Home Depot Shareholders Meeting - Simply Amazing
UPDATE: Nardelli is fired today (1/3/07), but is given $210M as an exit package - see post here.
I rarely comment on anything non-tech related, and I'm generally a big fan of capitalism, but as a shareholder of Home Depot (HD), I am sitting here in utter amazement over how CEO Bob Nardelli conducted the annual meeting this week. As a recap, Nardelli has been paid $245M by shareholders (including options) in 5 years as Home Depot's stock has gone down 12%, while its primary competitor, Lowes, has gone up 173%. BTW - this excessive pay is for a CEO who risked nothing by coming to Home Depot - it's not as if he started it out of his garage.
The meeting apparently played out like you used to see in Japan - a 30 minute long meeting, utter contempt for shareholders, physical intimidation of attendees, and no room for any debate on any issue, outside of Nardelli uttering the words "The Board Recommends You Reject This Proposal" over and over again. Amazingly, the Board didn't even bother to show up to the meeting, thus confirming their contempt for shareholders as well - simply outrageous and embarrassing.
NYT columnist Joe Nocera was actually at the shareholder meeting and has a devastating critique of it in today's paper (unfortunately behind subscription wall here, but currently available in full here), but you now appreciate the intelligence of GE's board in not selecting Nardelli as CEO. A key leadership attribute is how does a CEO handle adversity? Nardelli has an obsession with military-like terms, so we'll use a similar analogy - Cowards cut and run, while true leaders face their accusers and defend their actions. Guess which type we saw this week?
What will now happen is that the Board will terminate him over the next year or so, but will probably pay him hundreds of millions of dollars more in severance to do so, all of which is coming out of shareholder pockets. It would appear that there is no limit to the stupidity of Boards and to the greed of executives, which is especially timely coming the same week as the Enron verdict. The Home Depot BoD should be ashamed of their complicity in this entire process since at the end of the day, it's the Board's role to manage the CEO and they have totally failed.