Home Depot’s Nardelli Resigns
Atlanta based The Home Depot chief Robert Nardelli resigned yesterday. The bigger news item was the size of the seperation package, $210,000,000. You read it right 210 million dollars. Are you kidding me? Charlie Gibson on the ABC Nightly News reported that during Nardelli’s tenure, while the bottom line profits increased, the overall stock price decreased by some 7.1%. This is in direct contrast to Home Depot’s primary competitor Lowe’s who’s stock value has increased over the same time period.
My main question would be, shouldn’t a CEO compensation or seperation package be tied to the stock performance of the company? Why would the board of directors approve such an outlandish package? Is one person worth this type of compensation? Let’s take a look at what this seperation package equates to:
- Home Depot, according to their website, has approximately 355,000 associates.
- Now assume that each associate works 40 hours per week and earns $15.00 per hour.
- This seperation package would pay 350,000 associates for a year.
- If the average associate earns $20.00 per hour then the package would pay 262,500 for a year.
Is one person that the public never meets worth this much more than say, 262,000 associates who are in contact with a companies customers every day? Maybe it’s time for a board of directors to realize who are actually the people promoting a companies good name and good will through good customer service.
The President and CEO of a major corporation should be compensated handsomely for their leadership and planning capabilities, perhaps just making the compensation performance based would prove to be a good idea.
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