Wednesday, October 5, 2011

Severance

Bob Nardelli was a CEO at Home Depot until 2007. All of the numbers are based on real take aways from Nardelli or other top executives and financiers. Dick Fuld really exists, and he was a major reason your home is worth squat now. A semi-fictional short story:

“We really aren't very happy with your performance,” the chairman was stern and motioned for Bob to take a seat.

Bob, for his part, complied. It wasn't something he did often. As CEO he had the power to steer the company however he saw fit. And he had been raking in the short-term stock options for it. The company had made some short-term gains but they were catching up now and Bob's company was going under. He thought to himself, “I guess the ride's over.”

“We think you've done a great job, and we like you. But the board has decided to ask for your resignation. There will be a big going away party, a bash. And don't worry, your secretary won't be invited,” the chairman winked at Bob. It was a well known fact in the boardroom that Bob had been having an affair with the secretary. I guess she doesn't come with my resignation package, Bill thought.

“What's the package?” Bob asked. He knew that given how he had basically run the company to near collapse his package would be less than generous. But he wasn't too worried, he was good friends with everyone on the board and they wouldn't put him out in the cold.

“210 million,” the chairman said. It wasn't bad, but it wasn't great. His stock broker had pulled in nearly a billion last year. But who could really keep up with financier Joneses? Bob nodded to the chairman, he knew that it wouldn't be awful. At least he wasn't still on the wreck of a ship that was now the chairman's problem.

Bob Nardelli knew that he had one more chance to maximize gains before he left, “can I back date my options?”

“Of course, your severance package will force you to sell all your shares within nine months, but they are backdated to our highest performing periods. Your $210 million should amply increase soon.” The chairman gave another wink. Bob knew that appointing the self-effacing cheese-doodle in the place of chairman was the best insurance policy he could have had. Even in the wake of several labor scandals and huge employee lay-offs, Bob had probably stayed CEO for too long and he knew it.

“No pension?” Bob looked at the chairman hopefully.

“Unfortunately no. I know that some of your yachting buddies have that million dollar a year pension, but especially since shipping tried to unionize we can't really afford to do that. I think you'll be ok.”

“Are we done then? I'll draft up my letter and you guys get a party going. I have to meet Dick,” Bob was getting to meet Dick Fuld, his buddy down at Lehman Brothers. Unemployment would be nice, he could finally write that novel. And it's not like the losses were even his.