Home Depot's Absent Board of Directors
ALEX CHADWICK, host:
Next, another big company, Home Depot. The annual shareholders meeting was last week. The company's board of directors didn't bother to show up. The CEO, Robert Nardelli, was there, as was New York Times writer Joe Nocera. He's also a contributor to our friends at WEEKEND EDITION Saturday. Joe, welcome to DAY TO DAY. I read your piece about this meeting in the paper. I was outraged, and I don't own stock in Home Depot.
JOE NOCERA reporting:
I'll tell you, everybody who was there was pretty outraged also. There weren't that many people there. Mr. Nardelli comes out and, you know, the big issue is his compensation. He's gotten paid $245 million over the last five years and the stock has actually gone down. So there's a lot of union representatives there who have shareholder proposals having to do with executive comp. And I think he was expecting a really rowdy, angry meeting. So of course one guy gets up, a union representative, and he says, you know, if we're going to vote for the directors, can we meet them? And Mr. Nardelli said they're not in attendance. I've been a business journalist for over 25 years, and I have never seen an annual meeting where the directors didn't show up. I have never ever seen it.
CHADWICK: Now, why didn't they show up here? Is this something that Mr. Nardelli engineered because he thought that there were going to be embarrassing questions about his pay and things?
NOCERA: Well, he certainly thought that there were going to be embarrassing questions about his pay and he just didn't want to deal with it. Whether he engineered it or not, I really have no idea. but it's clear as a CEO or a board, you only have to deal with your shareholders really once a year. That's all, that's the only time you ever have to do it.
CHADWICK: You got to go to the shareholders meeting. And that's their chance to try to have some influence on the governance of the corporation.
NOCERA: And they also, it's their only chance to have dialog with the corporate executives and to ask them about the state of the business. He wouldn't even take any questions about the state of the business. It was astounding.
CHADWICK: Joe, you write about this because the questions of executive compensation and the responsibilities of the board, these are big questions now in American business, and when you see a corporation carrying on like this, I mean, what is the lesson of this? That basically companies, they really don't have to pay attention to their stockholders?
NOCERA: Shareholders really don't have any inherent power over the corporations that they supposedly own. I mean the only way you could get rid of the directors of Home Depot and effect change is to mount a proxy fight, and that's incredibly expensive. You have to put up your own slate of directors and so on.
CHADWICK: I wonder if the outcome of this might be that so many people who read your column would be so angry that there might be changes at Home Depot, or conversely would a lot of other boards of directors say, hey, there's an idea, we don't have to go to the meetings and we don't have to listen to anybody.
NOCERA: Very few corporations are going to do what Home Depot did. We've gone through Enron and WorldCom and Aldephia, and all these other problems, and companies are pretty sensitized to the need to at least act like they care about what their shareholders think, and many of them do. And big shareholders now do have more power than they use to. And you do see CEOs that are underperforming get fired. I mean you see a lot of things that you didn't use to see.
CHADWICK: Joe Nocera, business writer for the New York Times. Joe, thank you.
NOCERA: Thank you, Alex.
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