I have written more than a little about Home Depot and its CEO Bob Nardelli. From their top-heavy “Culture Change Offensive” (which I found offensive here), and the silly army mentality Nardelli tried to force down everyone’s throat (and got stuck in my craw here), to Bob’s stunning pay package (which rubbed me raw here), and even his autocratic shareholders meeting (which I recounted here) Nardelli has provided plenty of fodder for these pages. Well, it seems that the company and the board have finally come to their senses.
ATLANTA, Jan 03, 2007 — The Board of Directors of The Home Depot and Bob Nardelli announced today that they have mutually agreed that Nardelli would leave his position as The Home Depot’s chairman, president & CEO and as a Director effective January 2, 2007.
In other words: “get out… like yesterday”. Clearly the company simply tired of all the bluster and noise that went along with Bob’s “Army Mentality”, and the corporate results have been lackluster since he arrived. And as I said in this piece, the mood in the stores is rancid. It is a wonderful sign that the company saw the insidious effect Nardelli had, and chose to put an end to it.
But, the company didn’t completely come to their senses. They continued to give Nardelli completely ridiculous payouts even as he exits in disgrace:
Nardelli and the Company have agreed in principle to the terms of a separation agreement which would provide for payment of the amounts he is entitled to receive under his pre-existing employment contract entered into in 2000. Under this agreement, Nardelli will receive consideration currently valued at approximately $210 million (including amounts which have previously been earned or vested).
Holy Cow! Even in the face of amazingly generous pay packages to CEOs, this one is a stunner. This means that Nardelli has received, since becoming CEO of Home Depot, a whopping $400+ million in compensation! During the same time, HD (the stock) has gone from a high of around $70 to the mid-30s.
And worse, much of this is clearly a golden handshake, or simply “go away” money. It is optional, the board didn’t have to agree to it, but just wanted him out so badly they were willing to pay almost anything to have him go away:
This consideration will include a cash severance payment of $20 million, the acceleration of unvested deferred stock awards currently valued at approximately $77 million and unvested options with an intrinsic value of approximately $7 million, the payment of earned bonuses and long-term incentive awards of approximately $9 million, the payment of account balances under the Company’s 401(k) plan and other benefit programs currently valued at approximately $2 million, the payment of previously earned and vested deferred shares with an approximate value of $44 million, the payment of the present value of retirement benefits currently valued at approximately $32 million and the payment of $18 million for other entitlements under his contract which will be paid over a four year period and will be forfeited if he does not honor his contractual obligations.
The bulk of this is sickening… I’m sure there were clauses in his contract that would have allowed the company to fight most of this. I haven’t seen it, but I’d be shocked if it was all carved in stone. I’m betting they didn’t have to accelerate his unvested and/or deferred options, they didn’t have to buy out his retirement plans, they just did it to get rid of him.
While I applaud Home Depot for ridding themselves of this jerk, I wish they had the backbone not only to fire him, but to not pay his blackmail too. But I’m sure the company is better off without him. The markets surely agree, the stock is up over 3% today alone on the news.