New York Attorney General Eliot Spitzer won a stunning court victory last week to overturn former new york stock exchange chairman Dick Grasso's outsized $187 million pay package.

What's still to be determined however is whether this marks a shift in the compensation practices of boardrooms. Truth is there's a lot of water still to go under this bridge.

Certainly, the initial reaction from the media is that the ruling is a big win for good corporate governance. David Weidner argues that the case will give the Securities and Exchange Commission plenty of ammunition in its fight for greater disclosure about pay practices in his piece in MarketWatch.

The ruling sends shockwaves through boardrooms everywhere, says Gretchen Morgenson in the New York Times.

"The message of Justice Ramos from State Supreme Court in Manhattan is a clear warning to corporate directors everywhere: The days of pouring other people's money into the pockets of CEO's without justification are over,'' says Morgenson.

"Of course, the Grasso case, brought in 2004 by Eliot Spitzer, the New York attorney general, involved a nonprofit institution and not a public company. But the transfer of wealth from the New York Stock Exchange's seatholders to Mr. Grasso is markedly similar to what occurred at many public companies in recent years. As a result, directors who decide on compensation matters had best consider their obligations to their company's shareholders as they make those decisions.

"Courts have been reluctant to wade into compensation issues in the apparent belief that directors and the shareholders who nominally oversee them can better manage such matters. But shareholders have been unable or unwilling to effect boardroom change, and compensation excesses have become alarmingly common."

Morgenson argues that Ramos decision is the second indication that the courts are shifting ground.

The first came last year, she says, in a decision by Leo E. Strine Jr., a vice chancellor in the Delaware chancery court regarding a shareholder suit brought against directors and officers of the Fairchild Corporation. The plaintiffs had contended that Fairchild, an aircraft parts distributor, had excessively compensated its chief executive and certain of his family members and other top executives. The judge said the settlement to be paid to shareholders, worth $2.9 million, was inadequate, the judge and did not do enough to protect shareholders.

Mark Van Clieaf, managing director at MVC Associates, a consulting firm specializing in organisation design and pay for performance told Morgenson: "There is this continuum of precedents being created. The Delaware court challenging a settlement was one wake-up call. The Grasso case is another. If directors have not looked at pay for performance and have not challenged the quality of the pay data, pay percentiles and peer groups provided by external consultants, they may not be able to demonstrate their duty of care as directors in making defensible pay decisions."

Still, we still have to see whether the change is for real.

For a start, Grasso has indicated he will appeal.

His statement said: "Today's ruling is riddled with errors. One month ago, the Appellate Division told Justice Ramos not to try this case himself until the Appellate Division had decided important legal questions before them.

"Today, Justice Ramos somehow rejected the testimony of dozens of directors that they approved every dime they paid me, and decided that these men and women did not know what they were doing.
"Justice Ramos recently wrote that he takes comfort from the fact that the Appellate Division will review his rulings. So do I. I have instructed my attorneys to seek review from the appellate court, and look forward to the jury trial that the State Constitution promised me."

Professor Larry Ribstein argues that it's a "shocking" decision and politically motivated in his Ideoblog.

So it seems at the moment, it's just a partial victory for Spitzer. Just how it pans out remains to be seen.