After six years of controversy, Home Depot Chairman and Chief Executive Robert Nardelli agreed to resign, with Vice Chairman and Executive Vice President Frank Blake replacing him. Nardelli walked away with a $210 million severance package.
Nardelli's departure follows a recent share buyback package that did little to lift the company's lagging stock price. The company's stock price had fallen about 8% during his reign whle its main competitor, Lowe's, was up 173%.
Critics lambasted Nardelli for his autocratic management style and his bloated $245 million compensation over the last five years.
Even in absentia, Nardelli is likely to remain controversial. House Financial Services Committee Chairman Barney Frank (D-Mass.) quickly issued a statement criticizing Mr. Nardelli's rich severance package.
"The action of Home Depot's board of directors to simultaneously dismiss Robert Nardelli and provide him with $210 million in severance is further confirmation of the need to deal with a pattern of CEO pay that appears to be out of control," Frank said.
"Some defenders of CEO pay argue that CEOs are rewarded for increasing the stock or the overall value of the company, but judging by today's market reaction, Mr. Nardelli's contribution to raising Home Depot's stock value consists of quitting and receiving hundreds of millions of dollars to do so."
Financial analysts also looked askance at the huge severance package.
"The $210 million is really the icing on the cake here and the ultimate insult to shareholders," Howard Davidowitz, chairman of the retail consulting and investment banking firm Davidowitz & Associates, told The Street.com.
Home Depot said that during Nardelli's tenure, the company nearly doubled sales, to $81.5 billion in 2005 from $45.7 billion in 2000, and earnings per share increased more than 140% same period.