In the end it came down to the headstrong CEO's refusal to accept even a symbolic reduction in his stock package. Home Depot Inc.'s (HD
) board of directors wanted their controversial chief executive, Robert L. Nardelli, to amend his whopping compensation deals for recent years. After he pulled down $38.1 million from his last yearly contract, angry investors were promising an ugly fight at the company's annual meeting in May. Nardelli agreed that he would continue to receive a guaranteed $3 million bonus each year, but not more. When board members asked him to more closely tie his future stock awards to shareholder gains, he refused, according to people familiar with the matter. Nardelli has complained for years that share price is the one measure of company performance that he can't control. After weeks of secret negotiations, things came to a head at a board meeting on Jan. 2, leading to Home Depot's stunning announcement the next day that the company and Nardelli had "mutually agreed" that he would resign.
"The board loved him and hates the way this ended up," says a person familiar with the matter. But in a season of growing antipathy toward extravagantly paid executives, the directors felt they had no choice. On his way out the door, however, Nardelli negotiated another jaw-dropper: a $210 million retirement package that assures that he and his former employer will remain at the center of the swirling debate over CEO compensation. Nardelli declined to comment.