While a typical scenario of shareholders withholding their votes for board members in protest rarely garners more than single digits worth of support, Home Depot revealed that at least 30% of its shareholder votes were withheld from 10 of the 11 directors at the Atlanta home improvement retailer, according to a Wall Street Journal report. Those suffering sizable withhold votes included Chairman and Chief Executive Officer Bob Nardelli.
Director Claudio Gonzalez, chairman and CEO of Kimberly-Clark de Mexico SA, had the highest percentage withheld at 36%, while Countrywide Financial Corp. Chairman and CEO Angelo Mozilo, had only 8% kept back, according to the news report.
With similar executive pay initiatives raging at firms around the country, Home Depot directors have come under stinging criticism for approving more than $115 million in compensation for Nardelli since he took over 2000. During that time, the retailer’s shares plunged by 12%.
“Pay rage drove the significant withhold vote at Home Depot,” Patrick McGurn, an executive vice president of Institutional Shareholder Services, an advisory service that recommended investors withhold support for every director except Mozilo, told the Wall Street Journal. Though Pfizer Inc., ExxonMobil Corp. and several other big companies also weathered similar protest votes at their latest annual meetings, “this is the largest compensation one we’ve seen at a company this year — and possibly ever,” McGurn reported.
The voting process for board members at most companies is largely symbolic, in which shareholders can withhold their votes but cannot vote against directors.
In 2004, in perhaps one of the best examples of this scenario, 45% of the votes cast withheld support for the re-election of Walt Disney Co.’s Chief Executive and then-Chairman Michael Eisner to the board. He soon gave up the chairmanship and later resigned as CEO (See Eisner Protest Vote Reaches 43% )
Two proxy proposals to give Home Depot shareholders greater participation in executive pay registered strong support at this year’s meeting. One proposal from the AFSCME would have given investors the ability to cast an advisory vote on the compensation committee’s annual report on executive pay. It received 40% of votes cast.
Another proposal sought shareholder approval for any “future extraordinary retirement benefits for senior executives.” Home Depot said that measure received 45% support.
Home Depot also announced it would implement the one proxy proposal that passed. It calls for directors to be elected by a majority of votes cast.