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The Atlanta Journal-Constitution reports on an interview with Home Depot chairman/CEO Bob Nardelli, who came in for significant criticism when he appeared to be unresponsive and aloof during a recent annual meeting of shareholders.


On the disastrous annual meeting: “I take full responsibility for the meeting. I tried a different format, and it didn't work. I think the criticism of me was fair, and that's why, within seven days, I agreed to go back to the old format. What's unfortunate is when it cascaded down to my associates and to my board. It's unfortunate if it created distraction or angst for the [store] associates who are out there every day. However, it's one event over five years. I think the company's record stands on its own as far as financial performance and as far as values. We have never withdrawn from transparency.”

On managing to the stock price: “Look, there's no one more sensitive to the stock price than me — there's no one more aligned financially with the stock price than me. All I can do is continue to chart a strategic direction, deliver on that direction and hope the intrinsic value, the predictability and the confidence in our projections translate into a fair market price.”

On his own, often-criticized compensation package: “The board has been very appreciative of the performance of this company, and I'm very grateful for the compensation they've awarded me, commensurate with the company's performance. They evaluate me on the things I can control, such as top-line growth, which has almost doubled; earnings, which have more than doubled; and other metrics like return on invested capital. I would expect if the performance isn't there, they'll be just as responsive the other way.

“Secondly, more than 80 percent of my total compensation is in equity that is still with the company. Sixty percent of that 80 percent is in options that are underwater. So no one is more aligned with the stock price than me. If the stock price doesn't go up, I don't get any of that.”
KC's View:
Give Nardelli credit for at least confronting the criticism.

He can help his credibility a little bit more if he’d toss Larry Johnston off his board of directors.