HomeDepot_Eric_and_ David_revised[1]

HomeDepot_Eric_and_ David_revised[1] - As Home Depot stock...

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As Home Depot stock values have been falling consistently in the past few years, many of the executive decisions have been closely examined and deeply scrutinized. While former Chief Executive Officer Bob Nardelli resigned earlier in the year, much of his tenure with Home Depot has been criticized as a complete misuse of company funds and questionable executive bonuses. The Home Depot has been on nearly every major business magazine in the past few months regarding the large bonuses Bob Nardelli received during times in which share values were diminishing. Home Depot has also been criticized by allowing Nardelli to make majority decisions on investments—a mistake that now has the company owning large amounts of a very unsuccessful wholesale business. While the company did finally force Nardelli into resignation, the terms of his exit included a $210 million severance package. Though the leave of Nardelli is viewed with praise, another action is examined in the fact that Home Depot gave up such an extremely large sum of money to rid themselves of their CEO. To make matters even worse, it has also been recently revealed that under Nardelli’s tenure, and specifically under his request, employee stock rewards, incentives, and benefits were cut to further budget for the purchase of a wholesale business. As employee benefits have declined, many valued old timers that used to symbolize the knowledge and customer service of Home Depot have either left for a similar company or decided to retire. Throughout the whole ordeal, Home Depot, the nation’s largest home improvement retailer, has slipped in sales and share value, now
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battling over the rights for number one stocks with major competitor Lowe’s. Though Home Depot is still the world’s largest home improvement retailer, through a detailed company analysis and proposal it can easily be concluded that the company must change operations or prepare for a complete downfall. During Nardelli’s period in office, stakeholders have suffered tremendously through continuously unproductive stock. Though Home Depot’s stock was once valued high above that of competitor Lowe’s, the company now struggles to keep up with many smaller home improvement companies. While the company still ranks number one in size, the poor investments and struggling sales performance have left Home Depot shares in a dismal return. In 2006, Home Depot’s total return to shareholders was down 13%, yet the CEO was still awarded much larger bonuses than Lowe’s CEO during a year of excelling performance (Grow, 2006). In the fourth quarter of 2006, Home Depot’s profit fell 28% despite a 4% gain in sales. The company earned $925 million ending in January 28, 2007; in contrast with $1.29 billion from the year before (LA Times, 2007). The sales alone demonstrate that despite the growing size of the company, return to shareholders and profit was only decreasing. As a company that was once defined through veteran workers and
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HomeDepot_Eric_and_ David_revised[1] - As Home Depot stock...

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