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With no Home Depot improvement, CEO exits

Dan Grech Jan 3, 2007

KAI RYSSDAL: Now here’s an interesting item from the day’s news. A guy runs a company that underperforms. Underperforms a lot. The stock tanks. Rivals are nipping at the heels. What happens? Well, when Home Depot announced today its CEO was resigning, with the company’s blessing, the board gave him $210 million. From New York, Marketplace’s Dan Grech reports.

DAN GRECH: He may not be remembered this way, but Bob Nardelli did a pretty good job at Home Depot. Sales nearly doubled during his six years at the helm. He centralized operations and invested a billion dollars in new technology, including self-checkout aisles.

But critics say he had many failings. High on the list: alienating shareholders and not focusing enough on customer service. That gave Home Depot’s main rival, Lowe’s, just the opening it needed.

Retail expert Howard Davidowitz:

HOWARD DAVIDOWITZ: Lowe’s has just beaten their brains out, on the same playing field. Now Nardelli is directly accountable and responsible for that. He’s running the show.

Davidowitz says Nardelli had a militaristic management style. That led employees to nickname their company Home Despot. It didn’t help that Nardelli was one of the country’s most lavishly paid chief executives, despite his company’s tanking stock price.

DAVIDOWITZ: There’s been an outrage out there. His compensation has no relation to his negative performance, and ultimately he had to go.

So what’s next for Nardelli. James Senn is a leadership expert at Georgia State University.

JAMES SENN: Bob Nardelli is not done by a long shot. Whether he’ll have interest in assuming leadership of another company or starting a company, it’s too soon to say.

Nardelli is being replaced by the company’s Vice President Frank Blake.

In New York, I’m Dan Grech for Marketplace.

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