Risk & Compliance

Home Depot Directors Take a Tiny Pay Cut

In some minor adjustments to board compensation, it eliminates the $2,000 paid for annual meetings - which only one director attended in 2006.
Roy HarrisAugust 21, 2007

Home Depot Inc. — excoriated in 2006 for holding an annual meeting attended by just one director — has eliminated the $2,000 per-meeting fee that board members would have received had they been there.

In an Aug. 20 8-K filing, the home-improvement company disclosed several minor changes in director compensation that the board had made on Aug. 16, cutting the company’s match for board-member charitable contributions from $100,000 to $10,000 annually, and eliminating the $2,000 fee for each board meeting, along with the $1,500 per-meeting fee for each board committee session.

However, the annual $280,000 in payments to board members continues, as does the additional $10,000 annual cash retainer fee for committee chairs, except for the audit chair, who receives $15,000. The annual compensation is paid $50,000 in cash, and $230,000 in a stock retainer paid in deferred shares.

The infamous May 2006 session that Home Depot held in Wilmington, Del. — picketed by shareholders, including some wearing chicken suits — had been trumpeted in the press as a showdown between the board and shareholders angry about corporate performance and high executive compensation. The only director to show up, however, was CEO Robert Nardelli, who refused to answer any questions.

Home Depot CFO Carol Tome attended, however, later proclaiming that the minimalist meeting format had been an experiment that didn’t work out, and saying that the week after the session had been “really miserable” for Home Depot. Tome is not on the Home Depot board.

Nardelli has since has left the company, taking severance of $210 million with him, to cap the $134.5 million in compensation
for the year. He recently accepted the CEO job at Chrysler Corp., now under private-equity ownership.

Asked to explain why the per-meeting fees now were being eliminated, Home Depot responded to CFO.com in an email: “In line with recent changes made in executive compensation and corporate governance, the Board felt that these changes in Board compensation were appropriate and in line with market practices for director compensation.”

In the same 8-K filing, Home Depot said it had appointed Armando Codina to the board. Codina, president and CEO of Flagler Development Group, the Florida commercial real estate unit of Florida East Coast Industries Inc. Codina’s appointment increased the board size to 12, with 11 members being outside directors.

At this May’s annual meeting, Home Depot CEO Frank Blake apologized for the 2006 meeting, and said it “was a mistake, and it won’t happen again.” That meeting was attended by every director except one, who the company explained had had a previous engagement.