"Headline-grabbing examples of princely compensation packages for ousted executives such as Home Depot's Robert Nardelli and Pfizer's Hank McKinnell only added to pressure for change."
Only a couple of months back, Home Depot ousted its CEO Robert Nardelli for failing to lift the nation's top home refurbishing retailer's sagging fortunes. Over the last six years since he took charge, the firm's stock lost one-fifth of its value. Still, to the dismay of markets and shareholders, he took away $210 mn as compensation. Angry shareholders scoffed at the board's decision to gift away such a big sum for nothing but what they termed non-performance. In an interview with BusinessWeek Charles Elson, Director of the Weinberg Center for Corporate Governance at the University of Delaware said, "He is getting entrepreneurial returns for effective managerial results." "Something is wrong in the philosophy of the package that creates those kinds of returns", he added. Bob as Nardelli was popularly called, did not indulge in any financial shenanigan or accounting fraud as was the case with Enron's Ken Lay (Chairman) and Jeffrey Skilling (CEO), yet he became a part of what is referred to as the `executive excesses', which has seen CEOs extracting atrociously high salaries, perks, severance package and other compensations.
However, before Enron dropped the bombshell and exposed the ugly side of the corporate governance (or lack of it), markets' search for superlatives would have continued uninterrupted. But many market pundits fear that perception might have changed forever. Seven years back, BusinessWeek commenting on Jack Welch's, GE's charismatic leader who was approaching his retirement then, extraordinary leadership that enabled him to stay at the company's helm of affairs for two decades, said that such feat would be rare to be matched again by anyone else in the future. |
