Humble Depot?

Home Depot's CFO says a "miserable" week of shareholder complaints convinced the company to promise to revert to its traditional annual meeting format. Critics say that's not enough.

The 10 non-management directors, who make $130,000 a year, attended a two-day board session in Atlanta earlier in the week, “then stayed behind to continue their meeting,” Tomé told “Our board is very active, and the board is as supportive as they’ve ever been.”

In an extraordinary show of shareholder discontent, between 30 percent and 36 percent of the vote was withheld for 10 directors. (New director Angelo Mozilo, CEO of Countrywide Financial Corp., had 8 percent of his vote withheld.) Holders overwhelmed one negative management recommendation and approved a shareholder resolution to recommend a majority vote, rather than a plurality, to elect directors in the future. Other shareholder proposals also received heavy support, although they lost.

Home Depot said management had agreed to implement the majority-vote provision at its 2007 annual meeting.

Directors’ dealings with Tomé had been featured in a CFO magazine cover story in January 2005, in which she said her role was “to communicate from independence and authority.” In the article, she said she and Nardelli took an “open kimono” approach with the board that involved “talking about the bad stuff as well as the good stuff.”

Tomé told Friday that she had participated in planning for the 2006 annual meeting, and that the plans reflected that shareholders communicate more with management by mail, before the annual meeting, not at the session itself. Tomé, who observed the meeting from a seat next to Nardelli in Wilmington, also was involved in discusssions leading the company to reject the new format for next year, although she was restrained in her description of that review.

“We tried a new approach, and clearly, based on the feedback we got from shareholders, they prefer our prior format,” she said. In 2007, Tomé said, shareholders will again hear a business presentation from management, will get management’s answers to their questions, and will have directors present.

The mail communication from shareholders cited by Home Depot CFO Carol Tomé “is one-sided,” Minow said. “And that one side is management, not the board.” She added: “They can run, but they can’t hide. If they don’t make some significant changes — and I mean to the compensation plan and the board membership — next year’s meeting will require more than just courage. It will require protective gear.”


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