Thursday, January 11, 2007

Bob Nardelli Gets $210 Million for Being Fired

Last week, Home Depot fired its CEO, Robert Nardelli, and paid him $210 million in severance. Some shareholders aren't very happy about the amount he was paid for being fired, and for good reason.
The standard benchmark used by those upset with the enormous inflation of executive pay is the ratio between CEO pay and that of the typical line worker on the shop floor. We all know that that ratio has widened in the last 25 years.
But I find other ratios more enlightening. For instance, Mr. Nardelli's severance package comes to 10.3 cents for each share of stock (there are about 2 billion shares outstanding). Perhaps that is why we have seen the first of what could be many shareholder suits filed against Home Depot,
as noted in this report from Reuters:
Investors are turning up the heat on the Home Depot Inc. board of directors to make more corporate governance changes following the departure last week of Chairman and CEO Robert Nardelli, who had been under fire for his pay package.
This week, shareholders asked a Georgia state court to block Home Depot from paying Nardelli a $210 million severance package.
Nardelli's package represents 3.4 percent of the company's profits for the last year, and 0.23 percent of the company's revenue. Last week I spent $32.85 at the local Home Depot; of that modest purchase, 8 cents went to kick this guy out the door.
I searched for golden parachutes for sale on the Web, and found a company called Silver Parachutes of Hayward California (, that sells a complete kit for $1,575; and yes, gold is one of the custom color options. Throw in all of the options, like Genuine Sheepskin Backpad, Inflatable Lumbar Support and Monogram, and the price comes to just over $2,000. At that price, Mr. Nardelli could afford about 100,000 parachutes.


Anonymous Anonymous said...

I do not follow Home Depot's ticker. Does Home Depot have a remote chance of recouping the 3.4% profit lossover one year? That is tight for a retailer....

11:39 PM, January 12, 2007  

Post a Comment

<< Home