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Friday, January 05, 2007

How to make mega-millions?

The new year started on a good note for Home Depot's CEO, Robert Nardelli. Why? Because he got fired! Having gone through layoffs myself, I don't wish layoffs or getting fired on any one. However, I now realize that layoffs for CEO such as Nardelli are a good thing because they end up getting even more money. In Nardelli's case, he will be getting $210 million as part of his severance package. And since that's enough, Home Depot will also be footing his health insurance bill for three years.

Whereas many companies think several times on how to avoid paying even a week's salary when laying off ordinary employees and stick him/her with the high health insurance rates in the name of the COBRA law, they don't even blink twice when awarding multi-million dollar severance packages to even those CEOs who are being eliminated for performance reasons. Of course, such packages had been negotiated at the time of hire, but its amazing that companies do not think much when deciding on such a large severance package.

In fact, why even pay $1 dollar in severance package to CEOs when they are earning millions of dollars in total compensation every year? During his six-year tenure, Nardelli's total annual compensation topped $38 million, including a minimum of $3 million bonus. All this time, Home Depot's stock has not gone up much and still hovers around $40, about the same level when Nardelli joined the company.

So what's one of the best potential ways for some one to make mega-millions? - get hired and fired as a CEO for a large, publicly-traded firm!

For related stories, see the links below:

Smart Money - Home Depot CEO Deploys $210 Million Golden Parachute

BusineesWeek - Out At Home Depot

posted by Ruby @ 6:47 AM

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