HOME Depot Inc. (NYSE: HD), the home improvement giant that caused an uproar over its heavy-handed tactics at last year’s annual meeting, held its 2007 annual meeting yesterday and said sorry.
And different from last year when none made an appearance, all of the directors except one showed up. The meeting lasted a couple of hours and the 300-odd shareholders got to ask their questions. (I have something to say about how they communicated online at the end of this post.)
If you remember last year, former CEO Bob Nardelli stood alone on stage flanked by two big digital timers and wrapped up the proceedings in 37 minutes after giving each questioner just 60 seconds. That set off a shareholder revolt that culminated in Nardelli getting the boot in January after six years. In that time, he took home close to $300 million, a sum that continues to shock and outrage governance activists.
So it was obvious that the question of Nardelli and his pay was going to come up at yesterday’s meeting. I’m assuming that the directors and executives were briefed by Home Depot’s PR and IR people on what to say. And that’s what makes their answers yesterday so significant.
“We got full value from Nardelli”
According to new Chief Executive Officer Frank Blake and lead director Kenneth Langone, Nardelli did nothing wrong and really was a victim of forces beyond his control.
In an interview with the New York Times minutes before the meeting, Langone said Nardelli was worth “the full value” of his pay.
“We needed the best. We got the best. Bob saved Home Depot,” he told the newspaper.
Bloomberg‘s Mark Clothier got to speak to new CEO Blake briefly after the meeting. In his article, he reports:
When asked if Nardelli was overpaid, Blake said his predecessor was caught up in “larger social issues.”
“We’re seeing kind of a societal shift around what shareholders are willing to pay their CEOs,” he said. “It’s really an unfortunate thing when you see a real live human being get caught in the middle of that.”
CEOs of consumer companies are supposed to manage “societal shifts”
Don’t know about you, but I find Blake’s explanation a weak excuse. CEOs are supposed to be super managers. They’re supposed to be on top of things like “societal shifts,” and yes there is a shift underway. Their ability to see around corners is one of the reasons they get paid the big bucks, and Nardelli got more than most.
It’s not unfortunate for Nardelli that he got hit by a societal shift, it’s just bad management. He and Home Depot’s board should have seen the “societal shift” coming. A lot of other people did.
Obviously, business schools need to start teaching young executives how to identify and respond to societal shifts because the current crop out there doesn’t know one until they get hit in the head by it. And even then, I’m not sure they are really gettin’ it.
When HD shareholders got home last night…
I get the sense from reading the coverage and visiting the company’s website, that there’s still some denial about the shift. While the company did audio webcast (new window) the annual meeting, I find it odd that I have to learn the preliminary outcome of the voting from Bloomberg and not the company.
Why don’t companies understand that an annual meeting is really an election and referendum, and that people who participate are interested to know the outcome as soon as possible?
Sure, the information was available if you were at the meeting in Atlanta, but that ignores all those people who couldn’t be there in person, but who still took the time to vote online, by telephone, or by returning their instructions by mail.
When they got home from work and went to the company’s IR website too see what happened, they saw nothing telling them about the outcome. All they got was a low-rent, un-indexed audio stream from Shareholder.com behind a registration form.
Another example of companies not managing their web communications properly and giving investors less reason to use their websites.