Case | HBS Case Collection | October 2010 (Revised October 2011)

Ken Langone: Member, GE Compensation Committee

by Suraj Srinivasan and Lizzie Gomez

Abstract

On September 2003, Richard Grasso stepped down as chairman and CEO of the New York Stock Exchange, following weeks of intense public criticism over the size of his $190 million compensation package. As chairman of the committee that oversaw Grasso's payout, Ken Langone believed firmly that the payment was fair and reasonable. However, NYSE members, government regulators, and the media alike blamed the board for its oversight and viewed Langone as the mastermind behind Grasso's huge payout. Calls to oust Langone as director from all his board positions came within days of Grasso's resignation. This case follows immediate backlash against Langone over his role at the NYSE as well as the connection this scandal had on his eventual departure from General Electric's board of directors. Should Langone have resigned from GE's board?

Keywords: Accounting; Corporate Governance; Governing and Advisory Boards; Employee Stock Ownership Plan; Executive Compensation; Governing Rules, Regulations, and Reforms; Labor and Management Relations; Wages; Change Management; Energy Industry; New York (city, NY);

Citation:

Srinivasan, Suraj, and Lizzie Gomez. "Ken Langone: Member, GE Compensation Committee." Harvard Business School Case 111-060, October 2010. (Revised October 2011.)