So, another failed CEO takes a fall over excessive pay. It was pretty amusing to watch the press frenzy over his crash and burn because of his refusal to even take a modest cut in his pay package. Robert the Hog, who took home $64 million over six years and was in line to pocket hundreds of millions more. That pissed off even some of the company's board members--though, be clear, it was the board that had already approved his deal. So, Nardelli, who did a pretty poor job at Home Depot, will still get $210 million as severance.
It is amusing that the press now is piling on. After all, the huge pay Nardelli was pulling down was no secret. Take Business Week's take in its issue that just popped into my mailbox:
In the end it came down to the headstrong CEO's refusal to accept even a symbolic reduction in his stock package. Home Depot Inc.'s (HD ) board of directors wanted their controversial chief executive, Robert L. Nardelli, to amend his whopping compensation deals for recent years. After he pulled down $38.1 million from his last yearly contract, angry investors were promising an ugly fight at the company's annual meeting in May. Nardelli agreed to give up a guarantee that he would continue to receive a minimum $3 million bonus each year. But that's as far as he would go. When board members asked him to more closely tie his future stock awards to shareholder gains, he refused, according to people familiar with the matter. Nardelli has complained for years that share price is the one measure of company performance that he can't control. After weeks of secret negotiations, things came to a head at a board meeting on Jan. 2, leading to Home Depot's stunning announcement the next day that the company and Nardelli had "mutually agreed" that he would resign.
"The board loved him and hates the way this ended up," says a person familiar with the matter. But in a season of growing antipathy toward extravagantly paid executives, the directors felt they had no choice. On his way out the door, however, Nardelli negotiated another jaw-dropper: a $210 million retirement package that assures that he and his former employer will remain at the center of the swirling debate over CEO compensation. Nardelli declined to comment.
This particular greed may be an example that pushes some sort of move to curb executive pay.
Others remain outraged, even with Nardelli gone. A group of unions whose pension funds own shares in Home Depot plans to challenge his $210 million payout at the annual meeting in May. Meanwhile, in Washington, Representative Barney Frank (D-Mass.), the incoming chairman of the House Financial Services Committee, said in a statement on Jan. 3: "The actions of Home Depot's Board of Directors to simultaneously dismiss Robert Nardelli and provide him with $210 million in severance is further confirmation of the need to deal with the pattern of CEO pay that appears to be out of control."
We'll see. But, really, the bigger point is that boards of directors are stocked with buddies and allies of CEOs who are happy to open up the piggy bank for the top guy. That's what has to change.