The Nardelli Defenses Keep Coming

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While it seems almost no-one is willing to defend ex-Home Depot CEO Bob Nardelli's pay package, the criticisms of the pay package and his performance as CEO have certainly excited the business end of the internet. The latest is from Ken Lacroix, the D&O Diarist:

One question that needs to be asked is how much of what happened to Home Depot’s share price had to do with Nardelli and how much it had to do with where the share price was when Nardelli took over. As PointofLaw.com points out (here), Home Depot’s share price was already at stratospheric levels when Nardelli arrived.
But the more troublesome aspect of the criticisms about Home Depot’s share price is the clear implication that Nardelli would still have a job (although he would be $210 million poorer) if he had managed to get the share price to go up. It used to be the conventional wisdom that the market determined a company’s share price, not the CEO. Moreover, it has not been that long since corporate America faced a series of crises and scandals because too many CEOs seemed to think it was their job to engineer their company’s share price rather than to run their company. Corporate activists may be congratulating themselves for their “victory” at Home Depot, but they should be very careful about the lesson here. The danger, as pointed out on the ContrarianEdge blog (here) is that “the ousting of Bob Nardelli sent a wrong message to America’s CEOs : it taught them an incorrect lesson – manage the stock, not the company.”

Executive Pay, Shareholder Activism, and Board Duties [D&O Diary]

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