"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

04 January 2007

Nardelli Exit Package Called `Egregious,' May Bring New Rules

CROOK NEWS:$500m to Dump HD's Nardelli-"Pay for Ego"
If you were unlucky enough to catch the buyout industry reps' spin on the absurd "pay for ego" golden parachute given to failed Home Depot executive Bob Nardelli, you could see that the 'talking points' were shared. For example, see what key holder Relational Investors cheerleadered:

* Oh, Bob's not overpaid, he's a talented private equity guy;
* HD shares were priced at a 50 multiple so 'it's decline is NOT HIS FAULT;
* HD should be private since it could be leveraged up and has $30B in real estate; &
* Bob is simply being harassed as a public company exec, demanding that actual shareholder meetings with unscreened questions is SOOOOO aniquated. GAG!

Jan. 4 (Bloomberg) -- Home Depot Inc. Chief Executive Officer Robert Nardelli's ``egregious' $210 million severance package may be the catalyst for legislation that tries to rein in executive pay at U.S. companies. Nardelli, 58, was ousted after Atlanta-based Home Depot's shares dropped 7.9 percent and the company lost market share to Lowe's Cos. during a six-year reign in which he earned $225 million. Nardelli's exit pay includes $20 million in cash and compensation earned and not yet received.``It's just egregious,' Frank Glassner, chief executive officer of Compensation Design Group in New York, said in an interview yesterday. ``For what the shareholders left on the table, versus what Bob Nardelli is going to take home, I would classify that not as pay for performance, but pay for attendance or pay for ego.'

Congress and the U.S. Securities and Exchange Commission have focused on excessive executive pay in recent months. In July, the SEC began the biggest overhaul of rules covering compensation in 14 years, calling on companies to expand the information they provide to investors about the salary, incentives and perks given to senior executives. U.S. Representative Barney Frank, a Massachusetts Democrat who is the new chairman of the House Financial Services Committee, said yesterday that he would hold hearings on executive pay and may push for legislation to give shareholders greater say over what CEOs make. ``The justification for these really very, very large amounts of money being given has been that they are performance- driven,' Frank said of Nardelli's package after a speech at the National Press Club in Washington. ``When it's given as a consolation prize for bad performance, then the whole justification is called into question.'

Ya think?? Prior efforts to reign in executive pay have been blocked despite other "pay for ego" packages.. AVERAGE executive pay is 369 times that of the average worker.

Nardelli's payout follows almost $200 million received by former Pfizer Inc. CEO Hank McKinnell, who was forced out in July. Exxon Mobil Corp. gave former Chairman and CEO Lee Raymond a $357 million retirement package when he stepped down in 2005. The average pay for chief executives rose to 369 times that of the average worker in 2005, up from 131 times in 1993 and 36 times in 1976, according to a study by Kevin Murphy, a finance professor at the University of Southern California.

Well, guess who's a common thread here and in the "Pay for Ego" package that former NYSE head Dick Grasso was awarded-like a rigged lottery? Ken Langone (Google him and you'll find he's a repeat "pay for ego" gifter.

Nardelli's separation package, called for in his contract with the company, also includes a $9 million payment for long- term incentive awards, $44 million in previously earned and vested deferred shares, $32 million in retirement benefits and $18 million in other compensation. (And potentially $315m in options awards) ``It's an outrageous amount of money,' said Jeffrey Sonnenfeld, senior associate dean at the Yale University School of Management in New Haven, Connecticut. ``It is even more than Carly Fiorina was paid over the same period of time for a comparable drop in shareholder value. In both cases, it was bad deals from the first day.'

When are average shareholders going to realize that it's their money (e.g. shareholder's equity) being looted in these and the some 2000 option 'backdating' (e.g. rigging) cases. Again, where's the outrage???


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