Robert Nardelli’s rich compensation for poor performance at Home Depot has long been cited by shareholder activists as a prime example of what they view as excessive executive pay. Some union members have dressed in chicken outfits to protest the board’s reluctance to clip Nardelli’s wings.
Now, all their outrage has won them Nardelli’s removal — and won him at least a $210 million golden handshake on his way out the door.
Nardelli’s compensation may have a prominent place in the pantheon of paying for failure, critics said, but his arrangement is by no means unique.
Across corporate America, chief executives have been walking away with lavish riches even when their companies fail to perform, according to an analysis by the Corporate Library.
“You can call them pay-for-failure packages,” said Jesse Fried, a law professor at the University of California at Berkeley, who has been critical of excessive compensation packages. “You get what you pay for.”
Lots of detail, many examples, in the article.
Some nations, some corporations, write equitable proportion into wage scales for corporate governance. The Good Old Boy mentality that rules our economy and politics would rather support a license to steal.
Yeah, I noticed that story too. Even if Nardelli lives another 40 years, he’ll be able to live comfortably with over 6.5 million per year for failing. Not even including the interest it’ll earn. That’s ludicrous.
I think that is wrong, but the only way to get the boards attention is to either quit buying the stock or have a shareholder uprising and vote the board off, both of which I really dont see coming to pass
what is a an average person to do about this crap?
This is like the ‘Ol Golden Parachute.
You hear all of these excesses going to CEOs and at the same time these companies claim poverty and slash jobs by the thousands left and right.
How about sharing the burdens of the company? You can’t claim to be cutting jobs to save money to save a company if at the same time you are giving big money to CEOs in bonuses or retirement packages.
It’s all a sham.
As noted, some nations make such practices illegal. I think we have small likelihood of something like that happening in the “freedom-loving” USA.
Aside from coordinated consumer movements — again, mostly missing from the American psyche — I’ve simply stopped shopping at Home Depot. They’re not even on my list of last possible choices.
Voting with your buck ain’t bad.
4. “Voting with your buck ain’t bad.”
The problem with that is that it never addresses the underlying problem. There is simply no apparent cause and effect between the golden parachute and the decreased sales.
The best it would do is simply give Home Depot a basis to fire its new CEO and give him yet another huge golden parachute.
What to do?
1) Put the so called “death tax” back in place. Raise the lower limit – fine, index it to inflation, fine, but put it back.
2) Remove the UPPER limit to SSN taxes. Right now its about $95,000 – raise it to no limit. (the upper SSN limit is an earnings amount that when reached the tax payer stops paying SSN tax). Most Americans pay SSN based of 100% of their earnings – why not the rich?
2) Put in a fourth tax bracket to be activated at the 20 million mark – make it a 75% tax. Index it etc if you want, but put it in place.
3) Send the board members of companies that don’t stand up to these guys each a massive shot of testosterone.
4) Encourage companies to take risks on lesser know, younger leaders.
5) Have a year end TV show called “Who is the biggest CEO loser” and award the top five losers a public kick in the genitalia.
Take all the money collected and pay down the debit.
I wonder if the corporate world would notice if all of us with 401k plans suddenly stopped the automatic contributions.
Common stock holders don’t have the ability to do much during voting at stockholder meetings these days. in most publicly held companies, board members and or institutional (401k, mutual funds, etc.) stockholders have the majority of shares held. They are taught to focus not on what executives are paid, (note I didn’t say earn, because I doubt many of them EARN it) but on how well the company can squeeze the bottom line from Offshoring/outsourcing IT, busting out unions, and lowering employee healthcare and retirement benifits.
I have had the experience of meeting and working around several CEO types in large corporations. Some days I think it’s a miracle they find their way into work, yet they are rewarded like they do all the actual labor involved.
Outsource the CEO’s!!!
“2) Remove the UPPER limit to SSN taxes. Right now its about $95,000 – raise it to no limit. (the upper SSN limit is an earnings amount that when reached the tax payer stops paying SSN tax). Most Americans pay SSN based of 100% of their earnings – why not the rich?”
You do realize that the benefit we are all supposed to receive is based upon how much we’ve payed into the system? If a millionaire gets taxed on all of his income, he’d better be getting that much back when he turns 67 (or whenever). So while you may help in the short-term, you are also increasing liabilities in the long-term.
And non of this addresses the real issue that SS was not meant to be a retirement system in itself, but only a supplement to what people had already planned. Nor was it meant to pay for the crippled and dumb — or to act as a petty cash fund for politicians who couldn’t pay for their programs out of general revenues. SS was broken a long time ago, and turning it into yet another wealth redistribution scheme is not going to fix it.
You folks need to understand something…
Corps dont pay ANYTHING…
YOU DO.
YOU are going to pay his retirement, in the price of products and services.
#11, quite the revelation there. 😛
Hell, I could run a company into the ground as well as those bastards. They should hire me so they can fire me and only pay me 3-5 million to go away. It would save the company a lot of money.
God this country needs an enema!!!!!
12,
thanks…
For every Tax, for every BILL, for every utility, for every Lawsuit they pay out, for ALL the upper retirement packages, for Every CEO, for every Board member, for every bastard out playing GOLF…
You pay the wages,
YOU pay the retirement
you pay the Fines, bills, insurrance, wages…Of all of them.
Someone look up what an LLC corp is…
Basically means…persons are NOT liable, but the CORP pays it.
God this country needs an enema!!!!!
Comment by the2thdoctor
Where would we put it?
J/P=?
While I agree most CEOs are very overpaid, we are walking on a very slippery surface here people. Who and how do you determine what someone is worth?
Should the girl who takes your temperature and BP at the Doctor’s office be payed the same as the bus driver who drove you to the appointment? Should the CEO of Sony be paid the same as the CEO of Ford? If we start deciding their pay scale, then can your pay be next.
It would sure be nice if they got rid of these “poison pills” and “golden parachutes” that the top executives like to put in place. Wally, in #8, is right. It is the institutional stock holders that encourage this behavior.
10 – Mike – Your understanding of Social Security is the basis of all it’s problems.
Social Security was never meant to be an alternate to a retirement savings account, but legislators that put money into it have made it a pseudo savings account.
The whole purpose of Social Security is for society to provide a method to assist those that are unable to help themselves to maintain a minimum standard of life. The eligibility requirements are actually quite strict for people under the official retirement age.
But it is being treated as an entitlement by those that don’t need it after they retire. Does a retired person need social security if they have a million dollar bank account? Should they be eligible at all?
Social Security is a tax by a different name, designated for a specific purpose. Do you expect to get a return in services proportional to what you pay in for your regular taxes?
If Social Security benefits were cut off to those with net worth (personal home exempted) of over $500,000 and/or income above the state median income, SS would be immediately solvent, and rates could actually go waaaaaay down.
#17, Yes, yes, yes… “from each according to his ability, to each according to his need” we get it, SS should be just another welfare program.
“But it is being treated as an entitlement by those that don’t need it after they retire.”
Yeah, imagine people actually wanting to get back part of the thousands of dollars they were forced to pay into the system over the course of their working lives. Despicable…
#16 – While I agree most CEOs are very overpaid, we are walking on a very slippery surface here people. Who and how do you determine what someone is worth?
Well… if no one else wants the job, I’ll determine it. I don’t think the question is all that tough. If you drove a Ferrari to work and you are laying off employees… you are paid too goddamn much.
#17 – Social Security was never meant to be an alternate to a retirement savings account, but legislators that put money into it have made it a pseudo savings account.
Never meant to be… Yet, it is by default for a great many Americans living so close to the edge of the abyss. If your income leaves nothing after bills, rent or mortgage, medical expenses, bla bla bla… what do we expect people to save?
I always hear well to do folks with few financial worries and even less empathy suggest that those down of their luck should pull themselves up by their bootstraps… Fine… What advice do they have for those who don’t have boots?
#11 Corps dont pay ANYTHING… YOU DO.
Absolutely, ECA. But I don’t think the average Joe Average think of it that way.
#17, 18 & 19
the only reason that SS has survived as long as it has is because the Middle Class (who “don’t need it”) get a payout, and they form the backbone of the most effective lobby in the USA. means-test SS and yes, it becomes a dreaded “welfare” program and it will suffer the same fate as AFDC …
of all the governmental programs in the history of the US, SS has been the single most effective in achieving its goals. It aint broke, it just needs a bit of tinkering to keep up with the baby boomers, so it don’t need to be fixed.
but back on topic – a punitive tax on these exit bonuses is definitely called for.
A CEO should not Earn more then what??
4 times the going rate of a Union Janitor??
4 times the cost of a Plumber??
WHY in HELL, do you pay someone OVEr $1million a year?? And they DONT do the job.
Then explain WHY they are doing this for more then 1 person…It isnt JUST the CEO…check out the Board of directors.
IF/Once we can make a JOB that is paid for what it IS…Maybe..we can get back to decent prices, and quality goods.
#23 – The idea of agreeing with you kinda makes me a little queasy.
What does a corp do when it Looses money or WANTs more.
Raise prices
Start shuffleing lower jobs(their name not mine)
Make it harder to work, and mess up hours, to force you to quit.
change hiring practices, hire more Single income females, cant Quit, cant Strike. Have to feed the kids.
Cut managers, and janitors
Cut tech support and computerization
Cut book keepers, and distribution.
cut middle management.
Cut saleries to middle management.
Cut to share holders, pickup stocks.
Fire a CEO…
But NEVEr touch the board of directors.
I think thats close enough. And as you can see…the TOP is LAST.
I have no love for CEOs, but occasionally you can see them respond to pressure.
I was listening to my company’s broadcasted financial report to investors when the CFO was asked why the company was buying back stock instead of putting the money into its severely underfunded pension plan? The CFO’s response: “We have better things to do with that money.”
The stock dropped 10 points over the next week. A few weeks later the company announced they were putting another $300 mil in the pension plan and that the CFO had resigned.