Chrysler's Nardelli: Another Rough Patch

by: Saj Karsan December 01, 2008 | about stocks: GM / HD    

Saj Karsan

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It's been a rough couple of years for Robert Nardelli, though you wouldn't know it from the compensation he has brought home. First as CEO of Home Depot and now as CEO of Chrysler - he can't seem to do anything right except negotiate pay packages.

Nardelli took the reigns at Home Depot (HD) in 2000 after losing a power struggle for the top job at General Electric (GE) to Jeffrey Immelt. A great boom in housing would ensue in the next several years, but Home Depot's stock had essentially remained flat for his entire tenure, all the way to 2007! When confronted by angry shareholders at the 2006 annual shareholder meeting, Nardelli limited each shareholder to one minute, and refused to answer many of their questions. Meanwhile, its competitor, Lowe's (LOW) saw its stock triple during Nardelli's seven years at HD. Nardelli, however, received a $210 million parachute when he left.

A few months later, Nardelli accepted the top job at Chrysler. A year and a half later, he's back in the spotlight! Here he is asking Congress for taxpayer funds to help his company out:

Is Nardelli a bad manager that runs companies into the ground, or simply a victim of circumstance? It's impossible for us to tell from the outside. Operationally, Home Depot has looked great (as we've discussed here) but its stock never really responded. However, his stock results in both of these companies certainly haven't made him look good, at all.

Disclosure: None

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This article has 4 comments:

  •  
    Dec 01 10:29 AM
    Saj-
    And what would be Chrysler's ticker symbol be? Chrysler LLC! not Chrysler Corporation. Cerebrus is the majority owner of Chrysler, with DAI (Daimler) owning the other 19%. This 19% is a very insignificant element in Daimler's overall weath. Even an inexperienced investor acknowledges that Chrysler is not an impact to the Daimler price.
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  •  
    Dec 01 01:35 PM
    Nardelli said that these are unimaginable times in the auto industry. As an engineer in Detroit, I have to ask, what is so unimaginable about these times? Seems like everyone at my level imagined it, but management never got it, or the board of directors never got it. Unimaginable?!? Completely imaginable, in fact, completely real. Remember 1973? 1980? Hello? Anyone home at the top of these loser companies that deserve to go out of business? Let Toyota take them over. Any supplier who has supplied to GM and Toyota knows why Toyota is winning.
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  •  
    Dec 01 10:04 PM
    Nardelli was made head of the GE medical division solely to cut the costs out. He was hired at Home Depot to also cut the costs. Anybody bringing Nardelli in (read Cerebus), is primarily interested in cutting costs, not growing a business. Nardelli has never organically grown a business.
    And apparently quite a bit of the costing cutting at each stop, ends up in Nardelli's bank account.
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  •  
    Dec 03 11:39 AM
    Good point about the "unimaginable&quo... part. If we saw the real estate crash 2 years before it happened, and have been saying the same for the local car industry for decades, it seems to point at how dysfunctional management of most companies are, as well as how far removed they are from reality.

    Could be the high salaries put them in the stratosphere, well above their clients' realities. Could be board members are clueless. Could be stock holders only want quick returns and rarely have long terms plans. Could be too many financial folks and not enough passionate in their products people.

    One thing is for sure, things are running out of steam. The way we do business needs to be completely thought over again.
    Reply | Link to Comment
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