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Home Depot Irony Watch: Outrageous Exit Packages To Fuel Even More Outrageous Exit Packages

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Okay. Now that we've recovered a bit from our shock at reading that former Home Depot CEO BOb Nardelli was getting $210 million on his way out the door, we've got something a bit more substantial to say about it than the obligatory mouth wide open gasp. And here it is: Nardelli's exit will probably have the effect of increasing CEO compensation, at least marginally.
Although there will be some temporary populist (it's the word of the day!) outrage, the impression that Nardelli was forced out so suddenly from Home Depot after a long tenure there--he was one of the founding partners (We were totally wrong on this. No excuses.)--should only increase the fears of would be chief executives about their job security. (If Home Depot can throw Nardelli overboard so quickly, no one is safe!”) Which means that boards seeking to lure chief executives away from their current positions to lead a company--Nardelli came to Home Depot after coming very close to becoming CEO of GE--will need to make even larger promises of severance if things don’t work out. This is more true of companies with troubled prospects—who arguably need the very best leadership—since running these companies is far riskier than running a bright, shining market star. So expect to see more huge exit packages handed over to CEOs who have lead troubled companies, and more populist outrage over CEO compensation. And, of course, more opportunities for private equity companies that don’t have to deal with pesky shareholders and can afford to pay a CEO for what they are worth.