Nardelli Resigns From Depot

Criticism of Nardelli has heightened lately as at least one investor group, Relational Investors, has proposed strategic alternatives for the home-improvement retailer due to what the firm called its "chronic inferior stock price." Nardelli has also been said to have earned about $225 million during his six-year tenure in his position.

Under the terms of his resignation, Nardelli will receive about $210 million. That includes a $20-million cash payment, $84 million in stock options, $9 million in bonuses, 401(k) payments of $2 million, $44 million in shares already earned, retirement payments of $32 million and $18 million in additional compensation.

Nardelli is not allowed to compete with Home Depot for a year and can't solicit the company's employees or customers for four years. His compensation package will not be paid out over the next four years if he violates those obligations.

One of the problems that Home Depot has faced is the fact that Nardelli, a former General Electric executive, did not have a retail background, Howard Davidowitz, chairman of New York City-based retail consulting and investment firm Davidowitz & Associates, tells GSR. "You had a non-retailer coming in and taking over a retail company, and I've never seen that work," he says.

Home Depot has also suffered because of challenges from competitor Lowe's Cos., which is more upscale and is a more attractive chain to female shoppers, Davidowitz says. The chain was also late to update and renovate its store base, he says, which numbers just more than 2,100 units. Home Depot's same-store sales during its most recent quarter, which ended Oct. 29, slid 5.1% year over year, compared to Lowe's 1.7% increase.

Meanwhile, rumors late last year about a possible $100-billion leverage buyout of Home Depot could resurface, Davidowitz says. "Now Home Depot looks like more of a target because they look weaker than they did before."