Keyword: pr offensive

Well Bob, it worked.  This great PR offensive (see these posts about it here and here) worked wonders, the board bought all this stuff, and they rewarded you handsomely.  In the last five years, you’ve received some $200 million in salary, bonus, stock, stock options, and other perks.  In 2005 alone, you got a stunning $38.1 million in total compensation.  Nicely done.

But in case you missed it, the Home Depot board has guaranteed Bob Nardelli a “bonus” of $3million.  Read about it in BusinessWeek online.

one lucrative element of the package is not as well-known: Nardelli’s guaranteed minimum annual bonus.  Of course, many CEOs are eligible for a bonus each year, usually if they hit certain financial and operating targets.  Others have more limited guarantees, such as an assured payout in the first year of service.  But Nardelli’s employment contract shows that $3 million of his annual bonus, defined as the “target amount,” is a sure thing. “For each year during the period of employment,” says the agreement, “the executive will receive an annual bonus of no less than the full target amount.”  Last year, Nardelli earned a total bonus of $7 million.

Guaranteed bonus?  Isn’t that an oxymoron?  Aren’t bonuses supposed to be a reward for good work you did, not compensation for work you are going to do?

And as writer Brian Grow notes in that article, it’s not like he’s returned anything to shareholders.

To the ire of many investors, however, Home Depot’s total return to shareholders, a key benchmark of corporate performance, is down 13%, according to Institutional Shareholder Services (ISS).

Gee, Bob, hope you share some of it with the PR team.

Not long after Home Depot’s Bob Nardelli unleashed his silly PR offensive designed to get him more money (see the post here), he managed to get someone to whip up an article designed to show he reads management articles too.

The Harvard Business Review’s Ram Charan wrote a puff piece on “Home Depot’s Blueprint for Culture Change” in the April 2006 issue.  I’d love to give you a link to the article, but the HBR is subscription only content (you can, however buy this article for $6 here).

This article is PR work at it’s finest.  Sure the HBR requires there to be some real content, and even perhaps some kind of learning about how to do thou likewise.  But the miracle here is the stench of spin.  You can smell it in the lead in:

Deep, lasting culture change requires an integrated approach that remodels a company’s social systems.  The leadership team of Home Depot employed a remarkable set of tools to do that.

The remarkable set of tools was “boot camp”.  See my blog entry on that here.

But, to be fair there are some really interesting ideas in the article about how to catalog change, and monitor what is happening.  The problem is, it didn’t work at HD.  And I know why.

This culture change didn’t “take” because it didn’t go deep enough.  It was decided by the top 17 executives at an offsite meeting.  It was rolled out in a “huge event” to another 1,800 more.  But Home Depot has over 345,000 employees in over 2,000 stores.  That means fewer than one-half of 1% of the employees even got briefed on this big change.  And 0.005% of the employees had input.  No wonder they hate the required Monday morning “BobCasts”.

Bob, sir, forgive me, but even in the military you have to explain things to people, get their buy-in, heck even consider that private’s opinion.  This fancy “culture change” ain’t working, and no amount of force-feeding’s going to make it work.  But you don’t care, you’re off to the bank.

PS - The author, Ram is to be forgiven — he was the consultant working on the project for HD.  He’s just trying to get a little PR for himself.  You can be sure he didn’t get anything like Bob’s pay package…