Home Depot chief quits with $210m
Home Depot Inc Chairman and Chief Executive Robert Nardelli abruptly left the company after a year of heavy criticism of everything from his pay package to the underperforming retailer's corporate governance.
Nardelli, 58, will walk away with a severance package of about $210 million under the terms of his employment. He and the company said in a release that his leaving was a "mutual decision", and Home Depot shares rose more than 2 percent.
Succeeding Nardelli is Frank Blake, the 57-year-old vice chairman who joined Atlanta-based Home Depot in 2002. The moves of Nardelli and Blake, both former General Electric Co executives, took effect on Tuesday, the retailer said.
Wall Street cheered the leadership change. Many analysts said that although Nardelli improved operations at the world's largest home improvement retailer, recent unfavorable publicity dented confidence in Home Depot as it faces a slowing housing market and competition from rival Lowe's Cos.
"I just think it's a sign that just from a morale standpoint and a confidence standpoint... from investors, from employees, from the market, they needed to make a change," said Jon Fisher, a portfolio manager at Fifth Third Asset Management, which owns Home Depot shares.
Many analysts said Blake, who played a key role in Home Depot's expansion into Mexico and a recent purchase in China, was a better consensus builder, but added his lack of retail experience was a drawback as store sales weaken.
Blake "has never run a company or one of Home Depot's major operating businesses", Goldman Sachs analyst Matthew Fassler said in a research note.
Home Depot also named Joe DeAngelo, head of its growing supply division geared to contractors, to the new post of chief operating officer and gave added duties to finance chief Carol Tome.
The company said its board was confident about the current business model and long-term strategy, which includes a push to expand sales to contractor markets.
Home Depot also said it waived the retirement age of 72 for directors John Clendenin, Claudio Gonzalez and Milledge A. Hart III.
Mixed reception
Nardelli, one of the three executives in the running to succeed GE chief Jack Welch years ago, came to Home Depot in late 2000 with much fanfare, but drew mixed reviews from workers and some on Wall Street who expressed concern over his lack of retailing experience.
In recent years, Nardelli drew fire from critics who charged his pay was out of line with company performance. Home Depot's stock has fallen more than 8 percent since Nardelli arrived, but he has earned at least $119 million in salary and bonus during that time.
Late last year, after headlines over Nardelli's pay, the board's no-show at the May annual meeting, a federal probe into company stock-option grant practices and weakening sales and earnings, activist Home Depot investors became more emboldened, and takeover rumors sprouted.
"You always had the feeling you were very unwelcome" at annual meetings run by Nardelli, said corporate gadfly Evelyn Y. Davis, who owns stock in Home Depot and many other companies.
Ralph Whitworth, founder and principal at San Diego-based Relational Investors, said in mid-December that he was accumulating Home Depot stock and planned to nominate at least two directors for election at the retailer's 2007 annual meeting.
Nardelli's exit package includes cash severance of $20 million, unvested deferred stock awards of about $77 million and other payments, Home Depot said.
Home Depot shares, which rose 91 cents, or 2.3 percent, to $41.07 on Wednesday, have risen about 4 percent since early June, and had rallied in recent weeks on takeover speculation.
Home Depot said Nardelli and Blake were unavailable to comment.
Agencies
(China Daily 01/05/2007 page16)
