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Home Depot Shareholders Vote Down Proposals On CEO Pay

AP
Thursday, 24 May 2007 | 2:02 PM ET

Home Depot, which is considering selling its wholesale distribution business, is being prodded by a number of shareholders to keep the unit, Chief Executive Frank Blake said Thursday after the company's annual meeting.

"There are certainly a lot of investors who have approached me and said they love Home Depot Supply as part of the Home Depot portfolio," Blake told reporters.

Blake was mum on what the Atlanta-based company will ultimately decide to do with its division serving contractors, homebuilders and other business customers. Home Depot said Feb. 12 it was considering shedding the unit as it focuses on its core retail business.

"It's not like we're being vague," Blake said. He added, "We started a process, we're still in the process and we'll tell you when the process is done."

Thursday's annual meeting, meanwhile, was a far cry from last year's uninviting shareholder meeting. This time, all but one member of the board of directors attended and shareholders were allowed to speak critically, even at length.

One thing didn't change: Shareholder angst over hefty executive pay and the lagging stock price of the world's largest home improvement store chain.

Nine shareholder proposals were offered at the meeting, including ones that would give shareholders a say on executive pay and retirement benefits, allow the company to recoup bonuses that go to executives who don't meet performance targets and split the position of CEO and board chairman between two people.

All of the shareholder proposals were rejected, though two dealing with executive pay and retirement benefits were favored by more than 40 percent of the ballots cast.

Home Depot was widely criticized for the tone of its meeting last year, at which the board members were no-shows, except former CEO Bob Nardelli, who didn't allow general questions from shareholders.

He resigned in January after six years at Home Depot.

"We apologize for last year's meeting," said Blake, who replaced Nardelli. "It was a mistake and it won't happen again."

Several shareholders told Blake Home Depot's stock price remains a concern. Blake said Home Depot is investing in its business.

"We think that for your interests as a shareholder long term, that is the best thing to do for the company: invest in the business now and take advantage of the market when it comes back."

Blake acknowledged that the company has had some operational difficulties over the last year and has lost market share in some categories. But he said he remains bullish about Home Depot's long-term prospects.

Before the meeting, Home Depot director Kenneth Langone told a small group of reporters that he understands the concerns of shareholders.

Langone, who plans to retire from Home Depot's board next year, acknowledged mistakes, but said Nardelli's severance package was not one of them. Nardelli left the company with a severance package valued at about $200 million.

"Bob gave us full value for what we gave him," Langone said. While he was re-elected to the board Thursday, Langone received support from only 66.5 percent of the ballots cast.

Asked why Nardelli left the company so abruptly, Langone said the board decided the company needed new leadership.

"Bob Nardelli saved Home Depot," Langone said.

In his round-table with reporters after the meeting, Blake was asked repeatedly about Nardelli, his pay and the changes the company has undergone since Nardelli left.

"My view on Bob's pay issue is ... we're seeing a kind of societal shift around what shareholders are willing to pay their CEOs and it's a really unfortunate thing where you have a real live human being get caught in the middle of that," Blake said.

Shares of Home Depot , which operates more than 2,100 stores in the United States, Canada, Mexico and China, rose 41 cents to $39.19 in afternoon trading Thursday.

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