ATLANTA -- Home Depot Inc. is paying new chief executive Frank Blake a fraction of what it paid his predecessor, Bob Nardelli, and has taken the unusual step of promising Blake no severance package if he leaves.
But executive compensation experts don't expect the decision, reported yesterday by the world's largest chain of home improvement stores, to start a trend -- despite the investor ire hefty salaries draw.
"I wish it were a trend," said Lowell Peterson, a New York labor lawyer familiar with compensation issues. "I suspect it's unique to Home Depot because the pay and severance package given to Nardelli was so out of line."
Atlanta-based Home Depot reported Blake could earn as much as $8.9 million in total this year.
Excluding stock options, Nardelli was earning $25.7 million, on average. He resigned this month after six years at the helm, amid a furor over his hefty pay and Home Depot's lagging stock price. Blake was Home Depot's vice chairman.
Nardelli's severance package was worth about $210 million.
There are examples of other major firms cutting the amount they pay the top executive.
General Electric Co. granted CEO Jeffrey Immelt $3.4 million in total annual compensation in 2005, far less than the $16.25 million his predecessor, Jack Welch, earned in 2001, when Immelt suceeded Welch. Immelt earned about $8.5 million in total annual compensation in 2004 and $7.6 million in 2003.
The New York Stock Exchange, which faced an uproar over former CEO Richard Grasso's $187.5 million pay package, offered John Thain $4 million a year when he took over in 2004. executive. The NYSE also said Thain would serve without an employment contract.
Steven Hall, an executive compensation expert, said such examples are probably the exception, not the rule. "The problem that you have," he said, "is that people that have the background to be CEOs, proven or not, are very limited in supply. There's a lot of competition for them."
A judge on Monday denied a request by a group of shareholders to temporarily block Home Deport from paying Nardelli any more of his severance package. The judge also ruled several current and former senior officers and directors, including Nardelli, will be subject to depositions.
From December 2000, when Nardelli joined Home Depot, to the end of 2005, the last year for which figures were released, Nardelli got $154.2 million in compensation, excluding stock options.