People v. Grasso (50 A.D.3d 535, 2008)

Order, Supreme Court, New York County (Charles E. Ramos, J.), entered August 4, 2006, which denied defendant Kenneth Langone’s motion for summary judgment dismissing the complaint as against him, affirmed, without costs.

The Attorney General brought this action to challenge compensation and benefits awarded to the former CEO of the New York Stock Exchange (NYSE), Richard Grasso. A detailed discussion of the background of the litigation and the substance of the complaint is set forth in our decision in People v Grasso (42 AD3d 126 [2007]).

This appeal is from the denial of defendant Kenneth G. Langone’s motion for summary judgment to dismiss the seventh cause of action. In that claim, the Attorney General alleges that defendant Langone, a NYSE director and chair of its Compensation Committee from June 1999 until May 2003, breached his fiduciary duties to the NYSE by failing to make complete and accurate disclosures of Grasso’s compensation to the NYSE Board of Directors.

In the early 1990s, the NYSE Compensation Committee determined that the Exchange was at a competitive disadvantage because it was unable to offer its senior executives stock-based forms of deferred compensation. To remedy this problem, in 1997, the Board of Directors approved the NYSE’s Capital Accumulation Plan (CAP) for four of its most senior executives. Originally CAP provided a 25% match of variable compensation awards for eligible executives in a given year. The variable compensation to which it applied was the NYSE’s Incentive Compensation Plan (ICP) and its Long Term Incentive Plan (LTIP). CAP payments were deferred until retirement or termination.

In May 1999, the NYSE Compensation Committee and Board of Directors approved, and Grasso executed, his second employment agreement as chairman and CEO of the NYSE. The 1999 agreement modified Grasso’s 1995 contract and extended his term to May 31, 2005. In fact, Grasso’s 1999 employment agreement set forth five components of his annual compensation, which, for the first time included CAP These were: (1) a base salary of $1.4 million; (2) a discretionary ICP bonus with a minimum target amount of $1 million annually; (3) a LTIP award; (4) a CAP award equal to 50% of his total variable compensation (ICP and LTIP); and (5) a Supplemental Executive Retirement Plan (SERF) award.

The annual compensation for all of the NYSE senior executives was set each February for the prior calendar year. Between the 1997 institution of CAP awards and Grasso’s 2003 resignation, the process for setting executive compensation was as follows: Frank Ashen, the head of human resources, would collect median target compensation for a group of comparator companies from NYSE’s compensation consultant, Hewitt Associates. He would also prepare a summary of each NYSE executive’s performance for the year, based upon input from operating managers. Next, Ashen compared his raw data against 65 quantitative measurements to reach a score for each executive. That score comprised 65% of the individual’s compensation. The chair of the Compensation Committee then had discretion to determine the remaining 35% of compensation figures. Thus, during his tenure as chair of the Compensation Committee, Langone was directly responsible for determining 35% of the compensation of NYSE executives. Also, he interacted with the NYSE Department of Human Resources by making his yearly proposals to Frank Ashen. After the chair made his recommendations, Ashen met individually with each of the members of the Compensation Committee to present and discuss the salary proposals. On the first Thursday of each February, the Compensation Committee would meet for a collective discussion and vote on all of the executives’ compensation. Later that same day, the full Board of Directors would meet and vote on the same matters. It was the role of the Compensation Committee chair to make oral presentations to the Committee and the full Board before they voted.

The first time the Board of Directors had to approve CAP awards was in February 1998. The written materials prepared for the 1998 and 1999 Compensation Committee meetings, under the leadership of then chair Bernard Marcus, provided the Committee Members with worksheets that gave an exact value of the recommended CAP award for each participant. The “total compensation” column of those worksheets also displayed the recommended sum of each executive’s base salary, ICIJ LTIP and CAP award for the year. For example, the 1997 salary worksheet for Robert Britz, a NYSE executive vice-president who received a 25% CAP award, contained the following information (emphasis supplied):

After Langone became chair of the Compensation Committee in June 1999, the values of recommended CAP awards were removed from the worksheets distributed to Committee members. In addition, the values for “total variable compensation” and “total compensation” no longer included the recommended CAP awards. For example, the worksheet outlining Grasso’s recommended 1999 compensation was as follows:

Grasso’s February 2000 recommended 1999 compensation worksheet had the following statement underneath the chart: “Grasso will receive 50% of his variable compensation in the Capital Accumulation Plan.” However, the document did not give a value for his 1999 CAP award, which was $3,300,000. The worksheet similarly failed to set forth that his actual recommended compensation was $11,300,000.

After the Committee voted to approve Grasso’s compensation, a worksheet quantifying all of the components of Grasso’s compensation, including the CAP award, and their sum total, was sent to the NYSE CFO to effect payment:

Dale Bernstein, the deputy head of NYSE’s Human Resources Department, testified at her deposition that it was her job to prepare the worksheets of executives’ compensation. She related that after Langone became chair of the Compensation Committee, Frank Ashen told her to remove the CAP column from the materials distributed to the Compensation Committee. Bernstein stated that she told Ashen that she thought the worksheets were clearer with the CAP awards displayed. However, she testified that she deferred to Ashen, who told her that Grasso did not want the CAP columns displayed. Thus, from February 2000 to February 2003, the materials distributed to the Compensation Committee did not have a CAP column. Bernstein stated that after the compensation packages were approved, she gave the finance division worksheets which displayed the values of CAP and total compensation figures.

In February 2000, the Compensation Committee was given materials indicating that Grasso’s total 1999 compensation was $8 million, notwithstanding that his actual total compensation was $11.3 million. The minutes from the February 2000 Compensation Committee meeting do not indicate that Grasso’s CAP award was discussed. However, speaking points prepared for Langone’s remarks at the February 3, 2000 Board meeting indicate that Langone specifically told the Board that Grasso’s 2000 CAP award was $3.3 million.

One member of the Compensation Committee, D. Maughan, testified at his deposition that the worksheet he was given at the February 2000 Committee meeting would have been clearer if it included a CAP column and a “real total compensation” figure. Two other members of the Compensation Committee gave deposition testimony that they thought Grasso had been awarded approximately $8 million in total compensation for 1999, when in fact, the actual total compensation approved for Grasso in 1999 was $11.3 million. Notably, the $3.3 million discrepancy was the exact value of the CAP award (which, again, was not disclosed on the compensation worksheet). However, four Board members (M. Karmazin, L. Wachner, G. Levin, and R Murphy), testified at their depositions that it was clear to them, before they voted, that Langone was recommending that Grasso receive a $3.3 million CAP award for 1999.

Similar to the format for the prior year, the February 2001 worksheet for Grasso’s compensation indicated a recommended “total 2000 Cash Comp” of $15 million.

The 2001 and 2002 worksheets added the word “also” to the CAP statement under the chart. They both stated: “Grasso will also receive 50% of his variable compensation in the Capital Accumulation Plan.” However, the February 2001 worksheet did not reveal: (1) that Grasso’s 2000 recommended CAP award was $6.8 million, (2) that a $5 million special award was recommended for Grasso for 2000; or (3) that Grasso’s total recommended compensation for 2000 was $26.8 million. The minutes from the February 2001 Compensation Committee meeting do not indicate that Grasso’s CAP award was discussed. C. Booklet, a member of the Compensation Committee, testified at his deposition that he believed that Grasso’s total 2000 compensation was $15 million. This was the value in the “total compensation” column of the worksheet, not the $26.8 million Grasso was actually awarded.

The same procedures were followed in February 2002. The worksheet given to the Committee was as follows:

The notations under the chart on the February 2002 worksheet indicated that: (1) Grasso would also receive a CAP equal to 50% of his variable compensation; (2) in February 2001, Grasso was granted a special award of $5,000,000; and (3) in February 2002 Mr. Grasso was proposed for a special award of $10,500,000. Thus, the worksheet (including the table and the proposed $10.5 million special award) itemized a recommended compensation for Grasso of $22.5 million in 2001. Again, neither Langone’s speaking points nor the Compensation Committee minutes indicate a discussion of Grasso’s CAP award. Thus, the actual value of Grasso’s proposed compensation for 2001, including the $8.05 million CAP award, was $30.55 million.

Compensation Committee member R. Murphy, and Board members W. Harrison and J. Duryea all testified at their depositions that they believed they had voted to approve 2001 compensation for Grasso in the $20 million range. C. Booklet and R. Murphy also testified that the members of the NYSE would not be happy if they knew that the Compensation Committee was approving paying Grasso $30 million for his work in 2001.

Grasso’s employment contracts also entitled him to a lump-sum Supplemental Executive Retirement Plan (SERF) distribution upon his departure from the NYSE. This SERF award was determined based upon the length of his service at the NYSE and the amount of his variable compensation during that time. In the summer of 2002, Grasso sought to extend his contract and accelerate payment of some of his deferred compensation. The Compensation Committee held a special meeting during which some members first learned that Grasso’s SERF would be $152 million as of the date of his projected retirement. The Committee was concerned about the rapid, substantial growth of Grasso’s deferred compensation, and they decided that a third party should be retained to review the issue. Langone hired Vedder, Price, Kaufman & Kammholz, a consulting firm, for this purpose. Vedder, Price requested a copy of the materials provided to the Compensation Committee for their February 2002 meeting. However, Ashen provided Vedder, Price with the worksheets that were prepared for the CFO; namely, those which included the actual recommended CAP awards and compensation totals incorporating CAP awards, rather than the worksheet provided to the Committee, which did not display these figures.

Grasso then made a proposal to cap his final pay at $12 million, extend his contract to 2006, and to move $56 million of his accrued SERF benefit into his Supplemental Executive Savings Plan (SESP). The Compensation Committee considered this proposal, because it would lessen the NYSE’s accrual expenses, but it made no determination on the matter. Then, in January 2003, Grasso revised his proposal to request the immediate payment of approximately $140 million in deferred compensation, including more than $11 million in CAP benefits.

At its February 2003 meeting, the Compensation Committee was given worksheets which included, for the first time under Langone’s leadership, a figure for Grasso’s proposed CAP award. The “Total Compensation” figures in this worksheet also included, again, for the first time under Langone’s leadership, the CAP awards. Thus, the format of the February worksheet was inconsistent with those distributed to the Compensation Committee in February 2000, February 2001, and February 2002.

Grasso’s recommended total compensation for 2002 was $12 million. The minutes from the February 2003 Compensation Committee meeting also indicate the disclosure and approval of Grasso’s CAP award. However, the Compensation Committee did not vote to approve Langone’s recommendation, but referred it for further study of the financial implications for the NYSE.

On August 27, 2003 Grasso executed his third employment agreement with the NYSE. The same day the NYSE issued a press release revealing that $139.5 million would be immediately payable to Grasso. The press release did not reveal that $48 million was also due to be paid Grasso upon his retirement. In September 2003, the Chairman of the Securities and Exchange Commission contacted the NYSE and requested information concerning Grasso’s compensation. In response to increasing internal and external pressure, Grasso agreed to forgo future benefit payments. Several weeks later, he resigned.

The Attorney General then brought this action. The complaint alleges that the NYSE paid Grasso an unlawful amount of compensation and seeks the return of such sums to the NYSE. The seventh cause of action alleges that as an officer of the NYSE and chair of its Compensation Committee, Langone violated N-PCL 717 (a) by, “among other things,” misleading the Board about the CAP awards. Paragraph 207 of the complaint quotes the relevant portion of N-PCL 717 (a), a codification of the fiduciary duty owed by all officers and directors of not-for-profit corporations. That section provides in pertinent part: “Directors and officers shall discharge the duties of their respective positions in good faith and with that degree of diligence, care and skill which ordinarily prudent men would exercise under similar circumstances in like positions.” (Id.) In paragraph 208 of the complaint, the Attorney General asserts that as chair of the Compensation Committee, Langone breached his fiduciary duties under section 717 (a) by misleading its Board of Directors, “which had delegated to him the task of explaining the proposed compensation.” Langone’s digressions, the complaint continues, are actionable under N-PCL 720 (b) and 720 (a) (l).

After substantial discovery, including 61 depositions and the exchange of approximately one million documents, Langone moved for summary judgment dismissing the seventh cause of action. Langone asserted that he was falsely accused of misleading the NYSE Board as to Grasso’s CAP award. He averred that he personally disclosed Grasso’s CAP program to the Board and was present for similar disclosures by others. He stated that Grasso’s $3.3 million 1999 CAP award was disclosed to the Board at their February 2000 meeting. Langone also asserted that his presentations in 2001 and 2002 fairly and accurately represented all of the components of Grasso’s compensation. He claimed that the “undisputed facts” demonstrated that “[he] and others repeatedly disclosed Grasso’s CAP awards, both orally and in writing.” Langone’s motion contained 45 exhibits. These included Langone’s speaking points for various Board meetings, minutes from February 1997, 1999-2002 Compensation Committee meetings, excerpts from the deposition testimony of various Board members, and salary worksheets for the 2000-2002 Compensation Committee meetings. In support of Langone’s contention that the Board was fully informed about Grasso’s CAP awards, his counsel also annexed, as required by rule 19-a of the Rules of the Commercial Division of the Supreme Court (22 NYCRR 202.70 [g]), a 23-page “Statement of Material Undisputed Facts.”

In opposition, the Attorney General submitted excerpts from the depositions of 26 individuals, including Board members, NYSE employees, Grasso and Langone. He also presented 58 exhibits, a 14-page response disputing aspects of Langone’s “Statement of Material Undisputed Facts,” and a 32-page “Counter-Statement of Material Undisputed Facts.” The Attorney General’s submissions pointed to the necessity of annual disclosure of the CAP awards. The Attorney General also submitted excerpts from the deposition testimony of a number of the Board members, including Deryck Maughan, Charles J. Booklet, David Komansky, James Duryea, William Harrison, Robert Murphy, and H. Carl McCall. These witnesses’ testimony, much of which is set forth in the factual recitation, indicated misconceptions as to the magnitude of the compensation that they had voted to approve for Grasso in February 2000—Febru-ary 2002.

In reply, Langone submitted 29 additional exhibits, including documents and deposition testimony. These were to establish that Langone met his duty to fully inform the Board about Grasso’s compensation.

At oral argument and on the record, before deciding the motion, the IAS court inquired as to why, upon Langone’s succession to leadership as chair of the Compensation Committee, compensation worksheets circulated to the Committee members no longer itemized the exact values of CAP awards. Langone’s counsel responded that his client had nothing to do with the formatting of the worksheets shown to the Compensation Committee, and that he should not be faulted for those documents’ failure to disclose the CAP awards. The Attorney General countered that Langone was the only NYSE director who interacted with the Department of Human Resources, and that he was also responsible for recommending compensation to the remaining members of the Compensation Committee. The Attorney General added that in his role as chair of the Compensation Committee, Langone had a duty to ensure that the Committee was provided with a complete and accurate presentation of proposed compensation.

Langone’s counsel then asserted that the speaking points from the February 2000 Compensation Committee meeting showed, unequivocally, that Langone disclosed the exact amount of Grasso’s recommended CAP award to the Committee. However, the Attorney General produced evidence that Grasso’s CAP award was not included in Langone’s speaking points for the February 2001 or 2002 meetings. The Attorney General also asserted that there was no evidence that the exact values of Grasso’s 2000 or 2001 CAP awards were disclosed to any member of the Compensation Committee or the Board prior to voting to approve his compensation packages.

The IAS court denied Langone’s motion. It found issues of fact as to whether Langone breached his duties to the Board. The court held that the worksheets omitting the exact values of Grasso’s CAP awards constituted evidence that Langone may have breached his obligation to fully and accurately disclose his salary recommendations to the Board. The court noted that Langone’s speaking points for Compensation Committee meetings were inconsistent from year to year. The court also observed that Board members’ deposition testimony indicated that some directors were not aware of the magnitude of the total compensation that they were approving for Grasso.

On appeal, Langone contends that the Attorney General failed to raise an issue of fact as to the claim that he violated his fiduciary duties. He asserts that he had no duty to annually remind the Compensation Committee that it had approved a 50% CAP award for Grasso, and that even if he had such a duty, the undisputed facts reveal that he fulfilled it. Langone also claims that the element of causation has not been met because no Board members could have “reasonably relied” upon the worksheets to conclude that Grasso was not entitled to his contractual CAP award. Finally, Langone contends that any claims which rely upon his purported failure to apprise the Board of Grasso’s SERF awards were not pleaded in the complaint, and cannot be a basis for a determination that Langone breached his duties.

In response, the Attorney General asserts that Langone had a duty to disclose Grasso’s compensation to the Committee and the Board. He claims that the record is replete with evidence that Langone did not fulfill his obligations, and that his failures led the Board to vote in favor of compensation packages which were substantially higher than what they had understood. The Attorney General asserts that omissions regarding Grasso’s CAP and SERF both preclude summary judgment in favor of Langone.

Pursuant to CPLR 3212 (b) a court will grant a motion for summary judgment upon a determination that the movant’s papers justify holding, as a matter of law, “that there is no defense to the cause of action or that the cause of action or defense has no merit.” Further, all of the evidence must be viewed in the light most favorable to the opponent of the motion (Marine Midland Bank v Dino & Artie’s Automatic Transmission Co., 168 AD2d 610 [1990]).

The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact as to the claim or claims at issue (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Matter of Redemption Church of Christ of Apostolic Faith v Williams, 84 AD2d 648, 649 [1981]; Greenberg v Manlon Realty, 43 AD2d 968, 969 [1974]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

Once the prima facie showing has been made, the party opposing a motion for summary judgment bears the burden of “produc[ing] evidentiary proof in admissible form sufficient to require a trial of material questions of fact” (Zuckerman, 49 NY2d at 562; see also Romano v St. Vincent’s Med. Ctr. of Richmond, 178 AD2d 467, 470 [1991]; Tessier v New York City Health & Hosps. Corp., 177 AD2d 626 [1991]). The substantive law governing a case dictates what facts are material, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” (Anderson v Liberty Lobby, Inc., 477 US 242, 248 [1986].)

Here, Langone’s motion sought dismissal of the seventh cause of action, which alleged that he violated N-PCL 717 (a), a codification of the fiduciary duty of corporate officers and directors. The elements of the Attorney General’s seventh cause of action are (1) the existence of a fiduciary duty; (2) breach of that duty; (3) and a showing that the breach was a substantial factor in causing an identifiable loss. The first element of the cause of action is not controverted. N-PCL 717 (a) expressly provides, and Langone concedes, that as a NYSE director and chair of the Board’s Compensation Committee, he had a fiduciary obligation to discharge his duties, “with that degree of diligence, care and skill which ordinarily prudent men would exercise under similar circumstances in like positions.”

The dissent correctly recognizes that the scope of Langone’s duties present a question of law for the court (532 Madison Ave. Gourmet Foods v Finlandia Ctr., 96 NY2d 280, 288 [2001]). In 532 Madison Ave., the Court of Appeals aptly summarized our role in making this determination, which is to: “fix the duty point by balancing factors, including the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting the expansion or limitation of new channels of liability. At its foundation, the common law of torts is a means of apportioning risks and allocating the burden of loss. In drawing lines defining actionable duty, courts must therefore always be mindful of the consequential, and precedential, effects of their decisions” (id. at 288-289 [internal quotation marks and citations omitted]).

As chair of the Compensation Committee, Langone had discretion to recommend 35% of NYSE executives’ variable compensation. With that discretion, Langone had the responsibility, under N-PCL 717 (a), to accurately and completely convey his compensation recommendations to the Board. Langone also had a duty to make compensation recommendations which were in the interest of the NYSE, in good faith and with “conscientious fairness, morality and honesty in purpose” (see Kavanaugh v Kavanaugh Knitting Co., 226 NY 185, 193 [1919]; see also Pebble Cove Homeowners’ Assn. v Shoratlantic Dev. Co., 191 AD2d 544, 545 [1993], lv dismissed 82 NY2d 802 [1993] [“directors of a corporation have the fiduciary obligation to act on behalf of the corporation in good faith and with reasonable care so as to protect and advance its interests”]).

The issue of whether Langone breached his duties to the Board and to the Exchange is fact based, and it cannot be determined on the record before us: “New York courts have long held fiduciaries to a standard ‘stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is . . . the standard of behavior.’ Meinhard v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545 (1928) (Cardozo, C.J.). A corporate officer’s fiduciary duty includes discharging corporate responsibilities ‘in good faith and with conscientious fairness, morality and honesty in purpose’ and displaying ‘good and prudent management of the corporation.’ Alpert v. 28 Williams St. Corp., 63 N.Y.2d 557, 569, 483 N.Y.S.2d 667, 473 N.E.2d 19 (1984) (internal quotations omitted)” (Gully v National Credit Union Admin. Bd., 341 F3d 155, 165 [2d Cir 2003]).

In support of summary judgment, Langone submitted excerpts from deposition testimony, minutes from Compensation Committee and Directors meetings, and other documentary evidence. These purported to conclusively establish that Langone effectively communicated Grasso’s proposed compensation to the Board in conformity with his duties to his codirectors and the Exchange. Langone asserted that because CAP was a component of Grasso’s 1999 employment agreement, a reminder of yearly CAP awards was not a material element of his presentations to the Board. He alternatively asserted that the Board members were all aware of CAR that the participants’ yearly CAP award was “an automatic contractual consequence” of the Board’s other compensation decisions, and that Langone nonetheless made adequate disclosures of recommended CAP awards at the annual February compensation meetings. Langone submitted excerpts from the depositions of a number of Board members who related that they were fully informed as to their compensation decisions under Langone’s leadership.

However, in opposition, the Attorney General submitted deposition testimony, minutes from Compensation Committee and Board meetings, and documentary evidence, which demonstrated that while he was chair of the Compensation Committee, Langone may not have effectively communicated Grasso’s compensation to the Board. In addition, the record raises questions as to whether Langone’s executive compensation recommendations were in the best interest of the NYSE. The Attorney General’s submissions included deposition testimony from seven Board members, which indicated that they did not understand the impact of their votes in favor of Grasso’s compensation awards.

First, it is uncontested that the Department of Human Resources was directed to remove both the CAP award column and the total compensation column incorporating CAP awards contemporaneous with Langone’s succession to the position as chair of the Compensation Committee. It is unclear from the extant record who was responsible for the changes to the format of the compensation worksheets. However, it is also unclear whether Langone adequately explained the newly formatted written materials to the Compensation Committee. Further, some of the Board members testified that they believed Grasso’s total compensation for a given year was an amount which, the record reveals, was equal to the value displayed in the total compensation column in the worksheet for that year (a figure which excluded the CAP award referenced in the notations). Whether this was confusion or coincidence is an issue to be explored at trial.

As to damages, the Attorney General asserts that Grasso received exorbitant, unwarranted compensation awards between 2000 and 2002, while Langone was the chair of the Compensation Committee, at the expense of the NYSE. On this issue, the Attorney General’s submissions included the testimony of two Board members who opined that they knew that the NYSE members would not be happy if they had been made aware of the total compensation Grasso was awarded for his work in 2001.

Finally, the relevant inquiry on the present motion is whether, viewing the submissions in the light most favorable to the Attorney General, Langone has established, as a matter of law, that his actions did not constitute a breach of his duties as Compensation Committee chair (see N-PCL 717).

Further, the court’s role is limited to identifying whether there are material issues of fact, not to determine them (Sillman, 3 NY2d at 404). Thus, whether any of the directors who testified that they did not comprehend the implications of their votes either could, or should, have either done additional research or asked questions before approving Grasso’s compensation is an issue to be explored at trial. The dissent concludes that the notations describing Grasso’s CAP award on the 2000-2002 worksheets adequately apprised the Board that Grasso’s actual compensation was the “total compensation” figure in the chart plus 50% of the recommended ICE and LTIP awards. However, deposition testimony in the record indicates that the disclosures and the postulated mathematical calculations may not have been as clear to some of the directors voting to approve Grasso’s compensation as they are to the author of the dissenting opinion.

This record exemplifies the general rule that “comparison of a party’s conduct with the fiduciary standard of care is a question of fact” (Cramer v Devon Group, Inc., 774 F Supp 176, 185 [SD NY 1991]). For example, the record shows that there were changes in the format of the worksheets under Langone’s leadership which may have required explanation to the Compensation Committee; there is inconsistent deposition testimony about Langone’s oral presentations to the Compensation Committee and the Board between 2000 and 2002; and there is deposition testimony indicating that Committee members were confused. Thus, Langone has not established as a matter of law that he fulfilled his obligations under N-PCL 717. Accordingly, we affirm the order appealed denying his motion for summary judgment. Concur—Mazzarelli, J.E, Saxe and Sweeny, JJ.

. Members of the NYSE Compensation Committee were all members of the NYSE Board of Directors.

. The 1999 Compensation Committee (as of June 1999) included: K. Langone (chair), C. Booklet, R. Fuld, M. Greenberg, M. Karmazin, D. Komansky, C. Marshall, D. Maughan, A. Trotinan, and L. Wachner.

. The 2000 Compensation Committee (as of June 2000) included: K. Langone (chair), C. Bocklet, R. Fuld, M. Greenberg, M. Karmazin, D. Komansky, A. Trotman, and L. Wachner.

. The 2001 Compensation Committee (as of June 2001) included: K. Langone (chair), R Fuld, M. Greenberg, M. Karmazin, D. Komansky, G. Levin, R. Murphy, and A. Trotinan.

. N-PCL 720 (b) authorizes the Attorney General to bring an action against an officer or director of a not-for-profit corporation under N-PCL 720 (a) (1).

. N-PCL 720 (a) provides that

“[a]n action may be brought against one or more directors or officers of a corporation . . .

“(1) To compel the defendant to account for his official conduct in the following cases:

“(A) The neglect of, or failure to perform, or other violation of his duties in the management and disposition of corporate assets committed to his charge.

“(B) The acquisition by himself, transfer to others, loss or waste of corporate assets due to any neglect of, or failure to perform, or other violation of his duties.”

. Britz’s CAP award was 25% of his variable compensation.

. Grasso was not eligible for a CAP award until after the execution of the 1999 employment agreement.

Buckley and McGuire, JJ.,

dissent in a memorandum by McGuire, J., as follows: Defendant Kenneth G. Langone appeals from the denial of his motion for summary judgment dismissing the complaint as to him. The principal issue on this appeal is a simple one: whether there is a triable issue of fact about whether Langone, who was a member of the Board of Directors (the Board) of the New York Stock Exchange (the Exchange) and the chair of its Compensation Committee at the time of the Board meetings at issue, failed to inform or remind the Board during three meetings of the Board (in February of 2000, 2001 and 2002) about a contractually-mandated consequence of the decision the Board was to make at each of these meetings on the amount of the bonus it was awarding to its chair and chief executive officer, Richard A. Grasso. In concluding that there is such an issue of fact, the majority relies on: (1) allegedly misleading worksheets prepared by Exchange staff, and (2) purported contradictory deposition testimony of certain directors of the Exchange. However, the worksheets were never presented to the Board, and thus could not possibly have misled the members of the Board, and the deposition testimony the majority relies upon either expressly supports Langone’s position or fails to call it into question. Accordingly, there is no triable issue of fact and Langone is entitled to summary judgment for this reason alone. In addition, as discussed below, the majority fails to come to grips with the two other, independent grounds for reversal advanced by Langone.

On March 4, 1999, during a meeting of the Board, the Board met in “executive session”—i.e., outside the presence of Grasso—to discuss the terms of a new employment agreement with Grasso. Earlier that day, the Compensation Committee of the Board, which was then chaired by Bernard Marcus, had reviewed the agreement and voted to recommend it to the full Board. One of the key provisions of that agreement, Grasso’s participation in the Capital Accumulation Plan (CAP or the CAP Program), is central to this appeal. And the central concept of CAB as one of the directors, Gerald Levin, stated when he was deposed in this litigation, is “not at all” difficult. That simple concept is that each year Grasso would be entitled under the agreement to an award of deferred compensation (payable upon retirement or termination) in the amount of 50% of his annual “variable compensation,” i.e., the annual bonus awarded to him by the Board. Thus, each year the Board would decide the amount of Grasso’s bonus and, by operation of law, the employment agreement would dictate an additional benefit set at one half of the bonus in the form of the deferred CAP award.

As the minutes of the Board meeting state, Director Marcus addressed the Board regarding the proposed employment agreement with Grasso, reviewed its terms and informed the Board that the Compensation Committee had reviewed the agreement and recommended it to the Board. As was testified to by numerous attendees of the Board meeting, both directors and Exchange staff, one of the terms that Director Marcus expressly disclosed to the Board was that Grasso would participate in the CAP Program and receive a deferred 50% match of his annual bonus. Significantly, there is no testimony or any other evidence that Director Marcus did not make this disclosure concerning a central feature of the proposed agreement. The Board unanimously approved the proposed agreement.

In addition to being uncomplicated, the CAP Program was familiar to the Board. In September 1997, some 18 months earlier, the CAP Program was commenced when the Board approved the program, which was then limited to four “Group Executive Vice Presidents” and provided for a deferred 25% match of their variable compensation. As the minutes of the September 1997 Board meeting make clear, and as is undisputed, the CAP Program was explained to the Board by Frank Ashen, the Exchange’s vice-president for human resources, and he informed the Board, inter alia, that the four participants would receive a deferred 25% match of their annual variable compensation. In addition, the then chair of the Compensation Committee, Ralph Larsen, who at the time was also the chair of Johnson & Johnson, told the Board that the Compensation Committee had reviewed the CAP Program and recommended its adoption. By unanimous vote, the Board approved the program.

In June 1999, shortly after Grasso’s new employment agreement was approved by the Board, Langone became chair of the Compensation Committee. By then, a three-step process was already in place for determining and approving the annual incentive compensation awards for the prior year for senior Exchange executives, including Grasso. First, Ashen would meet individually with members of the Committee. The materials Ashen brought to these meetings included worksheets he prepared with proposed incentive compensation amounts for senior executives other than Grasso. During the one-on-one meetings, however, Ashen also reviewed the components of Grasso’s possible compensation (the annual salary fixed by the agreement at $1.4 million and his incentive or variable compensation), and his potential CAP award. As Ashen testified, “I would say that he [Grasso] would get 50 percent of his variable compensation wherever it ended up.” Second, in early February, the Compensation Committee met to discuss and approve the variable (i.e., incentive) compensation of senior executives, including Grasso. In most years, Ashen circulated a worksheet to Committee members with the proposed variable compensation for Grasso after Grasso left the room. Third, after the Committee approved recommendations for incentive compensation awards for Grasso and other senior executives, the full Board would meet later that same day. Assisted by “Speaking Points” prepared by Ashen, the Committee chair summarized the recommendations and the Board voted on and approved the compensation awards for the senior executives. When Grasso’s compensation was under discussion, Grasso would leave the room and the Board would meet in executive session.

At meetings of the Board on February 3, 2000, February 1, 2001 and February 7, 2002 (the February meetings) the Board, in accordance with recommendations of the Compensation Committee, approved variable compensation awards for Grasso of $6.6 million (for 1999), $13.6 million (for 2000) and $16.1 million (for 2001). At the latter two meetings, the Board also approved a “special award” to Grasso of $5 million, a payment that would be excluded from both his variable compensation (and thus from the CAP Program) and his pension plans. Accordingly, pursuant to the 1999 employment agreement, the Board’s actions at the February meetings resulted in CAP awards to Grasso of $3.3 million, $6.8 million and $8.05 million.

The crux of the Attorney General’s allegations against Langone are set forth as follows in paragraph 208 of the complaint: “Langone breached his fiduciary duty to the NYSE by misleading the NYSE Board of Directors—which had delegated to him the task of explaining the proposed compensation—about the amount of the annual compensation the Compensation Committee was recommending be approved by the Board, through, among other things, his failure to disclose that Grasso would be receiving as deferred compensation an additional 50 percent of his bonus or ICP [Incentive Compensation Plan] award” (emphasis added).

In moving for summary judgment dismissing the complaint as to him, Langone relied in part on testimony and documentary evidence relating both to the meetings on March 4, 1999 of the Compensation Committee and the Board approving Grasso’s employment agreement and to the September 1997 meeting of the Board at which the CAP Program was established. In addition, and in particular, Langone relied on testimony from directors and other attendees at the February meetings of the Board and the Compensation Committee, and on documentary evidence relating to these meetings. For present purposes, suffice it to say that numerous directors and others present at the February meetings testified that Langone expressly referred to Grasso’s CAP award, and that no director or other person present at the February meetings testified that Langone failed to disclose the CAP award. In short, the evidence relating to the February meetings provided further support for Langone’s position that: (1) the Board was fully aware that its decisions on Grasso’s variable compensation entailed an additional benefit under the CAP Program of an award of deferred compensation in the amount of 50% of his bonus, and (2) he specifically informed the Board at each of the February meetings of the additional CAP award.

Another meeting of the Board, on April 5, 2001, is relevant. At the meeting both Ashen and Langone made presentations to the Board regarding a proposal, approved earlier that day by the Compensation Committee, to eliminate one of the bonus programs and expand the CAP program beyond the six senior executives who were then participating in it. As the Speaking Points prepared for Langone by Ashen state:

“The Committee recommends expanding the participation in the Capital Accumulation Plan . . .

“There are presently six participants in the Plan. Dick Grasso, Bob Britz and Cathy Kinney participate at the 50% of variable compensation level.”

Ashen and Board members Gerald Levin and Robert Murphy testified that Langone, consistent with the Speaking Points, stated that Grasso was one of the executives participating in the CAP plan at the 50% level. Ashen and Board members Murphy and Mel Karmazin also testified that no Board members stated at the April 2001 meeting that he or she had been unaware two months earlier, when Grasso’s 2000 variable compensation was approved, that Grasso also was getting a CAP award of 50% of his bonus. On Langone’s motion for summary judgment, none of this testimony was controverted.

As discussed below, Supreme Court denied Langone’s motion, ruling that material issues of fact existed that precluded granting the motion and that the testimony Langone relied on “drips of credibility [issues].” On this appeal, Langone argues that his motion should have been granted for three reasons: (1) he was under no duty to remind the Board each year of what the Board unquestionably knew when it approved Grasso’s 1999 employment agreement, viz., that Grasso would receive an additional benefit under the CAP Program of an award of deferred compensation in the amount of 50% of his bonus, (2) the undisputed evidence submitted on the motion demonstrated that he did so remind the Board at the February meetings, and (3) the Attorney General failed to raise an issue of fact concerning causation, because the Board did understand that Grasso was entitled to an additional CAP award and thus any alleged failure so to remind the Board could not have been the cause of any injury to the Exchange. I need not reach the first and third of these arguments as Langone’s motion should have been granted on the second of these three grounds.

As Langone correctly maintains, the evidence he presented on his motion for summary judgment demonstrates that he did inform the Board of the amount of Grasso’s CAP award at each of the February meetings. The Attorney General, however, failed to meet his burden (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]) of producing evidentiary proof in admissible form sufficient to establish the existence of a material issue of fact requiring a trial on the question of whether Langone so informed the Board.

The Attorney General and the majority maintain that the worksheets presented to the Compensation Committee members are sufficient to establish a material issue of fact as to whether Langone so informed the Board at the February meetings. To understand why that is incorrect, the worksheets must be discussed in some detail.

The worksheet prepared by Ashen relating to Grasso for the February 3, 2000 meeting of the Compensation Committee contains columns for his 1999 “Base Salary,” “ICP” (Incentive Compensation Plan) and “LTIP” (Long Term Incentive Plan), i.e., the two components of his bonus or variable compensation, “Total Compensation” and “Total Variable Compensation.” Immediately below these columns a notation states as follows: “In 1999 Mr. Grasso will receive 50% of his variable compensation in the Capital Accumulation Plan.” The worksheets prepared by Ashen relating to Grasso for the other two February meetings of the Compensation Committee contain columns for his 2000 and 2001 “Base Salary,” “ICP” and “LTIP,” “Variable Compensation]” and “Total Cash Compensation].” On both worksheets, immediately below these columns a notation prominently states (in type identical in size to the preceding text) as follows: “Mr. Grasso will also receive a capital accumulation award equal to 50% of the Variable Compensation.”

At most, the first worksheet is ambiguous in that someone not knowledgeable about Grasso’s participation in the CAP Program pursuant to the 1999 employment agreement might understand the notation to mean that the $6.6 million figure in the “Total Variable Compensation” column included a CAP award of $3.3 million. For that to be the case, however, Grasso’s award of deferred compensation under the CAP Program would have to have been set at 100% (rather than 50%) of his variable compensation. Moreover, the amount of “Total Variable Compensation” exactly matches the sum of ICP and LTIP (the two components of Grasso’s bonus or variable compensation) and the figure set forth as “Total Compensation” equals that amount plus the “Base Salary,” thus indicating that CAP must be an additional category.

Putting aside that the notations in the latter two worksheets unequivocally state that the CAP award is an additional 50% of the variable compensation, the first worksheet is irrelevant in any event. In the first place, even if the worksheet could have been ambiguous to a director on the Compensation Committee, it does not affirmatively misstate the CAP award, let alone negate or cast doubt on the testimonial and documentary proof both that the Board correctly understood Grasso’s participation in the CAP Program and that Langone specifically informed the Board at the February 3, 2000 meeting that Grasso would receive a $3.3 million CAP award in addition to his bonus of $6.6 million. Perhaps most notable in this regard is the testimony of Linda J. Wachner, a member of the Board. Her uncontradicted testimony was that Langone “was careful to articulate each piece, including the CAP award, the 1999 compensation will be $8 million, and that Dick will also receive another $3.3 [million].” In addition, after making his presentation to the Board, Langone asked the members of the Compensation Committee “if there were any things he left out.”

The second reason the worksheet is irrelevant is that only Compensation Committee members received the worksheets. The full Board never received either the lone and ostensibly ambiguous worksheet or any of the other worksheets prepared by Ashen. This undisputed fact—the majority ignores it—is critical because, as noted above, the operative allegation of the complaint is that Langone “misle[d] the NYSE Board of Directors . . . through ... his failure to disclose that Grasso would be receiving as deferred compensation an additional 50 percent of his bonus” (emphasis added).

Unfortunately, despite their irrelevance, further discussion of the worksheets is necessary given that they are so critical to the majority’s position. The majority takes pains to note that “[a]fter Langone became chair of the Compensation Committee in June 1999, the values of recommended CAP awards were removed from the worksheets distributed to Committee members” and that “the values for ‘total variable compensation’ and ‘total compensation’ [columns] no longer included the recommended CAP awards.” The majority also maintains that “[i]t is unclear from the extant record who was responsible for the changes to the format of the compensation worksheets.”

Why the majority makes these statements and places such reliance on the changes in the worksheets is bewildering. Langone had nothing whatsoever to do with these changes in the worksheets. Not a shred of evidence is to the contrary. In fact, Ashen testified that Langone never told him. “how to do” or “set . . . up” the worksheets. The only other relevant testimony on this subject is that of Bernstein. As the majority also notes, Bernstein testified that Ashen told her to remove the CAP column from the worksheets. But Bernstein offered only the hearsay explanation that Ashen told her that Grasso, not Langone, did not want “CAP Accumulation” and “Total Compensation” columns to be displayed. It may be unclear whether Grasso played a role in the changes to the format of the worksheets, but the record is not unclear with respect to Langone. Nothing but rank speculation and a blatant fallacy— post hoc, ergo propter hoc—would support linking to Langone the hearsay-based attribution of these changes to Grasso. Immediately before its claim that the record is unclear with respect to who was responsible for the format changes, the majority stresses that “it is uncontested that the Department of Human Resources was directed to [make the changes] contemporaneous with Langone’s succession to the position as Chairman of the Compensation Committee.” The majority may not overtly commit this fallacy, but it plainly intends to suggest that the mere fact that the changes occurred after Langone became chair of the Compensation Committee raises an issue of fact regarding who decided to make the changes.

The majority also states that “Bernstein stated that she told Ashen that she thought the worksheets were clearer with the CAP awards displayed.” In the first place, however, merely because a statement can be made more clearly, it hardly follows that the statement actually made is not clear, let alone that it is false or misleadingly incomplete. As noted above, the worksheets for the February 2001 and 2002 meetings unambiguously support Langone’s position and the worksheet for the February 2000 meeting does not create a material issue of fact. Moreover, the majority fails to mention that Bernstein also testified that she did not “feel uncomfortable” with the changes in the worksheets “because the CAP was footnoted, so I felt that the information was there.”

On the subject of the worksheets, finally, the majority also is wrong in asserting that I “conclude[ ] that the notations describing Grasso’s CAP award on the 2000-2002 worksheets adequately apprised the Board that Grasso’s actual compensation was the ‘total compensation’ figure in the chart plus 50% of the recommended ICP and LTIP awards.” To the contrary, my position is that the worksheets do not create a material issue of fact precluding summary judgment for at least two reasons. First, and most importantly, the worksheets submitted to the Committee members do not undercut or create a material issue of fact regarding the evidence submitted by Langone that he specifically informed the full Board at each of the February meetings of the additional CAP award. Second, and as I have noted without contradiction by the majority, the worksheets for the February 2001 and 2002 meetings of the Committee unambiguously support Langone’s position while the worksheet for the February 2000 meeting is at most ambiguous.

In its oral decision denying Langone’s motion for summary judgment, Supreme Court relied on the absence of any statement in the minutes of the February meetings of either the Board or the Compensation Committee evidencing a discussion of Grasso’s CAP award. Indeed, Supreme Court went so far as to opine that “the Attorney General probably makes a prima facie case by just showing the minutes.” In attempting to defend its contention that material issues of fact precluded the granting of Langone’s motion, the majority does not rely on the minutes. In stating its view of the facts, however, the majority repeatedly notes that the minutes from each of the three February meetings of the Compensation Committee do not indicate that Grasso’s CAP award was discussed. On appeal, moreover, the Attorney General continues to rely on the minutes in this regard.

The absence of any reference in the minutes to a discussion of Grasso’s CAP award is as unsurprising as it is irrelevant. As Langone correctly observes, it is hornbook law that board minutes are meant to reflect the board’s actions, not all of its discussions (see 5A Fletcher, Cyclopedia of Corporations § 2190, at 155-156 [Perm ed] [minutes “should definitely and positively show what action was taken by the corporation in the matters that they purport to memorialize,” but the “secretary is not obligated to include everything that is said in the minutes as long as the secretary accurately transcribes what has taken place” (emphasis added)]). The majority offers nothing by way of response to this basic point of corporate law and procedure.

The minutes of the February meetings of the Compensation Committee and the Board do reflect the relevant actions taken, i.e., approval of the incentive compensation awards made to Grasso and other senior executives. By contrast, approval of the CAP award to Grasso or to any other executive was neither an action that the Committee or the Board did take nor an action that either was required to take. Rather, in each year the approval of the incentive compensation award automatically dictated the CAP award (by virtue of the terms of the 1999 employment agreement in Grasso’s case and by virtue of the terms of the CAP Program for the other executives). And as Langone notes, when an action was taken with respect to CAR the minutes so reflect. Thus, when the CAP award was increased for two executives (from a 25% to a 50% match) in February 2000, the Compensation Committee minutes so reflect, and the April 2001 minutes similarly reflect an expansion of the CAP Program to include additional executives.

In short, the absence of any reference in the minutes to a discussion of Grasso’s CAP award is devoid of any significance. It neither undercuts nor creates a material issue of fact regarding the documentary proof and uncontradicted testimony of participants at the February meetings of the Board (and of the Compensation Committee) that Langone did remind the Board anew (and the Committee) about Grasso’s CAP award.

Nor is the Attorney General persuasive in urging that a material issue of fact on whether Langone misled the Board is raised by a sentence in the Speaking Points prepared by Ashen for Langone’s use at the February 2002 meeting of the Board in presenting the Compensation Committee’s recommendations for Grasso’s 2001 compensation. At most, the last sentence of these Speaking Points is ambiguous. The third “bullet-point” notes that in 2000 Grasso received his contractually fixed salary of $1.4 million and “variable compensation of $13.6 million and a Special Payment of $5 million that will vest fully in February 2006.” The Speaking Points then continue as follows:

“ This year, the Committee recommends that Dick receive, in addition to his salary:

“-$16.1 million in variable compensation

“(up $2.5 million from last year)

“-A Special Payment of $5 million that he will receive when he leaves the Exchange that will also be placed in his SESP account—The Exchange’s non-qualified Savings Plan

“-Like the Special Payment we made last year, the $5 million will not be eligible for the Capital Accumulation Plan, nor will it be a part of Dick’s retirement calculation

“ As a result, all in, the Committee recommends that Dick’s compensation be raised $2.5 million, including a deferred special payment of $5 million.”

If one understands the term “compensation” in the last sentence to include the CAP award, the Speaking Points would be to this extent misleading in that the $2.5 million increase in the variable compensation dictated a $1.25 million increase in the CAP award so that the increase in total “compensation” would be $3.75 million. On the other hand, if one understands the term “compensation” to exclude the CAP award and include only the compensation the Committee was recommending for approval (the funds which, in contrast to the CAP award, were payable immediately) the Speaking Point would not be misleading. Moreover, anyone who understood the basic elements of Grasso’s participation in the CAP plan (which is mentioned in the preceding sentence of the Speaking Points) would understand that a $2.5 million increase in “variable compensation” would dictate an increase of $1.25 million in the CAP award.

The extent to which the last sentence of these Speaking Points is ambiguous, however, need not be explored any further. First, there is no evidence that Langone read the Speaking Points as written to the Board. To the contrary, and no evidence contradicts him, Langone testified with respect to these and other Speaking Points prepared for him by others, “I don’t read [to the Board].” The Attorney General focuses on one snippet of Langone’s testimony and asserts that Langone “conceded that he made the ‘all in’ statement from the speaking points.” In fact, the last sentence was read to Langone during his deposition and he was then asked: “Did you tell the Board that?” Langone’s response was: “Words to that effect, I did. I wouldn’t have read it.” Putting aside that the words “in effect” undermine the fatal concession the Attorney General discovers in that one response by Langone, a subsequent question by the Assistant Attorney General focused specifically on whether Langone had said “all in” during his presentation to the Board. His response was: “Well, first of all, I did not say all in.” Of course, a witness’s testimony must be viewed as a whole and one snippet of testimony cannot be taken out of its context and used to support or oppose a motion for summary judgment (see Baillargeon v Kings County Waterproofing Corp., 29 AD3d 838, 838-839 [2006]; Mitchell v Route 21 Assoc., 233 AD2d 485, 486 [1996]). Furthermore, as Langone also repeatedly made clear during the questioning on the last sentence of the Speaking Points, the term “compensation” did not include the CAP award.

During this same line of questioning, Langone gave other relevant testimony. With respect to his presentation to the Board, Langone repeatedly stated that the amount of Grasso’s CAP award was “give[n]” or “broke[n] . . . out” “very clearly.” In this regard, Langone also stressed that there was a “full discussion” of the special $5 million payment that, as is reflected in the penultimate sentence of the very Speaking Points on which the Attorney General relies, was not included in the CAP award. Indeed, at other points in the deposition, Langone testified more generally that he always gave to the Board the dollar amount of Grasso’s CAP award at all of the February meetings.

Contrary to what the Attorney General argues in his brief, Langone’s testimony about his pres