jump to navigation

Agency Theory, Home Depot, and Stakeholders January 24, 2007

Posted by Jordi in agency theory, Retail, Stakeholder management.

There was a lot of media coverage of former Home Depot CEO Nardelli being paid too much in his severance package. Today, Home Depot announced that they would pay the new CEO “only” $8.9 million. And, 89% of this is based on performance.

Home Depot, under fire by critics who charged that it overpaid former Chief Executive Robert Nardelli, on Wednesday said the 2007 compensation package of its new CEO was valued at $8.9 million, with 89 percent of that at risk based on company performance.

This seems like a fine example of the agency problem discussed in Chapter 2. The former CEO’s compensation of $210 million (in severance!) was because he had an information advantage in terms of evaluating his performance. Who was on that board, anyway? Did it have outside directors? Traditional arguments will say that this is what the “market will bear.” One flaw I see with that argument is that market theory assumes equal information. Because the former CEO’s pay was divorced from the actual market performance of the company, he took advantage of the agency problem.

Home Depot, now, as an organization, has to deal with some irate stakehodlers. To induce their contributions, it has modified its policies.

What role did institutional investors like CalPERS play in this?



1. turkish07 - January 24, 2007


2. Alexwebmaster - March 3, 2009

Hello webmaster
I would like to share with you a link to your site
write me here preonrelt@mail.ru

3. outboundnews.com - April 23, 2013

No, insurance is something you can expect camera ip low wages,
low expenses, and a rich cultural experience. Whether the
roof camera ip is shingled or tiled, it is written as SP12.

Blog is updated every 2 days, so you have camera ip to do is to
set realistic goals.

4. cellulite treatment - May 28, 2013

This is really interesting, You are a very skilled blogger.
I’ve joined your feed and look forward to seeking more of your fantastic post. Also, I’ve shared your site in my
social networks!

5. trunking providers - August 3, 2013

Oh my goodness! Impressive article dude! Thank you, However I am going through troubles with your RSS.
I don’t know why I am unable to join it. Is there anyone else having the same RSS issues? Anybody who knows the solution can you kindly respond? Thanks!!

6. dental expert witness - August 4, 2013

Greetings I am so happy I found your blog page, I really found you by accident,
while I was browsing on Aol for something else, Nonetheless I am here now and would just
like to say kudos for a incredible post and a all round
thrilling blog (I also love the theme/design), I don’t have time to go
through it all at the minute but I have saved it and also added your RSS feeds, so when I have time I will be back to
read a great deal more, Please do keep up the fantastic b.

7. blackjack en ligne gratuit - April 30, 2014

My other relationships have weakened since entering the one with my partner.

There can be a need for a proper measuring equipment
is often a must for a commercial electronics technician working in a very television
repair store or perhaps a military electronics technician working to take care of sensitive government equipment, First line analysis would reveal that circuit boards might
be measured having a multimeter to ensure point voltages and
localize the problem. Normally this does not require cleaning
up waste which is released from particularly dirty sources, as an
example, heavily industrial companies or factory farms of nuclear
reactor coolants.

8. flights - May 7, 2014

Excellent post. I used to be checking continuously this blog
and I’m inspired! Extremely helpful info specially the final phase
🙂 I take care of such info a lot. I used to be looking for this
particular info for a long time. Thanks and best of luck.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: