For Immediate Release
Monday, May 22, 2006
AFSCME Seeks To Hold Home Depot Board Accountable for Excessive Executive Pay
WASHINGTON —The AFSCME Employee Pension Plan announced today its decision to withhold votes from 10 of the 11 directors serving on Home Depot's board because of their continued willingness to rubber stamp excessive executive compensation and their refusal to tie CEO pay to company performance. The annual shareholder meeting is on May 25 in Wilmington, Delaware.
"Home Depot's directors are responsible for putting more than $150 million in Robert Nardelli's pocket over the past five years despite languishing stock value," said AFSCME President Gerald W. McEntee. "While Ken Langone may think Bob Nardelli has done a heckuva job, it's time for shareholders to intervene and stop the board before it overcompensates again."
The directors who will receive "no" votes include John Clendenin, Claudio Gonzalez, Lawrence Johnston, Gregory Brenneman, Milledge Hart III, Bonnie Hill, Laban P. Jackson Jr., Kenneth G. Langone, Robert L. Nardelli and Thomas Ridge.
Since his hiring in December 2000, Home Depot Chairman and CEO Nardelli has been paid more than $150 million in total compensation. Upon retirement, or at age 62, Nardelli will be entitled to a cash benefit equal to 50 percent of his salary and bonuses. Based on his 2005 salary, he would be entitled to $4.6 million worth of job benefits for life. Meanwhile, Nardelli's sign-on deal at Home Depot entitled him to a $10 million "loan," which he was under no obligation to repay.
In the last six years, Lowe's CEOs made one-quarter of Nardelli's pay. Yet in the last six years, Lowe's has delivered a shareholder return of approximately 200 percent compared to Home Depot's return of zero percent.
Lead Director Kenneth Langone is a co-founder of the company, thereby making him a non-independent director. Despite this lack of independence, he serves as chairman of Home Depot's Nominating & Corporate Governance Committee. In this role, Langone has been able to create a Home Depot board of like-minded, pay-enabling directors and cronies from his tenure on the boards of GE, Yum! Brands and ChoicePoint.
At the 2004 and 2005 annual meetings, majority votes were cast votes in favor of a shareholder proposal to submit severance agreements to a shareholder vote. Home Depot chose not to implement the proposal.
The AFSCME Employees Pension Plan is an institutional shareholder activist with more than $800 million in assets. The Plan has filed a shareholder proposal at Home Depot urging the board to establish an annual shareholder advisory vote on the company's compensation report that would give shareholders the right to an up-or-down vote on executive compensation, listed on the proxy as Voter Proposal 3. The "no" votes are based on AFSCME's proxy voting guidelines.
