So Bob Nardelli has resigned as Chief Executive Officer of The Home Depot Inc. after six years in the top spot of the world’s leading home improvement retailer. But Bob wasn’t content to leave with a handshake or even a golden watch. No, Bob and his supporters (enablers?) at The Home Depot decided that his less than stellar performance and termination was worth a severance package worth about $210 million. Although I feel that this is outragious and disgusting, I do not feel that this type of conduct should be illegal. The Home Depot is a public company and its managers and Board of Directors should be just as free to make these terrible business decisions as their stockholders are to dump the stock. Oh, wait, they’ve already been doing that almost since the day Bob started as the CEO. Gee, what a coincidence.
I do not feel that this type of behavior should be illegal because there’s no dishonesty going on here. The only people who are getting hurt are the stockholders and they have a very easy remedy: sell the stock. If enough do, and they have, The Home Depot’s leaders will wake up and realize that their terrible compensation decisions are significantly increasing the cost of them doing business both because of the $210 million being paid to dear old Bob and also because the low stock price makes it far more expensive for the retailer to raise capital.
Yet here to the rescue rides Representative Barney Frank, Massachusetts Democrat and the incoming chairman of the House Financial Services Committee. Frank is in favor of legislating against such stupidity, apparently using the heretofore unknown “angry meter” as an alternative to scales of justice. “They don’t understand the extent to which they make the American public angry,” reasons Frank. Frank has gone on record as saying that we should have laws that require public companies to allow shareholders to have a say in compensation and severance for senior executives. Uh, don’t they already? Don’t they elect the Board of Directors and can’t they also vote with their feet — by selling their stock? Since Bob started as CEO six years ago, The Home Depot’s stock price has fallen by three percent BEFORE adjusting for inflation. If we throw inflation in there, we’re looking at a stock price that has fallen by over 20 percent. Kind of makes you wonder how much The Home Depot would have paid to a CEO who did a good job, doesn’t it?
What really ticks me about this whole stinking mess isn’t Barney Frank. His heart is in the right place even if his head isn’t. The real problem here is that dearest Bob’s compensation package of $210 million (did someone say “ransom”?) is seven times the $30 million Home Depot set aside last June for stores and employees that provide good customer service. With 355,000 employees in the United States, Canada, Mexico, and China, The Home Depot set aside less than $100 per employee for helping to ensure that its customers are treated properly while setting aside $210 million for a failed CEO that they didn’t have the guts to fire a long time ago.
The next time that I’m in The Home Depot and I can’t find anyone to help me, it won’t be hard for me to connect the dots.
— Steven Rothberg is the President and Founder of CollegeRecruiter.com at http://www.CollegeRecruiter.com, a leading career site used by college students who are searching for internships and recent graduates who are hunting for entry level jobs and other career opportunities
This CollegeRecruiter.com Blogswap article is courtesy of Recruiting.com at http://www.Recruiting.com and CollegeRecruiter.com at http://www.CollegeRecruiter.com , a leading site for college students and recent graduates who are searching for internships and entry level jobs.