Nardelli Refused $20 Million Pay Cut To Keep Job: CNBC's Gasparino
Former Home Depot CEO Robert Nardelli could have stayed as chief executive of the home-products giant if he had agreed to take a $20 million cut in his contract that entitled him to around $200 million, CNBC'S Charlie Gasparino has learned.
Not only did Nardelli refuse to accept the offer, Gasparino said, but he ignored the advice of his mentor, former General Electric chairman Jack Welch, who at one point during the negotiations intervened and advised Nardelli to take the slightly lower package in order to save his job.
As reported, Nardelli was ousted as Home Depot's CEO last month amid controversy over his massive salary at a time when the company's share price floundered.
As previously reported by Gasparino, the company's co founder and lead director, Wall Street financier Ken Langone, led to charge to have Nardelli removed from the CEO post. But Langone didnt push Nardelli out without first offering him this deal that until now hasn't been disclosed.
Neither Welch, Langone nor Nardelli returned telephone calls seeking comment. But one person close to the matter told Gasparino that Nardelli believed he was worth the money even though he had become a lightning rod for complaints about executive pay.
Many analysts agree with Nardelli's view, Gasparino said. Despite the company's lagging share price, they point out that sales and earnings rose sharply during his tenure. He also took over the company when it's stock was inflated by the stock-market bubble, Gasparino said.
That's the main reason why major private-equity firms have recently approached Nardelli about a possible job when his non-compete agreement with Home Depot ends in about a year, Gasparino said.
But Nardelli learned that it takes more to run a major public company than increasing sales and earnings, Gasparino said. By late last year, Home Depot board members had come to the conclusion that they needed to make some statement to address the concerns of some investors that Nardelli's massive compensation should be more reflective of the company's stock price.
Ironically, the task of convincing Nardelli to take less money was Langone, the same person who recruited Nardelli from General Electric, where he had been one of the best executives at the company, and Welch, the guy who was Nardelli's mentor during his years at GE.
Sources told Gasparino that Nardelli's relationship with two of his biggest supporters is now strained, particularly after he decided to reject the deal, which all but forced Langone to oust him as CEO.