Media confused over Nardelli’s pay

By Dominic Jones

SO HOW much did shareowners pay former Home Depot CEO Bob Nardelli over the course of his six years at the helm of the world’s biggest DIY chain?

No one seems to know for sure, in part because the figures for 2006 haven’t been published yet. Even so, I’ve seen five different amounts quoted by the same number of media outlets.

Take a look at the excerpts below:

From the New York Times
“At Home Depot, Mr. Nardelli is expected to receive an exit package worth more than $210 million on top of the nearly $64 million he was paid during his six years at the helm.”

From the Financial Times
“Home Depot said that, under the terms of his contract, Mr Nardelli would receive a severance package worth $210m, in addition to the more than $120m that he has received in compensation since joining the company.”

From Bloomberg
“Home Depot Inc., the world’s largest home-improvement retailer, ousted Chief Executive Officer Robert Nardelli after investors criticized him for earning $225 million during his six-year tenure.”

From the Atlanta Journal Constitution
“By the end of 2005, Nardelli received packages worth $154.3 million, not counting the value of stock options, since becoming CEO. His pay for 2006 hasn’t been disclosed.”

From the Associated Press
“As of the end of 2005, Nardelli had earned $123.7 million in compensation, excluding certain stock-option grants, since becoming CEO. His compensation for 2006 has not yet been disclosed.”

Will fog of SEC filings ever lift?

If the brightest minds in US business journalism can’t figure out how much Nardelli was paid in the past six years, how on earth is the average investor supposed to figure it out? Such confusion is an open license to fleece shareholders.

Now, to be fair, the US Securities and Exchange Commission did take steps to address this confusion last year by introducing sweeping changes to executive pay disclosure. The new rules, which call for the use of plain English and a more understandable presentation of pay tallies, will show up in the pay disclosures that shareholders will be receiving in the next few months.

However, in a suspicious-looking move on the Friday before Christmas, the SEC watered down its original new rules by allowing companies to use a complicated formula for calculating stock option-based pay that will lower the reported figures. That’s been condemned by various people, most notably media columnists who can’t figure this stuff out by looking at SEC filings.

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