Despite its unique facts, the recent decision in the controversial Spitzer v. Grasso litigation is likely to influence the basis on which state attorneys general exercise oversight over, and enforce obligations with respect to, nonprofit corporations and their officers and directors. No. 401620104 (N.Y. App. Div. 1st Dep’t May 8, 2007). This may particularly be the case as to executive compensation-related issues. However, the decision should not be read as somehow emasculating an attorney general’s fundamental authority with respect to nonprofit organizations in general and charitable corporations in particular. Rather, attorneys general can be expected to continue to maintain a high profile in this area.
The underlying controversy arose from the attempt by Eliot Spitzer, then New York AG, now New York governor, to seek disgorgement of allegedly excessive compensation payments made by the New York Stock Exchange to Richard A. Grasso as its chief executive officer, at a time when the NYSE was a New York nonprofit (noncharitable) corporation.
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