This morning's breaking news regarding Bob Nardelli's resignation as CEO of Home Depot, effectively immediately, is welcome news to me. Hopefully, it will be, as well, for investors at large.
As I have written recently here, and this summer, here, and here, I think it is past due.
Nardelli's poor performance and imperial attitude, most explicitly apparent in the 'boardless' May, 2006 annual meeting in Delaware, finally outlasted their welcome with Home Depot's overly-patient board.
I am gratified for several reasons. First, it is good to see a board finally wake up and discipline its CEO for failure. Second, it reinforces my belief in my proprietary research-based view of business dynamics. Where others purportedly saw opportunity and "powerful numbers...powerful performance," I saw inadequate operational performance, and appropriate lackluster market price performance, as well.
As various analysts and pundits on CNBC babbled about Nardelli's arrogance as CEO and Chairman of Home Depot, they also tended to assert that this was not the major cause of his departure. I would agree. To me, style doesn't count anywhere near as much as performance. And Nardelli's performance during his tenure at the company was miserable.
Similarly to my recent post concerning CitiGroup CEO Chuck Prince's extraordinary good fortune, here, I think Nardelli received several years' grace time from his board, as well. Would any of his subordinates receive such forgiving treatment?
Perhaps it's a fitting start to the new year, that an atrociously underperforming CEO gets the boot.
Happy New Year!
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