Just a quick diary here, but Bob Nardelli has been named the new CEO of Chrysler. If ever there was a bad appointment for a top US company, this is clearly it.
The selection of Nardelli, who left Home Depot under a cloud related to complaints about his compensation, comes after German auto giant Daimler Chrysler on Friday completed a 7.4 billion-dollar sale of its US arm Chrysler to Cerberus, a large private equity firm.
Nardelli, who has no experience working in the auto industry, said his top priorities for Chrysler were a rapid execution of strategy, product safety and customer satisfaction.
Amid rock and roll, acrobats swinging across the Chrysler building's facade and fireworks exploding off its roof, he stressed that his compensation package was linked to Chrysler's ultimate success.
This is of course the same Bob Nardelli who took more than $200 million from Home Depot after his departure in January, 2007.
Nardelli became CEO of The Home Depot in December 2000 despite having no retail experience. Using the "Six Sigma" management strategy from GE, he dramatically overhauled the company and replaced its freewheeling entrepreneurial culture. He changed the decentralized management structure, by eliminating and consolidating division executives. He also installed processes and streamlined operations, most notably implementing a computerized automated inventory system and centralizing supply orders at the Atlanta headquarters. Nardelli was credited with doubling the sales of the chain and improving its competitive position. Revenue increased from $45.7 billion in 2000 to $81.5 billion in 2005, while profit rose from $2.6 billion to $5.8 billion. While this was a slower rate of growth than Home Depot had previously experienced (the company doubled in size every 4 years from 1979 to 2001), it must be noted that the high growth rates were largely due to rapid expansion. As the company was reaching its retail limit in the US, Nardelli came in to help the company transition into a mature business. Some have criticized him for not maintaining the growth that the company had previously experienced, pointing to his huge salary as a sign that he was actually supposed to bring new innovation to the company in order to help it maintain its historical growth. Others argue that without Nardelli's expertise, the company would not have had even the growth that did occur.
So while he did increase sales, it came at a high price.
The company's stagnating share price, Nardelli's results-driven management style which turned off both employees and customers, and his compensation eventually earned the ire of investors. Despite having received the solid support of The Home Depot's board of directors over the past few years, Nardelli abruptly resigned on January 3, 2007 by mutual agreement with the company. His severance package was estimated at $210 million. He was succeeded by The Home Depot vice chairman and executive vice president Frank Blake. Blake had served as Nardelli's deputy at both GE Power Systems and Home Depot.
But of course, what matters most is who you know, not what you now.
During his tenure at The Home Depot, Nardelli became involved with President Bush. He met Bush at the White House in 2002 and was appointed to Bush's Council on Service and Civic Participation.
Gone are the days when CEOs used to know what they are selling. Lee Iaccoca actually knew how to build a car, having designed the Mustang. When Chrysler was about to go under, Iaccoca help save the company. Ah well, I wasn't planning on buying a Sebring this year, anyway.