They Must Really Want Him Gone

A couple of days ago I wrote about the gap between CEO compensation and that of the average Canadian worker. Apparently, stratospheric compensation extends beyond day-to-day work to include termination pay.

I'm talking, of course, about yesterday's departure of Bob Nardelli from the role of Home Depot's CEO and Chairman of the Board. Nardelli, who had been Chief Operating Officer for six years, was under a great deal of pressure from investors who were unhappy about how the company's share price was perfoming. He leaves Home Depot with a cash payment of $20 million (US) and the acceleration of stock awards and options worth about $84 million (US).

Included in Nardelli's $210 million (US) severance package is a cash payment of $20 million and the acceleration of unvested deferred stock awards currently valued at roughly $77 million. To put it into perspective, the total amount that Home Depot has set aside for stores and staff that provide good customer service is only $30 million. In other words, Nardelli leaving is worth seven times as much as average employees doing a good job.

Investors don't seem to care. The stock ended the day trading almost 2.3% higher and most of the commentary was positive. Bernie Marcus, who co-founded the company and is still a major shareholder, did not seem to think the amount was a problem. "It's like the old story, if the stock goes up 10%, who's going to care?" he is quoted as saying.

I don't know about Mr. Marcus and Mr. Nardelli, but a lot of people care. People work too hard to make ends meet to just shrug off the latest golden handshake as the cost of doing business. Most people do not get rewarded for doing a poor job, and I can't think of many cases where a clerk in a Home Depot store would get an extensive severance package for quitting. It is about time that the executive elite of the corporate world start realizing that they must play by the same rules as everyone else.