Did Home Depot's Nardelli send Brownwood a " Thank You Card " ?
Monday, May 22, 2006
Home Depot CEO Builds Huge Nest Egg
I own some Home Depot stock, so I'll be casting 30 of the 2.1 billion votes at the 2006 annual meeting Thursday. The proposals are usually dull, but there's a nice snarky one this year about excessive executive compensation that blasts company CEO Robert Nardelli:
In our view, senior executive compensation at Home Depot has been excessive in recent years. In each of the last three years, CEO Robert Nardelli has been paid a base salary of more than $1,800,000, well in excess of the IRS cap for deductibility of non-performance-based compensation. His bonus in each of those years has been at least $4,000,000, and he was awarded restricted stock valued at over $8,000,000 in 2002, 2003 and 2004. Mr. Nardelli has also received a disturbingly large amount of compensation in form of "loan forgiveness" and tax gross-ups related to that forgiveness, which totaled over $3,000,000 in each of the past three years.
We believe that the current rules governing senior executive compensation do not give stockholders enough influence over pay practices. In the United Kingdom, public companies allow stockholders to cast an advisory vote on the "directors remuneration report." Such a vote isn't binding, but allows stockholders a clear voice which could help reduce excessive pay. U.S. stock exchange listing standards do require shareholder approval of equity-based compensation plans; those plans, however, set general parameters and accord the compensation committee substantial discretion in making awards and establishing performance thresholds for a particular year. Stockholders do not have any mechanism for providing ongoing input on the application of those general standards to individual pay packages. (See Lucian Bebchuk & Jesse Fried, Pay Without Performance 49 (2004))
During the six years Nardelli has led Home Depot, he's earned $154.3 million plus millions more in stock options. The company's stock price dropped 6 percent last year and is lower than when he arrived in 2000, while in the same period, Lowe's delivered 200 percent return for its shareholders. "The board at Home Depot has rewarded Nardelli for mediocre to poor performance," Paul Lapides, director of the corporate governance center at Kennesaw State University, told the Atlanta Journal-Constitution. "The pay for Lowe's former chairman is a quarter of Nardelli's annual pay, and Lowe's has outperformed Home Depot in the last six years."
Home Depot stacks the deck against shareholder proposals by obscuring the identity of the proponent, and the board of directors recommends a vote for or against each one. (They're against more scrutiny of executive compensation.)
One of the company's largest shareholders, the California Public Employees' Retirement System, came out in favor of this proposal last week.
A second proposal's even more blunt about Nardelli, calling for the company to stop letting one person serve as CEO and chairman of the board:
The pay-for-failure, pay-for-success, pay-for-anything-at-all attitude displayed by our board calls into serious question its effectiveness. ...
It is well to remember that at Enron, WorldCom, Tyco, and other legends of mis-management and/or corruption, the Chairman also served as CEO.
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Nardelli, Home Depot under fire for 'excessive' compensation packages
Atlanta Business Chronicle - May 18, 2006
One of The Home Depot Inc.'s biggest shareholders wants to have more of a say in executive pay, noting the home improvement retailer's executive compensation has been "excessive" and that part of Chairman and CEO Robert Nardelli's compensation package is "disturbingly large."
On Thursday, The California Public Employees' Retirement System (CalPERS) came out in support of a proposal that will be presented at the Home Depot (NYSE: HD) annual shareholders meeting on May 25 that would give company shareholders the opportunity at each annual meeting to vote on an advisory resolution to approve the report of the company's Compensation Committee. Such an advisory vote will "allow shareowners to have a voice" in Home Depot's executive compensation practices "while not directly affecting the board's ability to set compensation policy."
Sacramento, Calif.-based CalPERS noted investment research and proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis & Co. are recommending shareholders support this proposal.
"CalPERS believes that a shareowner advisory vote of the annual compensation committee report is an effective mechanism to enhance transparency in setting executive pay, improve accountability to shareowners, and to more effectively link pay and performance," CalPERS said. "We believe such a vote may compel the board to reexamine its compensation practices and act accordingly in cases where Home Depot's compensation packages may be excessive."
As Atlanta Business Chronicle reported May 12, Nardelli was Atlanta's highest-paid CEO in 2005, making more than $100,000 a day for a total annual compensation package worth $38.1 million.
"In our view, senior executive compensation at Home Depot has been excessive in recent years." CalPERS said. "In each of the last three years, CEO Robert Nardelli has been paid a base salary of more than $1.8 million, well in excess of the IRS cap for deductibility of non-performance-based compensation. His bonus in each of those years has been at least $4 million, and he was awarded restricted stock valued at over $8 million in 2002, 2003 and 2004. Mr. Nardelli has also received a disturbingly large amount of compensation in form of 'loan forgiveness' and tax gross-ups related to that forgiveness, which totaled over $3 million in each of the past three years."
Atlanta-based Home Depot reported May 16 it had a profit of $1.5 billion on $21.5 billion in sales for the first quarter. While its profit increased, analysts were disappointed in its sales performance.
source:http://sanantonio.bizjournals.com/sanantonio/othercities/atlanta/stories/2006/05/15/daily30.html
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Brownwood city sales tax receipts fall
By Steve Nash — Brownwood Bulletin
After months of strong-to-moderate growth in sales tax receipts, the City of Brownwood saw the number go negative in May.
Brownwood’s allocations from the state this month was $520,407, a 19 percent drop from May 2005, according to Texas Comptroller Carole Keeton Strayhorn’s office. May allocation reflects March sales.
Year-to-date allocation for Brownwood was $2.25 million, a 1.4 percent drop from 2005’s year-to-date of $2.28 million.
City Finance Director Walter Middleton said he suspects the May 2005 allocation — which reflected March 2005 sales — was spiked by the economic energy of Home Depot’s opening. “Maybe the anomaly was May ’05,” Middleton said.
May 2005’s allocation was nearly 30 percent higher than May 2004, Middleton said, and the May 2006 allocation was 14 percent higher than May 2004.
He said he thinks the sales tax allocations will stabilize and begin coming back up again. He said while he suspects last year’s numbers were spiked by Home Depot, the decrease still makes him nervous. “We don’t know for sure why it’s down.
City Manager Kevin Carruth said he concurred with Middleton’s idea that Home Depot’s opening last year had raised the numbers for that month. “There are probably multiple things going on but it was the first month of Home Depot,” Carruth said. “I wouldn’t be freaked out by it yet.”
Early had a 2.85 percent increase from May 2005 to May 2006. May’s sales tax payment was $105,407, compared with $102,861 in May 2005, a 2.85 percent increase. The year-to-date payment was $514,445, compared with $363,938 in 2005, a 41 percent increase.
Bangs’ payment for May was $8,434, a 20 percent increase over May 2005’s amount of $7,023. Year-to-date for 2006 was $28,699, compared with $21,971 for the same period in 2005, a 30 percent increase.
Blanket’s payment for May was $1,941, compared with $1,807 in May 2005, a 7.4 percent increase. Year-to-date for 2006 was $5,194, compared with $4,965 for the same period in 2005, a 4.6 percent increase.
The total amount of sales tax payments to all four Brown County municipalities in May was $636,581, compared with $732,418, a 13 percent drop. The year-to-date total was $2.8 million, a 4.7 increase over last year’s year-to-date of $2.67 million.
source: http://www.brownwoodbulletin.com/articles/2006/05/25/news/news01.txt
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All Corporate Welfare is local !
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