Robert Nardelli was the CEO of Home Depot for 6 years. During that time the company lost close to 50% of it's stock value. Besides paying Nardelli over 30 million a year in compensation, Home Depot agreed to a severance package reportedly worth over 200 million. Not bad for someone who on all measurable accounts failed. And here's the kicker, he almost immediately found another job! He was named the the CEO of Chrysler in 2007 and we all know how well that's turning out. Chrysler is a privately held company owned by Cerberus who is begging Washington for MORE money...as if the billions we (and yes i meant to say we) already gave them weren't enough. Giving Chrysler money really hits a nerve. Chrysler's parent company isn't willing to invest more money in Chrysler so why are we?
Now, not all CEO's have contracts like Nardelli but it is becoming more common for CEO's and top executives to have their compensation linked to stock performance in the form of options. Does this create an incentive for CEO's to take riskier business decisions in the hope of quickly increasing stock prices to the possible detriment of the companies long term viability?
No comments:
Post a Comment