HD Lawsuit: Lots More "Holy Cow" Moments Ahead
Senior Editor, CNBC
Home Depot shareholders want to stop the payout package that ex-CEO Robert Nardelli is going to get. They've filed an injunction to stop the payments all together. So far--there' s no ruling yet on the legal action. Nardelli resigned his post last week--leaving with a rather large $210 million severance deal (including a cash payment of $20 million).
Remember--that the severance deal was part of Nardelli's employment package when he was hired. It's not really a surprise. However-that's not quieting HD shareholders. The major reason they are upset-the price of HD stock has been struggling lately--and they don't see why Nardelli should be leaving with so much money.
Nardelli's severance deal (and other CEO deals) come at a time when many workers are being forced to cover a lot more of their own retirement costs and health care benefits. Case in point--according to the U.S. Bureau of Labor Statistics, fewer than half of all workers receive any retirement benefits from their employers.
So--should HD shareholders--or any shareholders at a company--have the right to fight such a payout? Donald Delves is president of the Delves Group. Eleanor Bloxham is president of the Value Alliance. Both were on "Morning Call" to discuss the issue.
Both agree that the legal action by the HD shareholders is good. Delves thinks shareholders have been far too docile for far too long. Bloxham says all company boards of directors need to move to a pay for performance situation with any CEO. In fact--she likes the U.K. model where shareholders vote in a non-binding way on an exec's pay package--before it's approved by the board.
So is Nardelli's deal--and the reaction to it--going to be the start of a lot more of these "super" golden parachutes getting exposed? Bloxham says it's a certainty-- "There will be a lot more 'holy cow' moments for investors at a lot of companies."
FYI: the lead plaintiff in the suit against Nardelli is the Employee Retirement Fund of Pontiac, Michigan. Nardelli was CEO at HD for six years.