambitious prosecutor born to wealth and privilege.
Langone, sued by New York Attorney General Eliot L. Spitzer over his role as the exchange's compensation committee chairman during the years when Grasso earned most of his money, said in a weekend interview that he believes jurors will sympathize with him and reject Spitzer's case.
"I'm thrilled to go to trial. I couldn't be more excited," Langone said, bellowing into a speakerphone and shuffling documents he said would prove his case.
"I can connect with [jurors] for one reason: I wasn't raised in Riverdale and I didn't go to private school," he added, referring to the wealthy New York neighborhood where Spitzer grew up. "I went to public school." Spitzer, through a spokesman, declined to comment.
Langone, a co-founder of Home Depot Inc., now heads Invemed Associates LLC, a New York investment bank. Forbes magazine has estimated his net worth at $820 million.
Grasso has made a similar class-based appeal, stressing his childhood in Queens and his rise from $81-a-week clerk to NYSE chief.
Some on Wall Street have expressed surprise at Grasso's and Langone's aggressive public relations campaigns, especially their invocations of hardscrabble roots in a case about a multimillion-dollar pay package. But James F. Haggerty, an expert on media strategies in high-profile cases, said the approach could be a smart one.
"I think so far they are doing a pretty remarkable job getting their side out," he said. "There is something to be said for the strategy of appealing to class consciousness."
Both Grasso and Langone say Grasso earned his pay by increasing listings and trading volume. Grasso has said he will sue the NYSE for $48 million he says he is owed.
Spitzer demanded in his lawsuit that Grasso return at least $100 million, saying the former chairman's pay package violated New York state not-for-profit laws. Spitzer said Langone misled other board members about the size of Grasso's pay package. Spitzer argued that Langone should be held responsible for $18 million in bonus money paid to Grasso that the lawsuit says was not disclosed to other directors.
Langone angrily rejected Spitzer's charges in the interview, one of several he has given in the past few days. He said NYSE directors had ample opportunity to review documents detailing the contracts. "You are talking about the most powerful guys in America, and they were given an explanation of all the numbers," he said.
Langone singled out Goldman Sachs Group Inc. chief executive Henry M. Paulson Jr. A Goldman spokesman said Paulson strongly opposed paying Grasso the $139.5 million, but Langone said Paulson missed half the NYSE board meetings he was supposed to attend. The spokesman did not dispute the attendance record.
A preliminary hearing in Spitzer's lawsuit is scheduled for Friday, but the case is not expected to go to trial for months.
© 2004 The Washington Post Company