Robert Nardelli

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Robert Louis "Bob" Nardelli (born May 17, 1948, in Old Forge, Pennsylvania) is an American businessman. He was the chairman and chief executive officer of Chrysler. He had earlier served in a similar capacity at The Home Depot from December 2000 to January 2007. Prior to that, Nardelli had risen to become one of the top four executives at General Electric. CNBC named Nardelli as one of the "Worst American CEOs of All Time".[1]

He attended Rockford Auburn High School in Rockford, Illinois and received his Bachelor of Science in business from Western Illinois University in Macomb, where he was a member of the Tau Kappa Epsilon fraternity. Nardelli also earned an MBA from the University of Louisville. He is married to Susan L. Schmulbach with four children and attend Roman Catholic church.[2]

General Electric[edit]

He joined General Electric in 1971 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 of Tenneco.

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 mentor Jack 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-publicized succession planning saga ensued. Nardelli competed with James McNerney and Jeffrey R. Immelt to succeed Welch. With Immelt winning the three-way race, Nardelli and McNerney left GE (as was Welch's plan). About 10 minutes after Welch let him go, Nardelli received a job offer from Kenneth Langone, who at the time was on the boards of both GE and The Home Depot.

Home Depot[edit]

Nardelli became CEO of Home Depot in December 2000, despite having no retail experience. Using the Six Sigma management strategy also used at GE, he dramatically overhauled the company and replaced its entrepreneurial culture of innovative product design with one focused on relentless cost-cutting.[3] 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 Atlanta 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, Home Depot stock was essentially steady while competitor Lowe's stock doubled, which along with his $240 million compensation eventually earned the ire of investors.[4] 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.[5] This move reduced costs, but hurt customer service at a time when Lowe's was making inroads nationwide. While the board 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; he only allowed shareholders to speak for a minute each.[6] When the board reportedly ousted him in January 2007,[7] Nardelli's severance package was estimated at $210 million. 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 Home Depot, Nardelli met President George W. Bush at the White House in 2002 and was appointed to Bush's Council on Service and Civic Participation (although he is no longer a member).[8] Nardelli also hosted a garden reception/fundraiser for Bush at his Atlanta home on May 20, 2004.[9]

Coca-Cola[edit]

While CEO of Home Depot, Nardelli was also briefly on the Board of Directors for Coca-Cola, starting in 2001.

Chrysler[edit]

On August 5, 2007, he became chairman and CEO of Chrysler, which had recently been taken private by private 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.)[10]

On February 17, 2008, before his first Daytona 500 race as Chrysler CEO, Nardelli guaranteed that Dodge 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 #12 Alltel Dodge, fulfilled this promise, and his car owner Roger Penske collected the $1 million bounty.[11]

On December 4, 2008, in an appearance on CNN's Situation Room with Wolf Blitzer, when asked "So what do you say about the argument that the Japanese, the Germans, Koreans make better cars than the Americans?" Nardelli 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."[12]

On March 17, 2009, Nardelli said that Chrysler Financial would require a second round of loans.[13] 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." [14] On April 30, 2009, Chrysler filed for Chapter 11 bankruptcy. The same day, Bob Nardelli announced that he would leave the company as soon as the bankruptcy was over, and his replacement was announced (Sergio Marchionne [15]), who would likely face a pay cap.[16]

Freedom Group[edit]

Robert Nardelli became CEO of the Freedom Group in September 2010 as the North Carolina-based gun maker searched for a permanent CEO. In March 2012 Robert Nardelli stepped down as CEO of the Freedom Group and as well as head of the operations and advisory business of Cerberus Capital Management LP.[17][18]

References[edit]

  1. ^ "Portfolio's Worst American CEOs of All Time". Cnbc.com. 2009-04-30. Retrieved 2014-08-25. 
  2. ^ "Robert L. Nardelli". Nndb.com. Retrieved 2014-08-25. 
  3. ^ Flaherty, Joseph (31 December 2013). "How Home Depot Copied Apple to Build an Ingenious New Bucket". Wired.com. Condé Nast. Retrieved 13 September 2014. "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 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." 
  4. ^ Nardelli's downfall: It's all about the stock[dead link]
  5. ^ Lublin, Joann S.; Zimmerman, Ann; Terhune, Chad (January 4, 2007). "Behind Nardelli's Abrupt Exit". The Wall Street Journal. 
  6. ^ Joe Nocera, "The Board Wore Chicken Suits", New York Times, 27 May 2006
  7. ^ Vlasic, Bill. "Robert Nardelli - The New York Times". Topics.nytimes.com. Retrieved 2014-08-25. 
  8. ^ Nardelli-Bush article that mentions Presidential Council[dead link]
  9. ^ Paul Harris. "article that mentions Bush Nardelli Garden Reception". Observer.guardian.co.uk. Retrieved 2014-08-25. 
  10. ^ Financial Times story about Nardelli's salary
  11. ^ [1][dead link]
  12. ^ "12/04/2008 CNN Nardelli Inverview". Transcripts.cnn.com. Retrieved 2014-08-25. 
  13. ^ Written by GREG GARDNER Free Press Business Writer (2014-08-19). "Nardelli Says Chrysler Financial Needs Second Round of Loans, Detroit Free Press". Freep.com. Retrieved 2014-08-25. 
  14. ^ "Pay Rule Led Chrysler to Spurn Loan, Washington Post". Washingtonpost.com. Retrieved 2014-08-25. 
  15. ^ "Marchionne confirmed as post-Ch11 Chrysler CEO". Autoblog.com. Retrieved 2014-08-25. 
  16. ^ "Next Chrysler CEO Faces Pay Cap, Detroit Free Press". Freep.com. 2014-08-19. Retrieved 2014-08-25. 
  17. ^ "Cerberus’s Freedom Group Withdraws Plans for IPO". Bloomberg. Retrieved 12 April 2012. 
  18. ^ "Nardelli Steps Down From Most of His Cerberus Roles". DealBook. Retrieved 27 March 2013. 
Business positions
Preceded by
Arthur Blank
CEO of The Home Depot
2000–2007
Succeeded by
Frank Blake
Preceded by
Thomas W. LaSorda
CEO of Chrysler
2007-2009
Succeeded by
Sergio Marchionne