Dateline, January 3, 2007: Bob Nardelli steps down as CEO at Home Depot (NYSE: HD). In leaving, Nardelli, who had been at the head of Home Depot for six years, scooped up a severance package valued at about $210 million, kindly tipped his hat, and slid his resume across the desks of Chrysler. Does this make the man an opportunistic corporate blood sucker, an overcompensated leadership figurehead, or just plain shrewd? My answer to that question would be, none of the above.
When trying to judge the departure of Robert Nardelli relative to his compensation and performance, two things need to be considered right on the front end. First, our jealousy factor must be removed from the equation. Second, we need to remember that compensation packages at this level are negotiated on the front end. Bob Nardelli didn't "get away" with anything. He executed the terms of an employment contract, plain and simple. How many of the ambitious persons reading this blog wouldn't have done exactly the same when given the same circumstances?
Most of the negative sentiment surrounding Nardelli's well-heeled departure emanated from shareholders who were hurt by a slow yet significant decline in HD's share value. But the fact is that within the past four years of Nardelli's tenure, HD's shares provided more consistent performance than the four years prior. Granted, investor's haven't seen Home Depot shares approach the past high of nearly $70, but in light of today's economy they probably won't see anything like that in the near future, and that's certainly not Nardelli's fault.
Some analysts express the need to benchmark Home Depot performance against that of Lowes (NYSE: LOW). It would seem to me that in this scenario, its only analyst spin that puts Home Depot in a bad light. Although they're in the same field, they are significantly different operations and only worthy of comparison as retail competitors. Once again, I say that's certainly not Nardelli's fault.
As money winners go, Bob Nardelli certainly was one for 2007. His departure from Home Depot raised many eyebrows, and also raised some important questions in regard to executive compensation. Through the year, top executive pay came under serious scrutiny, and it shall remain a matter of hot debate and adjustment for years to come due in part to the Nardelli effect. Perhaps we all won just a little bit when you consider all the noise about executive pay packages that Nardelli's Home Depot departure raised. Now we shall simply have to wait to see what the man does with Chrysler.
Be sure to check out more Money Winners of 2007.
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Why haven't the Republicans said much about the economy?
Reader Comments (Page 1 of 1)
12-14-2007 @ 10:51PM
Flatbroke said...
oh yeah, shrewd was he the rascal, who saw the opportunity and ran with it. I think it should fall squarely on the shoulders of the old bosses/founders, they are the ones who put the scoundrell there, he saw a weakness and boy are these sharks so expert at smelling blood. For ill more than for good this one will be for the history books of "high finance" as some would call it.
I say, turn this page and call it the big OOPS (Opportunists Of Piracy Systems) era. Save yourselves.
12-14-2007 @ 11:15PM
tandj78 said...
I worked at Home Depot for 6 years when Nardelli was hired and the founders retired. He was a complete moron and ran the company into the ground. His strategy was to fire every possible worker who made over $8 an hour. That left the stores without their most valuable asset- experienced employees-many ex carpenters, plumbers, electricians etc. Anyone who says different is in the dark
12-14-2007 @ 11:17PM
The_Village_Idiot said...
"Now we shall simply have to wait to see what the man does with Chrysler"
What do ya think he's gonna do? Chrysler is being readied for its ultimate rummage sale ('11 or '12?). Nardelli and Snow will pocket another few hundred million for their leadership efforts.
We (shareholders) learned, from the Nardelli & Grasso pay packages, that they're created by their own buddies. The real guilty party are these friends who inked the deals from the get-go. Until they hold those inking these ridiculous deals liable, I fear nothing will change and the shareholders will be left carrying the bags of cash to the booted-out CEO's limo.
12-16-2007 @ 10:54AM
HD13 said...
I spent 13 years working for what was a great company with an amazing culture. I was in the corporate office that whole time from the early 90's - folks worked 70-80 hrs on projects BECAUSE THEY WANTED TO - they wanted to do the right thing for the store associates and see the company succeed. There was a loyalty and admiration for Blank and Marcus that could only be described as contagious.
Unfortuanately what really happened and what the media spin-machine fails to ever admit was that that "pillar of ethics" named Ken Langone effectively "engineered" Nardelli into a company that he had NO BUSINESS ever running. Nardelli came from Manufacturing where everything is a statistic and can be managed by "metrics". He had no understanding of customer service, loyalty, or culture...BUT he was part of Langone's "club" (from GE) and managed to work out a nice GREED package both during and after his departure AT THE EXPENSE of thousands of loyal associates and shareholders who believed and put their hardest efforts and money into this company.
Blank and Marcus were paid a fraction of what this man pillaged from HD. His was a wholesale destruction of a successful corporate culture. A culture based on family, helpfulness, customer service, recognizing the value of every associate, respecting shareholders, and a desire to succeed as a company TOGETHER (note: all salaried associates had ISOs - until he showed up - something had to be done to insure his 20+ million a year salary, right?). That destruction was the only legacy Nardelli will have ever left behind at HD. He did nothing but ruin the incredible enterprise that Marcus and Blank so painstakingly built over 20+ years. He and Langone are 2 peas in a pod - driven only by greed and ego - the rest of us were left holding the bag at our own expense.