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Monday, August 06, 2007

Hillary, THIS is why we will not vote for corporatists
Posted by Jill | 10:20 PM
It's because of the kind of insiderism and cronyism that allows the same failed CEOs to be recycled from one company to another, picking up one huge compensation package after another, without having to defend their records of failure.

Remember Bob Nardelli, the failed CEO of Home Depot who had no retail experience and who received a $210 million severance package after a dismal performance as CEO that ruined the company's reputation for customer service and saw competitor Lowe's clean its clock?

Well, he's back.

And history is repeating itself. This time, Nardelli has NO motor vehicle experience, but he's going to be the new Chrysler CEO:

That's right. Ceberus has confirmed that the disgraced former CEO of Home Depot (Charts, Fortune 500), who became the poster child for excessive CEO compensation, has taken the reigns at Chrysler. On the day the deal was finalized, August 3, Nardelli was elected to the Chrysler board. Soon after, the directors appointed him chairman and chief executive.

[snip]

"I am very excited to be part of a team focused on re-establishing Chrysler as a standalone industry leader, with a renewed focus on meeting the needs of customers," said Nardelli

Rumors have swirled since March that Cerberus was thinking of hiring Nardelli, who also worked at General Electric (Charts, Fortune 500), when CNBC reported that the private investment firm had offered him a spot as a so-called operations specialist.

Cerberus has collected a huge bench of former executives to act as advisors on deals and serve on the boards of its portfolio companies. Former GE employees who now work for Cerberus include Paul Bossidy, Michael Williams and Jeffrey Fenton. A person within Cerberus says Nardelli never officially worked for the firm.

Nardelli angered Home Depot shareholders when he refused to take questions during a shareholder meeting in May 2006 as the stock was floundering. His rich pay package drew fire; he earned $38.1 million last year. Ultimately he was forced out of the company in January 2007, but left with a $210 million golden parachute in cash and stock options that included a $20 million severance payment and retirement benefits of $32 million.

To be sure, plenty of executives before Nardelli have gotten away with big paychecks and imperious behavior. In the end, it was the stock price that got him. As Bernie Marcus, co-founder of Home Depot, told Fortune after Nardelli's departure, "if the stock had doubled, who would have cared? Instead it went nowhere, and that's what this is all about."

By the time Nardelli left the retail chain, its shares were trading at about the same price as when he arrived in 2000. Moreover, analysts said that the stock had actually lost about 40% of its value because a series of stock buybacks had reduced the amount of shares available.

[snip]

The recent Chrysler sale to Cerberus is high profile and risky, as is putting Nardelli in the top spot. The turnaround is considered a bellwether for both the future of U.S. auto manufacturing and the fate of labor unions. Additionally, some contend that the problems that investment banks had securitizing the loans Ceberus made to Chrysler are evidence that the heady days of private equity dealmaking are coming to a close.

Even so, a source at Cerberus says his firm is confident that Nardelli has what it takes to fix the ailing company that is weighed down by nearly $19 billion in pension and retiree healthcare costs.


Anyone want to take bets on the largesse that Cerberus will stuff into the pockets of this goniff after he pulls the retirement security rug out from under Chrysler retirees?

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