The New York attorney-general has filed a long-awaited legal action against Mr Richard Grasso in an attempt to recover part of the former New York Stock Exchange (NYSE) chief executive's controversial $187 million (€155.70 million) pay package.

Mr Eliot Spitzer's lawsuit, which also named Mr Kenneth Langone, former head of the NYSE compensation committee, said the directors who approved the award were misled about its details.

Mr Spitzer launched the action after agreeing settlements with a NYSE executive and with Mercer Human Resource Consulting.

Both admitted providing information to the board that was inaccurate and incomplete.

The suit does not name any of the other former NYSE directors who approved Mr Grasso's pay.

The action will shine an unwelcome spotlight on the pay and performance of former directors such as Mr Henry Paulson, chief executive of Goldman Sachs, and Mr James Cayne, chief executive of Bear Stearns.

Mr Grasso is expected to argue that his pay package was justified by his performance and was in line with that of other corporate leaders.

The suit alleges that the board was provided with inaccurate and misleading information by Mr Frank Ashen, a top aide to Mr Grasso, and that the exchange used inappropriate comparisons with salaries of top executives at the world's biggest companies to set his pay.

A four-month investigation by Mr Spitzer's office also found that Mr Grasso "set his own performance targets, which he easily exceeded".

The suit asks a state court judge to rescind the pay package and determine a reasonable level of pay for Mr Grasso. - (Financial Times Service)