Thursday, January 11, 2007

Dog's Breakfast

Inspired by those overplayed "you might be a redneck if..." jokes and all this fuss over the $210 million in severance for deposed Home Depot (HD) CEO Robert Nardelli, we will embark on a tour of the company's last proxy statement. Jeff Foxworthy, please forgive us.

You might be the kind of company that gives its booted CEO a 210-million dollar severance package if:

Ken Langone, former board buddy of the NYSE’s Dick Grasso, is your lead director.

You’ve given your compensation committee an
exalted name like "Leadership Development and Compensation Committee."

You used not one, but two compensation consultants.

Of your four most highly paid officers after the CEO, only one is involved in actual operations and the other three are the CFO, the general counsel and the head of HR. (In a real business no one wants to sit with these guys in the cafeteria, but since your priority is obviously to keep a big and complicated compensation machine running smoothly, come to think of it dweebs with glasses are pretty cool. You even let the CFO and the general counsel use your private jet despite knowing they’d probably invite their lame lawyer and accountant friends to fly with them.)

Your compensation committee includes Countrywide Financial's Angelo Mozilo,the tenth highest paid CEO this year according to Forbes ($69 million).

Your last proxy statement included eight shareholder proposals, half of which mention excessive compensation, and you were too stubborn to give in on a single one of them, not even the majority voting proposal. For God's sake, even
Marty Lipton is telling clients it’s time to cave on that one.

You made huge loans to your CEO, forgave them, and then paid his tax bill when the IRS later treated those loans as compensation.

You paid above-market interest on everyone’s deferred compensation because, well, why not?

The Executive Compensation Table in your last proxy statement contained twenty-two footnotes.

Your SERP (which stands for Unfunded Excess Gimme Retirement Plan for Already Wealthy Executives) has a cute name like "FutureBuilder Restoration Plan."

Your executive employment contracts set a floor on bonuses.

You like your head of HR so much that when you asked him to move, you lent him 3 million dollars and later forgave the interest.

One of your directors is former Secretary of Homeland Security Tom ("what color is my alert?") Ridge. (We’re not sure why you invited him to join the board, but please tell us it wasn’t because he’s
said to have a hearing problem.)

In explaining why you absolutely must pay your CEO so much, you used the word "vision."

Here’s our favorite redneck joke: "You might be a redneck if your front porch collapses and more than six dogs are killed." No, we can't tell you why we like it. And yes, we love dogs.