Unjust reward.
Bob Nardelli, CEO of Home Depot, got fired today. He showed a complete lack of concern for shareholders at the most recent annual meeting:
Nardelli did not allow shareholders to ask general questions, ending the meeting, which was broadcast on the Internet, after a mere 30 minutes. He also did not respond directly to any of those investors who were allowed to address him about the proposals."This is not the forum in which we would address your comment," Nardelli told one shareholder representative who asked him what he would do to make board members more independent. "We certainly receive your comment."
The value of Home Depot stock declined under his control. And customer service foundered:
Home Depot has delivered superb financial numbers in the past five years, with total sales growing an average of 12% per year and profits doubling. But the share price has dropped 24% during the biggest home improvement boom in history. And shoppers are getting grumpier. The University of Michigan's annual American Customer Satisfaction index shows Home Depot slipped to dead last among major U.S. retailers, 11 points behind Lowe's. Home Depot employees, who were encouraged to "make love to the customer" under co-founders Bernard Marcus and Arthur M. Blank now sometimes treat them like bad dates. "I don't want to say one bad apple spoils the bunch," says Curt D. Bridges, an electrical engineer from Decatur, Ga., who used to be a die-hard Home Depot fan. "But sometimes some [store clerks] almost blow you off."
Mr. Nardelli will receive severance of about $210 million, about seven times the $30 million Home Depot set aside last June for stores and employees that provide good customer service.
That's quite the reward for failure.
Tip of the hat to Seth Godin.
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