Following today’s resignation of Home Depot CEO Bob Nardelli, Home Depot should take critical steps to ensure that the working men and women who are invested in the company are not victims of runaway executive pay or options abuse. Nardelli’s resignation follows demands by the AFL-CIO that Home Depot investigate options abuses and that Home Depot director Ken Langone leave the Board.

Nardelli in particular received massive September 11 option grants, grants that were issued in the wake of the September 11 attacks when prices were at record lows. Langone has been associated with executive pay abuses at multiple institutions, most notoriously the Grasso pay scandal at the New York Stock Exchange.

Apparently, Nardelli is asserting he is entitled to over $200 million in severance payments and other executive compensation. This is the second time in the last month that a CEO of a major public company with a history of executive pay abuse has departed, taking hundreds of millions of dollars of investors’ money with him. Investors expect that when CEOs abuse the trust placed in them, boards will act vigorously to limit the costs of their departure and to recover any money improperly taken. Home Depot’s board needs to act to show investors it can be trusted to take these steps.

Home Depot’s decision to waive its retirement age and re-nominate John Clendenin as a director also raises serious concerns. Clendenin is a long-standing member and former chair of the board’s Compensation Committee. Home Depot’s own internal investigation recently concluded that option backdating was routine at all levels of the company from 1981 through 2000.

Specifically, the AFL-CIO believes Home Depot needs to take three critical steps at this moment of transition:

First, Home Depot should freeze all payments to Nardelli until it can determine whether Nardelli’s compensation agreements were properly entered into, and whether he complied with his obligations under those agreements;

Second, Home Depot should disclose to investors its finding and conclusions about options misconduct involving officers and directors, including backdating, spring loading, and so-called September 11 grants;

Third, Home Depot’s board should ask Langone to resign.

Union members participate in benefit plans with over $5 trillion in assets. Union-sponsored pension plans hold approximately $400 billion in assets, and runaway executive pay has undermined accountability to shareholders and diminished returns for our funds.

Contact Steve Smith 202-637-5018