Finger-Pointing Hits NYSE Board

As disgruntled investors continue hounding New York Stock Exchange Chairman Dick Grasso, some of the attention is getting directed to his friends.

Chief among those is Home Depot (HD Quote) co-founder Ken Langone, who chaired the NYSE compensation committee that approved Grasso's $140 million pay package. When the pay package first came to light, it was revealed that 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 HD's board and Langone stepped down as head of the NYSE committee.

That's not good enough to some. Everyone involved in determining Grasso's pay package should resign, former NYSE chairman James Needham told the Associated Press Monday.

"It's time to clean house," said Needham, who headed the NYSE from 1972 to 1976. "I feel the board just didn't step up to the plate and run that operation properly."

While the entire board is drawing Needham's ire, particular scrutiny is falling again on Langone. According to a research firm, Langone is active on compensation committees with a history of supersizing executive paychecks despite poor share performance. Further, the investment bank he heads is under investigation by the National Association of Securities Dealers and has been implicated in improper activity in the past.

"Here's a guy who's sitting on the New York Stock Exchange board whose firm has been accused of serious wrongdoing," notes Greg Taxin, CEO of proxy adviser Glass Lewis. "It turns out he's a chronic overpayer as well."

Despite resigning his role as chairman of the NYSE's compensation committee in June, Langone continues to serve as a regular committee member. Meanwhile, Grasso has said that he will serve out his term as a director at Home Depot; that term ends in May.

Governance experts have noted that by serving on each other's compensation committees, Langone and Grasso have an apparent conflict of interest. They have the ability to set each other's pay for their own mutual advantage, although not necessarily to the benefit of shareholders.