Pay For Performance?

Home Depot Chairman & CEO Bob Nardelli is a pal. Period. An amazing guy. Perhaps more energy and determination than I've ever seen in one package. (I met him at GE.) And he has indeed mounted a largely successful REVOLUTION at Home Depot. Which is why I am simply dumbfounded by his Annual Meeting behavior last week. (Among many other things ... the Board were no-shows!!) I talked at a dinner on Sunday with a couple of gen-u-ine "captains of industry" ... with dozens of high-visibility annual meetings under their belts. They, too, are incredulous.

I confidently declare, alas, that Bob N will never recover from this one. FYI, for excellent commentary on the meeting, see Joe Nocera's article, "The Board Wore Chicken Suits," in the New York Times (0527); Joe is an old friend and superb reporter.

(If I don't understand, I sure as hell do offer the "shitty timing" prize for this sicko performance occurring the day after Skilling & Lay went down for, in effect, extreme executive arrogance and disdain of shareholders.)

Of course, pay for performance, a key Home Depot issue, is a very hot-contentious topic. A recent study (source??) I saw observed that CEO pay is closely (statistically) related to company size—and essentially unrelated to performance. So consider this from Advertising Age (0521.06) on top-mgt comp. Barebones: Over the last five years, INTERPUBLIC GROUP lost about $2 BILLION—and the top five execs were collectively paid $107 million. During the same five years OMNICOM's top five pocketed $111 million—on a profit of $3.2 BILLION. (Hmmmm?? Wow!! And: Not unusual.)