After Home Depot's Nardelli, Who's Next To Go?

As I write on MarketWatch, nobody would've complained about Home Depot's (HD) Bob Nardelli if the stock price had been rising. Nobody ever complains about anything when stock prices are rising; it's when they're falling or doing nothing that gets them jazzed.

Was anybody complaining about Nardelli's pay package when he was hired? Not that I recall. What about Pfizer's (PFE) Hank McKinnell, who was viewed by many on Wall Street as Saint Hank until a few years ago?

The bottom line is and always will be stock price, which no CEO can control but which ironically despite their lack of control will always be the ultimate target. Investors invest in companies to make money, and in this quick-buck world the tend to prefer short-term results than long-term plans.

That's why Chuck Prince of Citigroup (C) is clearly a target. While the company's stock has done well over the past month, much of that is the result of investor belief that Citi will do something -- anything -- to enhance shareholder value.

Also on the hot seat: Patrick Byrne of Overstock.com (OSTK), whose stock AND fundamentals have underperformed; Paul Pressler of Gap (GPS), whose turnaround appears to be on shaky ground; Jim Tobin of Boston Scientific (BSX), whose purchase of Guidant has done little to bolster the company's already sagging stock price, and Kevin Rollins of Dell (DELL). I have no idea why Dell's stock price has risen in the face of what appears to be an increasingly serious SEC investigation. (And don't go telling me it's because of Vista, which is a non-event right now and very well may be, from a corporate IT perspective for much of this year.)

And keep an eye on Steve Jobs. He has done a tremendous job turning around Apple (AAPL), but the options mess at Apple is far from over. Let's not forget that for innovations and operations, there are those who might have argued that William McGuire of United Health (UNH) was the Steve Jobs of managed health. I know, I know! Unlike McGuire, Jobs canceled his backdated options (good for him!) and instead got restricted stock. The point remains: Who knows where this will end, and until it does -- in this environment in which corporate government rules -- anything is possible.

And when it does end, for any of the execs named here, my guess is that very few people have paid attention to the guts of the employment contracts of those mentioned above, including what they'll get if they're fired or quit. As always, it's not important until it is.

Speaking of employment contracts -- memo to the SEC: How about making it easier for investors to find out what's in an employment contract by creating a separate form companies must file for initial and amended contracts? Right now they're tucked here and there, often in a proxy or at the bottom of a 10-Q, 10-K or in a special 8-K. There's got to be a better way.

Comments

[BamBam:]

Yes, Chuck Prince is next.

But, I say it's not just because the stock has performed so poorly during his tenure.

It's because, through his arrogant comments in Barron's and his subsequent unimpressive investor presentations, Chuck Prince has clearly demonstrated that he understands nothing about shareholder value. Yes, market prices will fluctuate for reasons out of managements' control. But, a CEO who is totally indifferent to shareholder value is bad news under any market conditions.

The longer this man keeps his job, the more Citi's share price will diverge from its potential.

Let's hope that the Citigroup board of directors is paying attention to Home Depot.

2007 Jan 03 08:44 PM