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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (73689)	1/3/2007 6:34:30 PM
From: stockman_scott	Read Replies (3) \| Respond to of 89467

Nardelli Exit Package Called 'Outrage,' May Heighten Pay Debate By Josh Fineman Jan. 3 (Bloomberg) -- Home Depot Inc. Chief Executive Officer Robert Nardelli's $210 million severance package drew criticism as an ``outrage'' and threatened to escalate the debate over whether U.S. executive pay is excessive. 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. ``The departure package is an outrage,'' said Nell Minow, editor at the Corporate Library, an independent research firm in Portland, Maine. ``He should be giving money back to the company, not taking anything more.'' U.S. Representative Barney Frank, a Massachusetts Democrat who is the new chairman of the House Financial Services Committee, said today 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.'' Jerry Shields, a Home Depot spokesman, said the company wouldn't comment on Nardelli's package. Home Depot's shares rose 91 cents, or 2.3 percent, to $41.07 at 4:21 p.m. in New York Stock Exchange composite trading. $200 Million at Pfizer 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. ``We hold the board of directors accountable,'' said Richard Ferlauto, director of pension investment policy at the American Federation of State, County and Municipal Employees. ``The compensation committee should have known better. It is not a divine right of CEOs to be paid huge numbers of dollars when they do not perform, when they do not create value for shareholders.'' 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. Beats Fiorina ``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.'' Fiorina, former chief executive of Hewlett-Packard Co., was paid about $42 million in severance, including stock options, restricted stock and annual pension payments, according to four union pension funds that sued the company for the return of the payments in March. Patrick McGurn, executive vice president at Institutional Shareholder Services in Rockville, Maryland, called the Nardelli payment a ``$200 million-plus mistake'' that ``should serve as a cautionary tale for other boards that find themselves rushing to impulsively ink a lucrative, one-sided, long-term contract with a `can't miss' executive. Most of the pay-for-failure payout flows directly from Nardelli's flawed employment agreement.'' Home Depot and Lowe's are both headed for the smallest increase in net income in at least nine years as a slowing housing market crimps home-improvement spending. Lowe's shares have tripled during Nardelli's tenure at Home Depot. To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net Last Updated: January 3, 2007 16:59 EST