When I was a kid, I shoveled snow to make a few dollars. One time, a friend and I did a driveway for a grumpy old neighbor. We pooped out before all the snow was gone, and when we asked to be paid, the old man refused.
“You don’t finish, I don’t pay,” he said.
We skulked off. But those were the rules of the marketplace. You wanna get paid, you gotta do the job. Simple enough, right?
Apparently not in corporate America, where CEOs regularly leave their companies in no better shape than when they got there, yet walk away with huge compensation packages -“golden parachutes” they are called, or, as us common folk refer to it, “stealing.”
Robert Nardelli is the latest example. He’s the 58-year-old CEO who got passed over for the top job at GE, so he jumped to Home Depot for a compensation package worth $240 million.
Some might ask why a guy from the world of power turbines should be running the third-largest retailer in the country – but then, CEOs don’t like to be questioned. They have cultivated an image of what Tom Wolfe once called “Masters of the Universe.”
And if you can run the universe, Home Depot should be a snap, right?
So many zeroes on his checks
Well, not so fast. In Nardelli’s six years at Home Depot, sales have sagged and the share price actually dropped 8%. In the corporate world, share price is your batting average.
Yet when people questioned his exorbitant pay – especially with the company worth less than when he started – Nardelli acted like an autocrat, at one point limiting attendance at the annual meeting and keeping questions to under a minute.
Finally, he was dumped.
OK. People get fired, right? But unlike most people, Nardelli walked away with a package worth $210 million – on top of the $64 million he was paid during his term.
Golden parachute? That’s a platinum cloud.
Shareholders were furious. Not only did the guy not make them any cash, he took a fortune on his way out. That’s a little like a neighbor who raids your fridge, and as he’s leaving, asks for beer money.
So forgive my simple-minded Midwestern naïveté: But if the guy you hired doesn’t do the job, why do you hand him a jackpot? Why don’t you show him the door and say, “Good luck, fella.”
You know, the way the average worker is treated when he doesn’t perform?
The right people deserve the loot
I guess because CEOs refuse to see themselves as average, or even as workers. Instead, they like to be compared to superstar athletes or box office stars.
Well, I’d like to be compared to Brad Pitt, but that doesn’t make it true. And yes, while superstar athletes get exorbitant salaries, remember, they are usually paid by rich individuals who get compensated by a rich league, rich TV revenues and fans who pay high ticket prices. If a player craps out, the stock price doesn’t drop and thousands of people don’t have to be laid off.
Greedy CEOs, on the other hand, are more despicable because of how many employees – and shareholders – get left holding the bag for their failure and avarice. Nardelli is not alone. Pfizer gave Henry McKinnell an exit package worth $213 million, after that company lost more than $137 billion in market value during his tenure. How many belts were tightened and people dismissed while he left richer than he came in?
Some say CEOs need to be paid this way for a firm to succeed. Baloney. While Home Depot sagged under the grossly overpaid Nardelli, its competitor, Lowe’s, paid its top dog a third of Nardelli’s money – and the stock rose 188%.
American business has created a subclass of elitists – CEOs and the board members who OK their salaries. And these people seem to think that money is just something to be handed out.
We’re good with that. Just start handing it out at the bottom. You’d be amazed at how well your company works when you pay people for coming in, rather than for leaving.
Contact MITCH ALBOM at 313-223-4581 or firstname.lastname@example.org.