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Bob Nardelli | |
|---|---|
| Born | (1948-05-17)May 17, 1948 (age 76) |
| Education | B.S.Western Illinois University,MBAUniversity of Louisville |
| Occupation | Businessman |
| Known for | CEO ofThe Home Depot,Chrysler,Freedom Group |
| Spouse | Susan L. Schmulbach |
| Children | 4 |
Robert Louis "Bob" Nardelli (born May 17, 1948) is an American businessman who was the CEO ofFreedom Group from September 2010 to March 2012. Prior to that role, Nardelli served as chairman and CEO ofChrysler from August 2007 to April 2009 and CEO ofThe Home Depot from December 2000 to January 2007. Before joining The Home Depot, Nardelli spent most of his career atGeneral Electric and had risen to become one of the top three executives competing to succeed Jack Welch.[1]
Born inOld Forge, Lackawanna County, Pennsylvania, Nardelli attendedRockford Auburn High School inRockford, Illinois and received his Bachelor of Science in business fromWestern Illinois University inMacomb, where he was a member of theTau Kappa Epsilonfraternity. Nardelli also earned an MBA from theUniversity of Louisville. He is married to Susan L. Schmulbach with four children and attends Roman Catholic church.[2]
He joinedGeneral Electric in 1971[3] as an entry-level manufacturing engineer. From 1988 to 1991, Nardelli was an executive for a division of the construction equipment maker,J. I. Case Company, which was then part ofTenneco.
By 1995, he had risen to president and CEO of GE Power Systems, also having the title of GE senior vice president. Nardelli was often known as"Little Jack", after his mentorJack Welch, whom Nardelli had ambitions to succeed as CEO of GE. When Jack Welch retired as chairman and CEO of GE, a lengthy and well-publicizedsuccession planning saga ensued. Nardelli competed withJames McNerney andJeff Immelt to succeed Welch. With Immelt winning the three-way race, Nardelli and McNerney left GE (as was Welch's plan). About ten minutes after Welch let him go, Nardelli received a job offer fromKen Langone, who at the time was on theboard of directors of both GE andThe Home Depot.
Nardelli became CEO ofThe Home Depot in December 2000 despite having no retail experience. Using theSix Sigma management strategy used at GE, he dramatically overhauled the company and replaced its entrepreneurial culture of innovative product design with one focused on relentless cost-cutting.[4] 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 headquarters.
Nardelli was credited with doubling the sales of the chain and improving its competitive position. Revenue increased from $45.74 billion in 2000 to $81.51 billion in 2005, while net earnings after tax rose from $2.58 billion to $5.84 billion. During Nardelli's tenure, The Home Depot stock was essentially steady while competitorLowe's stock doubled, which along with his $240 million compensation eventually earned the ire of investors.[5] His blunt, critical and autocratic management style turned off employees and the public. Nardelli was notably criticized for cutting back on knowledgeable full-time employees with experience in the trades and replacing them with part-time help with little relevant experience.[6] This move reduced costs, but hurt customer service at a time when Lowe's was making inroads nationwide. While the board of directors strongly stood by him for most of his tenure, questions about his leadership mounted in 2006, and in an ominous portent of the near future, he was the only director present at the annual meeting. At that meeting, he only allowed shareholders to speak for one minute each.[7] Nardelli and the board reached a mutual agreement for Nardelli to resign on January 3, 2007; his severance package was estimated at $210 million.[8][9] 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.
During his tenure at The Home Depot, Nardelli met PresidentGeorge W. Bush at the White House in 2002 and was appointed to Bush'sCouncil on Service and Civic Participation (although he is no longer a member).[10] Nardelli also hosted a garden reception/fundraiser for Bush at his Atlanta home on May 20, 2004.[11]
While CEO of Home Depot, Nardelli served a single term on the board of directors ofCoca-Cola from 2002 to 2005.[12]
On August 5, 2007, he became chairman and CEO ofChrysler, which had recently been taken private byprivate equity firm,Cerberus Capital Management. His annual salary at Chrysler was $1, with other compensation not publicly disclosed. (It's rumored that the terms were that he wouldn't be paid unless Chrysler succeeded. If they did succeed, he would be paid a salary along the lines of $30 million.)[13]
On February 17, 2008, before his firstDaytona 500 race as Chrysler CEO, Nardelli guaranteed thatDodge would win the race for the first time since 2002, and that he would award a $1 million bonus to the Dodge team that did it.Ryan Newman, the driver of the No. 12Alltel Dodge, fulfilled this promise, and his car ownerRoger Penske collected the $1 million bounty.[14]
On December 4, 2008, in an appearance onCNN'sThe Situation Room with Wolf Blitzer, Nardelli was asked, "So what do you say about the argument that the Japanese, the Germans, Koreans make better cars than the Americans?" He responded, "We spent about half a billion dollars in the first several months. Our warranty costs are down 29%. It's an interesting comparison because in the hearing today, going around the panel, the majority of the Senators said that citing specific vehicles that they own that they've got 60-, 70-, 80,000 miles. The comment was you guys are making them too good and therefore, we're not buying vehicles and we're contributing to your problem. That was from the Senators on the committee today."[15]
On March 17, 2009, Nardelli said thatChrysler Financial would require a second round of loans.[16] On April 21, 2009, it was alleged by an unnamed "federal watchdog agency" that a $750 million loan from the government was turned down, on the grounds that it would have required that executive compensation be capped. According to contemporary media coverage "as part of the economic stimulus package, Congress approved compensation limits, and the Treasury is working on clarifying what the firms must do to comply with the rules. In other words, the executives were asked to sign the waivers without knowing what specific limits the Treasury might set."[17] On April 30, 2009, Chrysler filed forChapter 11 bankruptcy. The same day, Nardelli announced that he would leave the company as soon as the bankruptcy was over and his replacement was announced—later determined to beSergio Marchionne[18]—who would likely face a pay cap.[19]
Robert Nardelli became CEO of theFreedom Group in September 2010 as the North Carolina–based gun maker searched for a permanent CEO. In March 2012, he stepped down as CEO of the Freedom Group, and as the head of the operations and advisory business ofCerberus Capital Management LP.[20][21] He is now operating XLR-8 LLC, an investment and advisory firm.
In 2000, Marcus retired and brought on Bob Nardelli as CEO. Nardelli had been one of Jack Welch's hatchet men at GE, and he spent the next seven years driving down costs—at the expense of The Home Depot's reputation for innovation...Marcus forced Nardelli out in 2007 and brought in a Home Depot veteran to right the ship by returning the focus to developing and selling innovative products, exclusive to Home Depot.
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| Business positions | ||
|---|---|---|
| Preceded by | CEO ofThe Home Depot 2000–2007 | Succeeded by |
| Preceded by | CEO ofChrysler 2007–2009 | Succeeded by |