Archive for January 4th, 2007
Here we go again. Yet another failed CEO is going to collect $$$Hundreds of Millions of $$$ for running his company into the ground. This is happening so often it’s not even news any more.
Robert L. Nardelli has abruptly resigned as chairman and chief executive of Home Depot, pocketing a lavish severance package and leaving shareholders with a stock that has languished even as sales have nearly doubled during his six-year tenure.In a statement released yesterday, Home Depot’s board of directors and Nardelli said they “mutually agreed” to the resignation, which took effect Tuesday. Under the terms of a separation agreement negotiated when he joined the company in 2000, Nardelli, 58, is to receive about $210 million in cash and stock options, including a $20 million severance payment and retirement benefits of $32 million.
Nardelli replaced several top executives with former GE colleagues and implemented top-down management. At the same time, he expanded Home Depot’s wholesale business to attract professional contractors. He also expanded the company outside the United States.
Yet Nardelli failed to have much effect on Home Depot’s stock price, plagued by slowed store expansion, a cooling housing market and increased competition from rival Lowe’s, several analysts said. On Dec. 4, 2000, the day before he was named chief executive, shares of the company closed at $40.75. On Friday, the last day of trading before Nardelli announced his resignation, the stock closed at $40.16. Last year, the stock’s price ranged from a low of $32.85 to a high of $43.95, finishing down 0.8 percent.
So under his tenure, HD’s profits doubled but Lowe’s took away a lot of HD’s market share and its stock remained flat, meaning that investors lost money even though the company appeared to be doing well. That’s a pretty neat trick. Not many CEO’s could pull that off. No wonder the BOD was unhappy with him.
Except that that isn’t entirely why they were unhappy. The precipitating cause for his firing (calling it a “resignation” isn’t fooling anybody) was – wait for it – the size of his paycheck. Read the rest of this entry »