Is $210M Relevant?

Implications: Much has been written and said about Nardelli's severance package vs. his accomplishments at Home Depot.  He has had some successes, but when it is compared to Lowe's from a Wall Street perspective, he lagged.  Did the Board decide to enter 2007 with a clean slate? Is he a victim of arrogance (witness the 2006 shareholder meeting)? or did he know that things weren't going to get better in the near future (although the housing market seems to have stabilized)?

Only time will tell, but the important question is "does HD's strategy need to change?"

Analysis:

Regardless of what we think about the $210M, I want to know who his attorney was and I want to hire him to negotiate my compensation and severance package!!  And I want him to negotiate with a Board that is so amiable.  It takes both parties to come together on a deal like this (and we don't know the details which may have other perks.)

More importantly, Nardelli's departure begs the question of if the strategy will change.  Since Blake was involved in acquisitions and strategy, it's a safe bet to think that those areas won't change.  With DeAngelo being promoted to COO, the HD Supply strategy is safe - expect more acquisitions to grow this business.  He committed that HD Supply would be 20% of HD.  I would expect it to happen, especially since he may be #2 in line (heir apparent?).  Also expect a change in management style and perhaps increased local autonomy, which would help the HD Supply side as that is a local relationship business (with customers and supplier sales personnel).  I would also expect less store openings in the US as HD is probably experiencing some cannibalization of sales due to store growth.  And with rumors of private equity interest, could those rumors now be entertained and perhaps a private equity company could gain back some of its investment by selling some store locations (reduces cannibalization and generates revenue).  This would be similar to last year's Toys R Us scenario.

Nardelli leaving will energize HD and "liberate" the people, but it'll take some time.