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Nardelli's Legacy: A Lesson About Pay And Performance

The real lesson in "Out at Home Depot" (Cover Story, Jan. 15) may be that GE executives are extremely well-trained in hitting operational targets but know little or nothing about picking the targets that will produce shareholder value.

The financial indicators highlighted in your article did not turn down until 2006, but the stock market seemed to sense the problem much earlier. How? Despite the sales growth and rising gross margins, the important measure, free cash flow, has been virtually flat since 2001. For the analysts, Home Depot Inc. (HD) was not performing.

Robert L. Nardelli's insistence that he not have his compensation tied to the stock price was his most successful negotiating move. It might also have been the best indicator that he did not understand anything about what stockholders wanted.

Shepherd G. Pryor IV

Highland Park, Ill.

Who in their right mind would hire a CEO to run an $82 billion, publicly traded corporation without tying his compensation to some sort of performance measure? In a sense, I do not blame Nardelli for sticking to his guns in regard to his compensation; the board has nobody to blame but themselves.

While Nardelli was apparently a poor CEO, he did say something that rang true: "Share price is the one measure of company performance that [he] can't control." It's no wonder that many CEOs and companies are "going private" so they can run their company and create long-term value without being held hostage by an institution that prides itself on shortsightedness, namely Wall Street.

Christopher Siegle

Pompano Beach, Fla.

I've been a part-time Home Depot employee for over 10 years, and I could write a book about the decline in service, knowledge, and morale of its employees.

Nardelli made an enormous amount of money at the expense of the company. For example, he did away with the $25 gift card each employee received before the holidays. Now we get a coupon worth 20% off a future purchase. He did away with the longevity pay experienced employees receive every five years. He did away with hands-on training. I can't think of one change he made that helped the employees.

William Yantorno

Danbury, Conn.

The implication in "Is Steve Jobs untouchable?" (News & Insights, Jan. 15) that it is acceptable to be a CEO and a recipient of backdated options if you didn't understand the accounting or if the stock has done well and shareholders have not been disadvantaged, totally misses the point. The options were granted under his watch, and he as CEO is accountable.

David T. Fronek


Peter Burrows' paean to Steve Jobs contains the most tortuous rationalizations on an appropriate response to options backdating that I've encountered. My own premise is, simply, that a thief is someone who takes something that does not belong to him and that he is not entitled to.

As for the notion that Jobs is a "national treasure," please. He is a forward-thinking innovator who runs a company that makes gadgets. Mount Rushmore isn't ready for a fifth face.

Jane Brannon

Naperville, Ill.

"A seal of approval for the milk of human kindness" (Up Front, Jan. 15) did not include the "Certified Humane Raised and Handled" food label, administered by Virginia-based Humane Farm Animal Care.

We believe this is the gold standard of such labels, because producers who have earned the right to use it are certified to have humanely treated their animals at every stage in the food production process.

Ed Sayres, President

The American Society

for the Prevention of

Cruelty to Animals

New York

"Is your medicine the real deal" (Science & Technology, Jan. 8) does not present a complete picture of pharmacy compounding, a vital medical service.

Improving patient health is a pharmacist's top priority and the vast majority adheres to high standards of quality. When a pharmacy breaks the law, state boards of pharmacy step in. Fortunately, such behavior is rare. Unfortunately, though, pharmaceutical manufacturers are using limited incidents to justify sweeping, new regulations that would harm patients.

By driving the Food & Drug Administration to make it difficult, if not impossible, for doctors to prescribe compounded medicines, manufacturers would force patients to take their proprietary, one-size-fits-all products. Patients with unique health needs would be shut out.

L.D. King

Executive Director

Association of Compounding Pharmacists

Sugar Land, Tex.

I find Steve Mister's letter (Readers Report, Jan. 29) in rebuttal to the book review of Natural Causes, "Modern snake oil?" (Books, Jan. 8), appalling. The pot calling the kettle black? "Science is virtually absent in Natural Causes," writes Mister, president and CEO of the herbal supplement industry trade group the Council for Responsible Nutrition. But that is exactly the case with the very existence of "herbal remedies." That their safety record is the result of conscientious producers and manufacturers would be laughable if it were not so dangerously false.

Manufacturers of herbal supplements are interested in just one thing: profits. The "Council for Responsible Nutrition" is about as aptly named as "Intelligent Design," words cleverly chosen to be misleading.

That 150 million ill-informed Americans get sucked in each year does not prove Mister's case. It simply points out the power of misleading advertising claims.

Bruce W. Parkinson

San Jose, Calif.

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