Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Thursday, January 04, 2007

Unjust Rewards: Last year, Home Depot gave Robert Nardelli $30 million in pay and stock option for serving as its chairman and chief executive. This year, the company will pay him $210 million for doing nothing… unless you count his decision to step down as a major contribution to the company’s fortunes, which shareholders apparently do: Home Depot stock was up 2.3 percent yesterday following news of his departure.

It is obvious that executive pay in America is distorted, grotesque and out of control. This is only the latest, and probably not the most extreme, example. Nardelli will receive almost twice as much for leaving the company as he received over the course of his six year tenure ($125 million) during which Home Depot’s share price went from $40.75 to $40.16. And that’s to say nothing about the company’s reputation: once a leader in employee engagement, social and environmental responsibility, the company is now just another big box retailer.

The outrage over Nardelli’s rewards is likely to add fuel to incoming House Financial Service Committee chair Barney Frank’s interest in investigating executive compensation, but it’s hard to envisage a cure that is not worse than the disease. The only solution likely to work involves boards acting responsibly of their own volition.

It would be nice to believe that those who have contributed to this sorry state of affairs would feel a little discomfort, but how do you embarrass people who have no shame?

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