Atlanta, GA, May 26, 2006--Home Depot shareholders had harsh words for chairman and chief executive Robert Nardelli on Thursday, but rejected a proposal that would let investors cast an advisory vote on executive pay packages.
"Arrogance will kill you," said one investor, upset that most directors were absent and that Nardelli allowed no time for questions. "If you aren't humble and decent, you will destroy this company."
Home Depot has come under fire from critics who charge Nardelli's pay is not in line with the company's performance.
Its stock price has dropped 15 percent since Nardelli arrived from General Electric Co., in late 2000, while regulatory filings show he has earned at least $119.2 million in that time, excluding options and some other compensation.
A small group of people, including a person wearing a chicken costume, carried signs outside the meeting in Wilmington, Delaware, expressing outrage over Nardelli's pay.
Nardelli said a proposal requiring directors to be elected by a majority of votes cast, as opposed to the current plurality, was approved, based on initial tallies. Director nominees were elected to one-year terms.
At the meeting, which was broadcast over the Internet, shareholders were also angered that there was no company performance review or separate question-and-answer period. Previous Home Depot meetings have included these items on the agenda.
"This is one of the worst meetings I've seen in terms of the arrogance coming from the front table," Richard Metcalf, corporate affairs director for Laborers International Union of North America, told Reuters.
In recent days, big Home Depot shareholders such as the California Public Employees' Retirement System (CalPERS) had urged investors to pass a proposal allowing stockholders to vote each year on an advisory resolution to approve the company's compensation committee report.
Pension firms and proxy advisers had also recommended votes against many Home Depot directors, some of whom have been criticized for a lack of independence.
In light of the current criticism, "one would have thought that (directors) would have wanted to bend over backward and answer questions and convey a sense of being open," Metcalf said. "The attitude of the CEO toward the board tends to match the reporting that this is a clubby board, out of touch with its stakeholders."
Some shareholders said Nardelli's pay was excessive compared with his counterpart at rival Lowe's, and in light of Home Depot's stock performance.
"While you have been handsomely compensated, the stock price has languished," Richard Ferlauto, director of pension and benefit policy for the American Federation of State, County and Municipal Employees, told Nardelli.
Meanwhile, rival Lowe's expressed confidence in its outlook as concerns rise that a cooling housing market and consumer skittishness over gasoline prices could hurt home improvement.
Lowe's, which held its annual meeting in Charlotte, North Carolina, said it would invest $800 million in its existing stores and install more self-checkout stations. It also announced a two-for-one stock split and raised its dividend.
