Bob Nardelli last week resigned abruptly as chairman and CEO of The Home Depot after a six-year tenure during which, despite large profits, Home Depot stock dropped 12 percent.
Nardelli had often been criticized for an autocratic, militaristic style of management and a compensation package many viewed as excessive. Nardelli’s severance package was valued at about $210 million including cash ($20 million), stock-based compensation ($128 million), retirement benefits ($32 million), lifetime health and life insurance valued at $18 million) and $9 million in owed but unpaid compensation.
On the positive side, Nardelli helped increase revenue and profits and increase the number of stores the company operates to more than 2,000. Home Depot’s earnings per share increased by about $150 million over the past five years.
The company’s rental program has grown dramatically during Nardelli’s tenure. When he joined as CEO in December 2000, Home Depot Rentals was ranked No. 26 on the RER 100, with about 150 rental outlets and an estimated annual rental volume of $38 million. In this year’s RER 100, Home Depot Rentals is No. 5 with 1,170 rental outlets and an estimated rental volume of $510 million.
The Atlanta-based home improvement merchandiser said Nardelli is being immediately replaced by its vice chairman Frank Blake.
Analysts pointed out that much of Home Depot’s poor stock market performance occurred during the first two years of Nardelli’s reign, when he was attempting to turn the company around. During the past four years, Home Depot’s stock price rose more than 67 percent, annual sales doubled to $81.5 million, and profit nearly doubled as well. However, its stock fell almost 1 percent over the past year as the housing market slowed.