CEO Bob Nardelli splits with Home Depot after a six-year term marked by a stagnant share price and PR gaffes
By The Associated Press
Bob Nardelli resigned abruptly Jan. 3 as chairman and chief executive of The Home Depot Inc. (HD) after a six-year tenure that saw the world's largest home improvement store chain post big profits but left investors disheartened by poor stock performance.
Home Depot shares climbed more than 3 percent in morning trading.
Nardelli's sudden departure was stunning in that he told The Associated Press as recently as Sept. 1 that he had no intention of leaving, and a key director also said that the board was pleased with Nardelli despite the uproar by some investors.
Asked in that interview if he had thought of hanging up his orange apron and leaving Home Depot, Nardelli said unequivocally that he hadn't. Asked what he thought he would be doing 10 years from now, Nardelli said, "Selling hammers."
For The Home Depot?
"Absolutely," he said at the time.
Home Depot said Nardelli's decision to resign was by mutual agreement with the Atlanta-based company.
Nardelli has been under fire by investors for his hefty pay and the poor performance of the company's stock price during his tenure. He became CEO in December 2000.
Home Depot said Nardelli will be replaced by Frank Blake, the company's current vice chairman, effective immediately.
"We are very grateful to Bob for his strong leadership of The Home Depot over the past six years. Under Bob's tenure, the company made significant and necessary investments that greatly improved the company's infrastructure and operations, expanded our markets to include wholesale distribution and new geographies, and undertook key strategic initiatives to strengthen the company's foundation for the future," Home Depot's board said in a statement.
The board also announced that Carol Tome, the company's chief financial officer, and Joe DeAngelo, the company's executive vice president, Home Depot Supply, will be assuming additional responsibilities.
Tome will be assuming responsibility for mergers and acquisitions, credit services and additional strategic responsibilities. DeAngelo was appointed to the newly created position of chief operating officer.
Nardelli and Home Depot have agreed to terms of a separation agreement that would provide for payment of the amounts he is entitled to receive under his pre-existing employment contract entered into in 2000. Under this agreement, Nardelli will receive consideration currently valued at about $210 million.
The package includes a cash severance payment of $20 million, the acceleration of unvested deferred stock awards currently valued at approximately $77 million and unvested options with an intrinsic value of approximately $7 million. It also includes payments of earned bonuses and long-term incentive awards of approximately $9 million, account balances under the Company's 401(k) plan and other benefit programs currently valued at approximately $2 million, previously earned and vested deferred shares with an approximate value of $44 million, the present value of retirement benefits currently valued at approximately $32 million and $18 million for other entitlements under his contract which will be paid over a four-year period and will be forfeited if he does not honor his contractual obligations.
Nardelli has also agreed not to compete with the company for one year, and not to solicit employees or customers of the company for four years.
Home Depot did not say what Nardelli would be doing next.
In conjunction with the management changes, the board also announced that it had waived the retirement age of 72 and has asked John L. Clendenin, Claudio X. Gonzales and Milledge A. Hart III to stand for re-election at the 2007 annual shareholders meeting. This action was taken to retain these directors experience. Home Depot said the action was temporary.
Home Depot shares rose $1.29, or 3.2 percent, to $41.45 in morning trade on the New York Stock Exchange.