Home Depot failing....so CEO resigns with $210 million severance

[Andy9o8 0]

Tell me this isn't somehow obscene.

http://www.msnbc.msn.com/id/16451112/

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Home Depot CEO Nardelli quits
Home-improvement retailer's chief executive had been criticized over pay

ATLANTA - Dogged by criticism of his hefty pay and his company’s poor stock performance, Bob Nardelli abruptly resigned Wednesday as chairman and chief executive of The Home Depot Inc. after six years at the helm of the world’s largest home improvement store chain.

But he didn’t leave empty-handed: the Atlanta-based company said Nardelli would receive a severance package worth roughly $210 million
....

The total package is seven times the $30 million Home Depot set aside last June for stores and employees that provide good customer service.

[Amazon 7]

Its par for the course......the biggest turds always rise to the top of the cesspool.

[Butters 0]

Add another to the list.

"That looks dangerous." Leopold Stotch

[SpeedRacer 1]

now I wanna be a CEO. or better yet, a former CEO.

Speed Racer
--------------------------------------------------

[billvon 2,426]

Obscene? Not really. Lots of people get rich lots of ways. I mean, a few people got rich by going long on Enron in the early days. Obscene or not? A few people got rich by going short on Enron towards the end. Obscene or not? Bad kids get millions when their parents die. Obscene or not?

Now, if he had intentionally caused the company to fail, gone short on company stock, and cashed out when the stock bottomed out, I'd be more likely to think it obscene.

[akarunway 1]

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Obscene? Not really. Lots of people get rich lots of ways. I mean, a few people got rich by going long on Enron in the early days. Obscene or not? A few people got rich by going short on Enron towards the end. Obscene or not? Bad kids get millions when their parents die. Obscene or not?

Now, if he had intentionally caused the company to fail, gone short on company stock, and cashed out when the stock bottomed out, I'd be more likely to think it obscene.

well. hopefully his greed will cause a ken lay attack

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[Andy9o8 0]

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Obscene? Not really. Lots of people get rich lots of ways. I mean, a few people got rich by going long on Enron in the early days. Obscene or not? A few people got rich by going short on Enron towards the end. Obscene or not? Bad kids get millions when their parents die. Obscene or not?

Now, if he had intentionally caused the company to fail, gone short on company stock, and cashed out when the stock bottomed out, I'd be more likely to think it obscene.

I'm not saying every golden parachute (ironic on this site - now there's a "Smart" reserve) is necessarily per se obscene. What I find obscene is when top corporate executives who perform so poorly that they're at risk of getting fired are rewarded for their poor performance with – dare I say it? – obscenely large severance packages. The other 99.9% of the population, when their performance on the job is lousy, are simply fired. I'm also reacting to the irony that one of the pre-existing criticisms of this guy's performance is his getting paid so much while the company profits are flagging. So what's his "punishment" for being overpaid? – he gets overpaid. Makes sense to me. Not.

Also note how his severance package way outstrips the money set aside for stores and employees who provide good customer service. They perform well; they get a total of $30 million. His performance is lousy; but he's in the privileged class, so he gets $210 million.

It's a classic Animal Farm, where everyone's equal, except the pigs are a little bit more equal.

I wish I was a Home Depot shareholder; if I was, I'd file a shareholder's derivative lawsuit against the company by the end of the week, demanding that the severance package be nullified.

[rehmwa 2]

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I wish I was a Home Depot shareholder; if I was, I'd file a shareholder's derivative lawsuit against the company by the end of the week, demanding that the severance package be nullified.

and you'd be in violation of an existing contract as an owner of the company - fair or not, not very legal or moral on your part

I would however, lobby that in the future the company not hire someone that wants to negotiate that type of deal in their contract and, instead, maybe hire good business managers that might not be so high profile as to demand big severance agreements.........

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[billvon 2,426]

>What I find obscene is when top corporate executives who
> perform so poorly that they're at risk of getting fired are rewarded
> for their poor performance with – dare I say it? – obscenely large
> severance packages.

In most cases, the company is merely fulfilling the legal terms of the employment agreement, not "rewarding" the CEO for anything.

Take another case. Let's say that you get a job at a company that guarantees you $20,000 a year when you retire. Based on that, you scale back your contributions to your 401k to compensate; you won't need as much money in your retirement. Your division does poorly due to a minor recession, although you believe you did your job competently. When you retire, they say "we're not giving you anything, you slacker! Why should we reward incompetence?"

Would that be ethical for them to do? If they DID give you the money when you retire, would that be obscene?

[Andy9o8 0]

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and you'd be in violation of an existing contract as an owner of the company - fair or not, not very legal or moral on your part

Utter nonsense.

As anyone who practices corporate law can tell you, shareholders' derivative lawsuits are precisely the proper means by which shareholders seek remedy -- on behalf of the shareholders as a whole - against the top management of a corporation for, among other things, top executives' breaching of their fiduciary duties to shareholders by deliberate and/or reckless waste of corporate assets to the detriment of the shareholders.

As a matter of fact, here's a good example of one:

http://www.latimes.com/business/la-fi-apple3jan03,0,3896443.story?coll=la-home-headlines

Quote

At Apple, timing led to overnight windfalls
Stock option grants in 1997 came on the eve of a big share-price jump.
By Dawn C. Chmielewski
Times Staff Writer

January 3, 2007

In August 1997, Apple Computer Inc. handed four top executives options to buy a total of nearly 1 million shares. The next day, the value of those options jumped a staggering 48%, or $7.7 million.

This was no coincidence, according to a shareholder lawsuit filed against executives and directors of the Cupertino, Calif.-based company in federal court in Northern California. Rather, the options were granted to coincide with good news that would give the four executives an overnight windfall.

The stock soared when co-founder Steve Jobs announced that Apple's sworn enemy, Microsoft Corp., threw the struggling company a life raft in the form of a $150-million cash infusion. In exchange, Apple gave Microsoft a stake in the company and agreed to use the software giant's Web browser on its Mac personal computers


But the grants are an example of the fast-and-loose practices that went unchecked in a corporate culture fashioned by Jobs to revive Apple, which by 1997 was hemorrhaging money, according to the lawsuit, a combination of 11 shareholder complaints.

Filed days before Christmas, it alleges that Apple engaged in widespread manipulation of option grants to allow employees to buy shares at low prices. Apple "spring-loaded" options in advance of good news and "backdated" other grants to days when the stock traded at low prices to create an automatic paper profit, claims the suit, which has only recently come to light.

"What they've done — and it's not isolated — is utilized confidential internal corporate data in a way to divert to themselves substantial profits," said Darren Robbins, a San Diego lawyer involved in the shareholder lawsuit. "That constitutes both a breach of fiduciary duty and a violation of federal securities law."

[Andy9o8 0]

I think you're getting hung up on my use of the word "obscene". So to avoid us getting bogged down on semantics, I don't mind setting aside that particular word.
But I still think there is a problem with certain top executives of large companies getting handsomely rewarded for lousy performance, while the stockholders' investments devalue. I know I'm not alone in viewing that as a social ill. Yes, it may very well be (and usually is) part of an employment contract. But the average shareholders didn't participate in those contract negotiations; and I'm willing to bet that the average Home Depot shareholders will be plenty outraged at this development. I happen to think that outrage is largely justified from an ethical perspective.

[kallend 1,644]

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Obscene? Not really. Lots of people get rich lots of ways. I mean, a few people got rich by going long on Enron in the early days. Obscene or not? A few people got rich by going short on Enron towards the end. Obscene or not? Bad kids get millions when their parents die. Obscene or not?

Now, if he had intentionally caused the company to fail, gone short on company stock, and cashed out when the stock bottomed out, I'd be more likely to think it obscene.

I think it perfectly fits the word "obscene", regardless of any absence of hanky panky on his part.

...

The only sure way to survive a canopy collision is not to have one.

[JohnRich 4]

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I still think there is a problem with certain top executives of large companies getting handsomely rewarded for lousy performance, while the stockholders' investments devalue. Yes, it may very well be part of an employment contract...

Bingo! The problem is not that he made that kind of money. The problem is that the board signed that kind of contract with him, which doesn't tie his pay to the performance of the company. If the company performs poorly under his leadership, then his pay should suffer equally. On the other hand, if Home Depot was making money hand over fist for the shareholders, then that might be a fair compensation. So what's the real problem here is the dichotomy of high pay despite poor performance. And that's the fault of the deal that was made with him when the board hired him.

[billvon 2,426]

>The problem is that the board signed that kind of contract with him . . .

I agree. The issue here is that the board made a bad call. Hopefully this will inspire stockholders to exercise more oversight on the decisionmaking/board selection process, so that people don't discover decisions they don't like years after they are made.

[JohnRich 4]

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I think it perfectly fits the word "obscene", regardless of any absence of hanky panky on his part.

Aren't you the one always blaming the voters for the behavior of politicians, because they elected them?

This is the fault of the board of directors - they elected him and made the deal.

[kallend 1,644]

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I think it perfectly fits the word "obscene", regardless of any absence of hanky panky on his part.

Aren't you the one always blaming the voters for the behavior of politicians, because they elected them?

This is the fault of the board of directors - they elected him and made the deal.

I don't think I disputed that. It's still obscene.

...

The only sure way to survive a canopy collision is not to have one.

[CanuckInUSA 0]

When I grow up, I’m going to become the CEO of a multi-national corporation so that when I resign I can start my own country on some paradise island. The only problem with my plan is that it appears that I won’t grow up.

Try not to worry about the things you have no control over

[freethefly 6]

CEO's getting fatter while the company stumbles seems to be a favorite topic from time to time

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=2043739

"...And once you're gone, you can't come back
When you're out of the blue and into the black."
Neil Young

[BillyVance 34]

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Obscene? Not really. Lots of people get rich lots of ways. I mean, a few people got rich by going long on Enron in the early days. Obscene or not? A few people got rich by going short on Enron towards the end. Obscene or not? Bad kids get millions when their parents die. Obscene or not?

Now, if he had intentionally caused the company to fail, gone short on company stock, and cashed out when the stock bottomed out, I'd be more likely to think it obscene.

Yep, pretty much what Richard Scrushy did with HealthSouth. That was obscene.

"Mediocre people don't like high achievers, and high achievers don't like mediocre people." - SIX TIME National Champion coach Nick Saban

[headoverheels 291]

It seems perfectly in line with what some folks get for running around on a baseball field, maybe even too cheap.

[Andy9o8 0]

That's a good example of a bad analogy.
A bad analogy does not make a good argument.

[mnealtx 0]

How so? They're both (presumably) being paid for their skills. In one case, it's skill in running a company, and in the other, it's athletic skill.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[Butters 0]

I don't know to many (if any) professional athletes who receive a $210,000,000 severance package.

"That looks dangerous." Leopold Stotch

[mnealtx 0]

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I don't know to many (if any) professional athletes who receive a $210,000,000 severance package.

True...and I didn't consider it in that light, to be honest.

Hmm... I wonder how much of a raise T.O. will get from his next team, once the Cowboys get sick of his antics?

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[kallend 1,644]

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How so? They're both (presumably) being paid for their skills. In one case, it's skill in running a company, and in the other, it's athletic skill.

But this "CEO" is being rewarded for failure.

...

The only sure way to survive a canopy collision is not to have one.