A while back I posted about an excellent article from Barron's magazine about how sometimes the best thing a CEO can do for a stock is "drop dead". Bob Nardelli, the tone-deaf CEO of Home Depot, brought that truism to life yesterday when he resigned / was fired / departed from Home Depot and the stock rose 4% in the morning on this "good news".
Nardelli came to Home Depot when he lost out in the race to succeed Jack Welch at GE. A lot of Nardelli's ideas for Home Depot seemed to make sense, and he was improving the company on many operational metrics, even though it always trailed Lowes in the eyes of the market. However, Nardelli's old-fashioned demands for outlandish pay even in the face of poor performance (the stock was flat during his tenure) finally cost him his job. The board of Home Depot ended up paying Nardelli $210M to basically go away. This is similar to the $113M that Morgan Stanley paid their CEO, Purcell to leave in 2005.
While GE has led in a lot of important corporate practices, this also exposes further cracks in the vaunted myth that GE and its minions can earn outsize returns. This post described research showing that the "above market" gains for Mr. Jack Welch's tenure were likely due to the fact that the insurance unit of GE (since dumped by the guy who succeeded Mr. Welch, the seemingly squeaky-clean Jeff Immelt) had taken accounting assumptions that subsequently were written off when the unit was sold.