Business News and Information

Home Depot (HD) chief executive, Robert L. Nardelli, has been awarded $245 million in the last five years despite the fact that the company's stock has declined by 12 percent while competitor, Lowe's (LOW), has increased by 173 percent.

According to this NYTimes.com article, the clubbiness of the six-member committee of the company's board that recommends Nardelli's pay might be the reason. Connections to Nardelli's former employer, General Electric (GE) and Home Depot's influential lead director, Kenneth G. Langone as well as five of the six members of the compensation committee who are or have been chief executives might have played a part in the approval of such a pay package.

Governance experts say people who are or have been in the top job have a harder time saying no to the salary demands of fellow chief executives. Moreover, chief executives indirectly benefit from one another's pay increases because compensation packages are often based on surveys detailing what their peers are earning.

Despite the close personal and professional ties all the board's compensation committee members technically meet the legal definition of independent.

It is interesting to note that Mr. Langone is currently under fire for his role as head of the compensation committee at the New York Stock Exchange, which granted former chief Richard A. Grasso a pay package worth more than $140 million. Furthering the game of seven degrees of separation is the fact that Grasso sat on the Home Depot board from 2002 to 2004, including a stint on the compensation committee.

Ironically, the co-founders of Home Depot, Arthur M. Blank and Bernard Marcus, took home salaries of $1 million or less and refused bonuses in the attitude of 'we're all in this together,' according to a corporate goverance expert Paul D. Lapides, who has studied the company for years.