Blake Apologies to Home Depot Shareholders

Atlanta, GA, May 24, 2007--Home Depot said on Thursday that all 11 director nominees were elected to one-year terms, but shareholders rejected proposals that would give investors a say on executive pay and tighten other corporate governance procedures.

At the annual meeting, Chairman and Chief Executive Frank Blake moved to mend fences with investors by apologizing for the 2006 meeting, where no directors were present except for then-CEO Robert Nardelli.

Blake, named to the top job in January when Nardelli resigned amid an uproar over his compensation, said last year's gathering, which also had no separate question-and-answer period or a company performance review, was a blunder that would not reoccur.

"We apologize for last year's meeting," Blake told the audience of more than 300 at the Cobb Galleria in metropolitan Atlanta. "It was a mistake, and it won't happen again."

At the meeting, all directors were present except for Milledge Hart, whom Blake said was unable to attend. Home Depot founders Bernie Marcus and Arthur Blank were also on hand.

Blake announced that preliminary voting results indicated that all director nominees were reelected. Most nominees received favorable votes of more than 90 percent except for company co-founder Kenneth Langone, who garnered 66.5 percent of votes in favor, and Claudio Gonzalez, who received 72 percent of votes cast.

Langone, chairman of investment banking firm Invemed Associates, is due to step down from the retailer's board next year.

All nine shareholder proposals up for consideration were rejected. A plan that would give investors an advisory vote on executive pay received 43 percent support, while a proposal that would allow investors to approve extraordinary retirement benefits had 44 percent of votes cast in favor. 

While some investors applauded Blake for presiding over a more open meeting and noted that the company had changed some of its governance policies in recent months, others took aim at ex-CEO Nardelli, who left with $200 million in severance pay.

"Last year, there was a complete mutiny and disrespect for all shareholders," said John Evans of Lithonia, Georgia.

Blake, who joined Home Depot in 2002, faced tough questions on other issues. "The value of my stock has declined. What are you going to do for us shareholders?" one investor asked.

In his comments, Blake said that while Home Depot expected per-share earnings to fall 9 percent this year on flat sales amid a slower U.S. housing market, the company was boosting spending to gain back market share and energize business.

"We are at a turning point for our company," Blake said. "We know that we have things to fix, but we also know that we have a great market, and we need to invest for our future."

Home Depot is boosting capital spending by 29 percent this year, with plans to boost store maintenance, overhaul departments such as flooring and recruit certified staffers in areas such as plumbing.

Under a company policy that took effect this year, Home Depot directors are required to win a majority of votes cast, as opposed to a plurality.

Among other shareholder proposals, one that would split the roles of chairman and CEO received 34 percent of votes cast in favor, while a plan that would stipulate that most equity compensation in the form of stock options and restricted stock be performance-based had 32 percent of votes cast in favor.