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In August 2007,
Robert Nardelli (Nardelli) was appointed as the Chairman and CEO of Chrysler
Holdings LLC (Chrysler) for a token annual base salary of $11.
Just a few months previously, Nardelli had been in the eye of a storm for
receiving what was thought to be an unreasonably high severance package to
resign as the CEO of Home Depot2.
In January 2007, Nardelli had been granted a severance package worth $210
million by Home Depot's board.
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This was in addition to the average compensation of
$25.7 million a year that he had collected since he joined the company
in 2000. Analysts thought that the compensation was excessive,
considering Nardelli's unpopularity at Home Depot and the company's
stagnant share price during the last few years of his tenure; however,
most of them agreed that he had indeed managed to improve Home Depot's
financial performance.
Before joining Home Depot, Nardelli had worked at General Electric Co.
(GE) for 27 years. The last few of those years were spent as the CEO of
GE's Power Systems unit, which he turned into one of the conglomerate's
most profitable divisions. Nardelli had also been a part of the
three-way race to succeed Jack Welch as the Chairman and CEO of GE, a
decision that eventually went in favor of Jeffrey Immelt.
When Nardelli arrived at Home Depot, the company was in a poor state.
There was no sense of financial discipline or accountability, and as the
company had been run by its founders Bernie Marcus and Arthur Blank from
the time it was set up in 1978, the culture was deeply ingrained, and
strongly resistant to change.
Nardelli, who was the first outsider to become the CEO of Home Depot,
initiated significant changes aimed at improving the financial
performance of the company. He overhauled Home Depot's purchasing and
technology systems, and initiated extensive cost cutting programs. He
also adopted GE's policy of firing underperformers every year. Home
Depot witnessed an increase in profits and revenue at during Nardelli's
six years at the company. Sales grew from $46 billion in 2000 to $81.5
billion in 2005, and profits more than doubled to $6 billion over the
same period.3
However, despite the positive impact he had had on the company, Nardelli
was never very popular at Home Depot. Home Depot's managers and
employees, who had been used to a much less aggressive culture, did not
take to Nardelli's autocratic management style and forceful manner.
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1] Dollar ($) refers to US dollars.
2] Home Depot was the second largest retailer in the US after
Wal-Mart Stores Inc. The company mainly sold home improvement products.
3] Katie Benner, "Robert Nardelli named CEO of Chrysler,"
Fortune, August 6, 2007. |
