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Bob Nardelli Quits Home Depot: The Debate Over Executive Pay
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Experts felt that part of the problem was the way in which executive compensation packages were determined. Generally, in most public companies, the board had a compensation committee to determine the pay for their chief executives. This committee would often consist of peer executives from other companies. They would hire compensation consultants to study what other companies paid their executives. Thus, experts opined that the committee members and the consultants had an interest to see an increase in compensation.

However, many experts felt that comparing a chief executive's job with that of a rank-and-file worker was not fair, since the expectations and responsibilities were totally different. Generally, the increase in the CEO's compensation package and bonuses were linked to the company's performance in a given year. Arguing in support of the CEOs getting big pay packages, James Glassman of the American Enterprise Institute,8 said, "Good CEOs are hard to find and can have a huge impact on a company's performance."9 "There is a 'privileged class' of chief executives who do extraordinary work," said Chuck Pappalardo, Managing Director, of executive search firm Trilogy Venture Search based in Burlingame, California. "Not everyone is capable of running a truly global company. They make a lot of money, but you have to compare what it takes to do it," he added.10

On the whole, the exit of Bob Nardelli from Home Depot and the controversy generated due to his severance package had once again brought into the open the issue of CEO compensation. Some experts felt that large executive pay packages created a divide between the top executives and the rank-and-file workers and generated resentment among shareholders, more especially if the company's stock was an underperforming one.
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8] The American Enterprise Institute for Public Policy Research is a private, not-for-profit institution involved in research and education on issues related to government, politics, economics, and social welfare. It was founded in 1943.
9] "Home Depot's Huge $210 Mil Severence To Ousted Chief Nardelli Angers Dems; Pay For So-So Performance? Rep. Barney Franks blasts 'out of control' payout, plans exec pay legislation," www.money.cnn.com, January 04, 2007.
10] "Debate swirls around CEO pay," www.baltimoresun.com, May 15, 2006.

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