Human Capital & Careers

Home Depot: Options Clean under Nardelli

Retailer Home Depot discovers $10 million in unrecorded expenses related to stock options granted before CEO Robert Nardelli took over in late 2000.
Stephen TaubJune 16, 2006

The Home Depot announced Friday that it had found $10 million in unrecorded expense related to its stock-option grant practices and procedures since 1996, but took care to note that those grants predate the tenure of current CEO Robert Nardelli.

Nardelli has been under fire from shareholders in recent months for his compensation package, a controversy that culminated last month in a disastrous annual shareholder’s meeting at which none of the company’s directors appeared.

In a statement released Friday, Home Depot said an internal review had uncovered five instances prior to December 2000 in which the date of the meeting or resolution approving the grant was later than that used to determine the stock-option exercise price. In three of the five instances, the market price of the company’s stock on the award date was higher than that on the date the exercise price was determined.

The company added that the amount was not material, and it does not plan to restate prior results.

The statement also stressed that since December 2000, when Nardelli joined Home Depot from General Electric, all stock options have been appropriately priced, with the exercise price based on the market price of the company’s stock on a specified grant date on or after the date of approval.

Since Nardelli became CEO, the company said, stock-option awards have been made in a regular process under which grants are authorized at the time of scheduled meetings of the board of directors or a board committee. “The company has not found any instances where stock options were retroactively priced,” the statement added.

4 Powerful Communication Strategies for Your Next Board Meeting