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Comparing Exit Packages

The post below is by Bob Johnson, one of my favorite bloggers, along with his dog Rex (see “i spi on bob jonsen fer chainee” at Bob’s blog, Satiric Mutt). I added an afterword. – SusanUnPC

Comparing exit packages: Home Depot CEO Bob Nardelli versus Pfc. William R. Newgard

by Bob Johnson

The first week of 2007 brought news of two exits: one emblematic of capitalism gone awry, the other, the tragic death of a 20-year-old man in Iraq.

Bob Nardelli was the CEO of Home Depot for six years. The company’s stock went nowhwere during his tenure, but his compensation package skyrocketed. His reward for leaving? An exit package of $210 million.

Pfc. William R. Newgard, 20, of Arlington Heights, Illinois died on December 29, 2006 when his vehicle struck an IED in Iraq. His “exit package?” Less than 1/4 of 1% of Mr. Nardelli’s going-away present.

So just how do we value life in this country?

The plight of poor Mr. Nardelli:

After enduring six years of mounting criticism over his pay package, an imperious management style and a listless stock price, Robert L. Nardelli, the chief executive of Home Depot, resigned abruptly. He left with a severance package worth $210 million. Over six years as chief executive, he had taken home $64 million and was on track to earn hundreds of millions more.

The $210 million in compensation for Mr. Nardelli will include deferred compensation, pensions and other benefits to which he was already entitled. It also included an extra $20 million cash payment that the company was not legally obliged to pay.

Mr. Nardelli collected $274 million over six years while overseeing a lackluster performance by the company he was managing.

That comes to a cool $45,666,667 a year.

But I’m sure he was worth every penny.

Will Newgard was a quiet young man who had just spent the holidays with his family and friends in Arlington Heights while on leave. He was worried about his return to Iraq:

Will Newgard posted a clock on his MySpace Web page to count down the hours, minutes and seconds left in his military duty in Iraq, or as he wrote, “until I’m out of Iraq for good.”

On Tuesday night, the clock on the social networking Internet site showed five months and 17 days remaining, but U.S. Army Pfc. William Newgard was gone already. He died Friday morning of wounds from a homemade explosive device that detonated near his vehicle in Baghdad, the U.S. Department of Defense reported. Killed alongside Newgard was Sgt. Lawrence J. Carter, 25, of Rancho Cucamonga, Calif.

More than once during his December leave, Will mentioned he might not survive his second deployment to Iraq.

And what was Private Newgard’s life worth, at least in terms of the hard-edged capitalism that counts for worth to so many in this country?

About $24,000 a year.

But then there’s the “exit package.” The Army provides a “gratuity” of $100,000 to soldiers killed in action.

The Army is not quite as generous as the Home Depot Board of Directors, apparently.

But Private Newgard may have had insurance that provided his family with an additional $400,000 in death benefits, though whether or not Private Newgard would have opted to pay for such a policy on his $24,000 annual salary is unknown. (Premiums are deducted from paychecks.)

What was Will Newgard’s sacrifice worth in a culture that values cash above all else? Less than 1/4 of 1% of Bob Nardelli’s exit package? Even in strictly capitalist terms, is that a true statement? Is one Bob Nardelli really worth more than a thousand Will Newgards?

If “values” is the new watchword in politics, let’s measure that vlaue.

Something is horribly out of whack in this country. And it goes well beyond this inane, insane war.

Update [2007-1-7 10:45:15 by Bob Johnson]:

As noted below by slothax, calipygian and Rohan, the insurance benefit maximum is $400,000 based on a $29/month premium. That said, my calculation of 1/4 of 1% of Nardelli’s payout is based on Private Newgard’s family receiving $500,000 total ($100,000 gratuity + $400,000 insurance) following his death.

::::::::::

SusanUnPC: Thanks to Bob Johnson for allowing me to reprint his post in full. Bob’s post today at Daily Kos is joined by another in the Recommended List:

Broken

by Craig Burnham

Sun Jan 07, 2007

I want to share with everyone here and experience that I had the other night. I was over at a friends house, and we were having a little party. After about an hour or so a limo rolls up, and I see my old friend Andy come out. Andy is in the Army, and he just returned a few weeks ago from an 18 month deployment in Iraq. I went to high school with Andy, and we played baseball together. We partied all throughout high school, and we had some great times.

I could tell right from the second I hugged him that he had changed. He was hammered. He has been hammered just about every day since he returned from Iraq, so his best friend later told me. I asked Andy how he was doing. He said “I just got back from Iraq, how the hell do you think i’m doing”. Of course he’s not doing good, after an 18 month tour in Iraq i’m not sure how I would be. But he kept going. “I’m broken, I’ve just returned from the worst experience in my life.” I can’t imagine what he went through, and to be honest I didn’t want to ask him any specifics. Still he kept going. …

(Read all.)

Then there was this article in the Los Angeles Times sent me by a friend. I wish I’d had this article in hand when I was on a shuttle van a few weeks ago, and overheard an older man mock a homeless vet standing by the road with a sign begging for food and money. “Don’t give him nothing. He can get all the help he needs through the VA,” the man said authoritatively.

The battle of Iraq’s wounded: The U.S. is poorly equipped to care for the tens of thousands of soldiers injured in Iraq.

By Linda Bilmes, who teaches public finance at the Kennedy School of Government at Harvard University. She is the coauthor, with Joseph Stiglitz, of the report, “The Economic Cost of the Iraq War: An Appraisal.”

January 5, 2007

THE NEW YEAR brought with it the 3,000th American death in Iraq. But what’s equally alarming — and far less well known — is that for every fatality in Iraq, there are 16 injuries. That’s an unprecedented casualty level. In the Vietnam and Korean wars, by contrast, there were fewer than three people wounded for each fatality. In World Wars I and II, there were less than two.

That means we now have more than 50,000 wounded Iraq war soldiers. … [T]he Department of Veterans Affairs is buckling under a growing volume of disability claims and rising demand for medical attention.

[...]

The VA also runs Vet Centers — 207 walk-in neighborhood help centers that provide counseling to veterans and their families. These popular, low-cost centers have already treated 144,000 new veterans. But they are so understaffed that nearly half are sending veterans who need individual therapy into group sessions or placing them on waiting lists, according to a recent report by the House Veterans’ Affairs Committee.

At the same time, wounded veterans trying to obtain disability checks are being tied up in a bureaucratic nightmare. The Veterans Benefits Administration has a backlog of 400,000 pending claims — and rising. Veterans must wait from six months to two years to begin receiving the money that is due to them while the agency plods through paperwork. The staff eventually helps veterans secure 88% of the benefits they ask for — but in the interim, thousands of veterans with disabilities are left to fend for themselves.

The situation is about to go from bad to worse. Of the 1.4 million service members involved in the war effort from the beginning, 900,000 are still deployed on active duty. Once they are discharged, the demands for medical care and counseling will skyrocket, as will the number of benefit claims. The Veterans for America organization projects that VA medical centers may need to treat up to 750,000 more returning Iraq and Afghan war veterans and that half a million veterans may visit the Vet Centers.

And then there is the cost. After the Persian Gulf War in 1991, half of all veterans sought VA medical care, and 44% filed disability claims. Assuming that this pattern is repeated, the lifetime cost of providing disability payments and healthcare to Iraq and Afghan war veterans will likely cost U.S. taxpayers between $300 billion and $600 billion, depending on how long the war lasts.

President Bush is now talking about spending more money on recruiting in order to boost the size of the Army and deploy more troops to Iraq. But what about taking care of those soldiers when they return home? The VA’s solution is to hire an additional 1,000 claims adjudicators to cut the backlog.

A better idea would be to stop examining each application and instead automatically accept all disability claims, then audit a sample (like the IRS does for tax filings) to weed out fraud. Or at a minimum, simple claims should be fast-tracked and settled within 60 days. We should also place more counselors and more claims experts in the Vet Centers and harmonize recordkeeping so veterans can move seamlessly from the Army’s payroll into VA hospitals and outpatient care. …

(Read all.)

I’m staggered by the statistic that 44% of the veterans of the Gulf War filed for disability. It shows the immense effect that war, any war, has on those who fight it.

And I recall an interview that Democracy Now‘s Amy Goodman conducted with a VA nurse who said that all the news about the Iraq war has brought in veterans from as far back as World War II. Yes, even WWII veterans are reaching out to the VA for help with recurring PTSD.

Last year, a local company I am familiar with ran a clever, wildly successful viral marketing campaign and donated its proceeds — tens of thousands of dollars — to the Seattle Vet Center. The Vet Center’s administrator invited the company executives to help hand out blankets, toiletries, and food to the homeless vets, some of who come from the Iraq War.

Yes, there are homeless vets from THIS war. The Iraq War.

A disability check won’t compare to Mr. Nardelli’s package, but it’d perhaps cover the bare basics like housing and food.

  • Chris Marlowe

    How American society is fragmenting in economic terms.
    In ten years, if we look at the damage which was done to the US economy compared to the Operation Iraqi Freedom, the damage done on the US economy front will be perceived to be much greater.

    http://www.atimes.com/atimes/Global_Economy/IA10Dj03.html

  • http://noquarter.typepad.com SusanUnPC

    Now there’s a bomb squad at the Port of Miami.

    Keep it up, Homeland Security. You’re following the script leading up to Wednesday at 9pm ET.

  • http://noquarter.typepad.com SusanUnPC

    Leslie, re your “totally OT,” I think it is T… :) Any rumor, speculative news that hints of terrorism is designed to raise people’s blood pressure. You know the rest.

  • Leslie

    Bush’s mission accomplished overseas:
    Afghan families are selling their daughters off for food. Some are as young as 8 years old.

    http://rawstory.com/showarticle.php?src=http%3A%2F%2Fobserver.guardian.co.uk%2Fworld%2Fstory%2F0%2C%2C1984396%2C00.html

    How are those tent cities in Irag going?

  • Mr.Murder

    As for comparing packages, that is what got us into this mess.

    Bush/Dobson Oedipal Industrial Complex.

    Nothing a stuffed flight suit can’t cure.
    Mission Accomplished!

  • Leslie

    Susan,
    Why do you continue to be surprised that Bush cares more about his campaign donors and the wealthiest 1% of this country than he does about anyone else, including the troops? Has Bush even attended a single soldier’s funeral?

    Bonddad has a post up at DailyKos citing a Congressional Budget Office study that says Bush’s tax cuts dropped rates more sharply for the wealthy, those earning over $1 million, than any other group. Bush’s tax cuts also raised taxes for the middle class.

    http://www.dailykos.com/storyonly/2007/1/8/113235/4854

  • Mr.Murder

    Outstanding arrears are given when fatality occurs, it is my opinion these should also be applied towards those held over in stop loss.

    There may be a sizable portion of casualties who fall under said considerations and are being shortchanged their sacrifice.

    I’d suggest an independent commission be established to help such, compromised of outsourced VA regulars already familiar with the paperwork needed to be met. More than likely there are several service unions who can help satisfy this requirement with their membership.

    I’d also suggest veterans NGOs file a class action for the same cause.

  • Leslie

    Totally OT: You all may have heard, Manhattan was feeling a little gaseous this morning. [I didn't smell any gas coming into midtown though.] Maybe the Perils of Pauline ought to be renamed the Perils of NYC?

  • Cab02149

    I have lived long enough to see things never seen before and with overwealming influence on our daily lives. It alienates me more each day. Why would a person volunteer to represent and defend the lifestyles of the “over-rich and over-famous”? How can the shape and direction continue? There must be a wall standing somewhere.

  • http://noquarter.typepad.com SusanUnPC

    I’ve seen different numbers too. We could quibble about statistics til the cows come home, but the POINT is that there are a very large number of lifelong wounded vets who will cost U.S. taxpayers hundreds of billions of dollars for their lifetime care … and there will be more to come before W is done.

    ALSO: The PTSD issues brought up above haven’t been discussed.

    Without the considerable fundraising efforts of many individuals and companies, our vets would be in even worse shape than they are. Don Imus and others at MSNBC spent a lot of time last year raising money for a center for vets who’ll need longterm PT, etc…. and Imus, more than once, mentioned how troubling it was that the gov’t wasn’t doing this.

    Then there were those I know, who disagree with this war, but felt compelled to give tens of thousands to the Vet Center, which EAGERLY took the money because their VA funding is so DAMN INADEQUATE.

    Why isn’t anyone here bitching about the VA, and how VA monies are handled?

    If anyone needs info on that, I can provide it.

  • bg

    Sorry Susan, my bad. I did read the entire thing but missed that sentence. I got hung up on the 50,000 number (and missed the sentence after it which you rightly point out she credits the reason for the low death rate).

    But this was part of the point to my post, sometimes we miss part of the argument when distracted by something that we find erroneous or at the very least suspect.

    I still argue that her estimation of 50,000 wounded is not a valid assumption based on the way she is doing her calculations. It is either careless, or at worst sensationalistic to grab the reader’s attention to her argument.

  • http://noquarter.typepad.com SusanUnPC

    “What Linda Bilmes fails to recognize about this statistic is the reason for it. …”

    She brings up the number who survive, and why. (I did not quote the entire commentary. I can’t, or it’s copyright infringement, which is why you see those ellipses and [...] in quotations from articles.) It’d be best to read her full piece.

  • bg

    While I don’t totally disagree with what seems to be the point of Linda Bilmes’s article, (that the VA is going to be overwhelmed), I think she is being a little too liberal with her numbers in an effort to “shock and awe” her readers.

    “But what’s equally alarming — and far less well known — is that for every fatality in Iraq, there are 16 injuries. That’s an unprecedented casualty level. In the Vietnam and Korean wars, by contrast, there were fewer than three people wounded for each fatality. In World Wars I and II, there were less than two.”

    What Linda Bilmes fails to recognize about this statistic is the reason for it. Fatality rates for wounded service members is the lowest it has ever been due to the skill and technology in today’s military medicine (in previous wars more soldiers died of wounds). She treats this statistic as if it makes Iraq a worse war than previous ones. On the contrary, she should be praising the incredible efforts of the military medical profession and in force protection equipment which has made the death rate (killed versus wounded)the lowest in war’s history.

    She also fails to understand that you can not simply extrapolate the total number of wounded veterans by applying a simple formula of 1 x 16. This does not take into account that some service members are wounded more than once, and that a good percentage (I couldn’t find the stats, I don’t believe they are released) of the wounded are RTD (return to duty). I would venture an educated guess and say that 50% of all wounded are RTD. A wounded service member is given the title of WIA (in the form of a purple heart) for any bump or scratch achieved during enemy action, therefore, the double amputee is counted the same as someone with a cut on his finger from shrapnel. We will all agree there is a big difference in those wounded soldiers and the cost of caring for them.

    “After the Persian Gulf War in 1991, half of all veterans sought VA medical care, and 44% filed disability claims.”

    Again, more homework needs to be done (or at least shown) for a more effective argument. The key word is “filed claims”. Many service members will try to file a disability claim when they retire for anything from asthma to blown knees, to hearing loss (not always combat related). How does 44% of filed claims compare to the rest of the military (non veterans of the Gulf War) so we can have some relative value. More important, how many of those 44% of filed claims were actually approved, and how much disability was awarded (10%, 50% or 100%). I am sure she did all of this homework, but since this article is seemingly being written to “shock and awe”, I would like to see all of the facts.

    However, with all of that being said, I do completely agree that the VA is going to be overwhelmed regardless. The VA would have been overwhelmed without the ongoing war. But when you through around statistics like this, those policy makers who truly understand the problem will simply dismiss the argument, despite its merits. PTSD is going to be a big problem (already is, especially among medical personnel) and another new medical issue is internal head injuries (as a result of that low death rate, many service members are surviving concussions that in past they never would have survived).

  • Thinker

    Though this is an excellent heartfelt vignette, where one fine young man loses his life doing his “duty” while another, I was going to say fat, but I can’t find a photo of Bob, grossly overpaid, underworked executive in his zero risk position gets a kewl $300M for talking out of his hiney.

    The Monday Memo write up on Bob….the go getter brought a tear to my eye. How, oh how could a man who, and I quote “After college Nardelli went to work for General Electric (GE), where his father had worked, as a bottom-rung manufacturing engineer. He worked hard to prove himself. He wanted to run the company some day.” How could a man upright and resolute with all the qualities American admires turn out to be yet another fat fudgepacker, filling his pockets on the backs of young guys like Will Newgard.

    As I have said before, young guys who make their choice by opting for a career in the armed forces can only expect the worst to happen and last time I looked all the super rich people in the World were about as happy as the poorest. They just have different issues. So, by way of compromise, I like Senator Webb’s answer. The poor will be just as unhappy with more money. The rich will be just as unhappy with less money. And when the playing field is leveler, perhaps they can concentrate on the important things….their happiness. Mindless slaughter in Iraq will never qualify.

  • http://satiricmutt.blogspot.com/ Bob Johnson

    Ironically, Nardelli was lauded in this March 2006 Business Week piece for his “military-style” leadership:

    http://www.businessweek.com/magazine/content/06_10/b3974001.htm

    >>Military analogies are commonplace at Home Depot Inc. (HD ) these days. Five years after his December, 2000, arrival, Chief Executive Robert L. Nardelli is putting his stamp on what was long a decentralized, entrepreneurial business under founders Bernie Marcus and Arthur Blank. And if his company starts to look and feel like an army, that’s the point. Nardelli loves to hire soldiers. In fact, he seems to love almost everything about the armed services. The military, to a large extent, has become the management model for his entire enterprise. Of the 1,142 people hired into Home Depot’s store leadership program, a two-year training regimen for future store managers launched in 2002, almost half — 528 — are junior military officers. More than 100 of them now run Home Depots. Recruits such as Ray “understand the mission,” says Nardelli. “It’s one thing to have faced a tough customer. It’s another to face the enemy shooting at you. So they probably will be pretty calm under fire.”

  • pangloss

    Susan
    Though I’ve not seen any mention in your MSM I don’t think it is just your vets that maybe having trouble eating or making ends meet.

    See The Sydney Morning Herald
    December 22, 2006:

    http://www.smh.com.au/news/world/after-the-war-a-struggle-to-survive/2006/12/21/1166290678892.html?page=fullpage#contentSwap2

    When I read the downunder piece I’d just finished reading that great Christmas story in the NYT headlined: Wall St. Bonuses: So Much Money, Too Few Ferraris.

    The irony is perfect don’t you think?

  • http://satiricmutt.blogspot.com/ Bob Johnson

    Hank,

    You’re as ignorant as your pal, Dave.

    Do you own your own company? Have you ever started a company? Or are you just another conservative wastrel who believes that through the miracles of trickle-down, even a loser like you will one day be a wealthy land baron?

    I have to laugh at trailer-dwellers like you who buy into the whole conservative economic mumbo-jumbo.

    Let me know if you’ve ever actually done anything in your working life besides being a loud-mouthed peon.

    And a sucker.

  • http://www.lqblog.com Hank Dagny

    Usual weak and stupid liberal argument comparing apples to oranges and somehow making a valid case out of thin air or less.
    One truth is certain. The soldier did his duty as he saw fit to do it. It was his choice to serve and thank God there are people like him who do that – so idiots like liberals can live in a country safe enough to be the chicken livered anti-capitalist communists and traitors to their country that they are.

    The Board of Home Depot also decided it was their duty to do what they saw fit for their duty to the company they serve.

    Liberals think they are the ones who should tell people how to live and what to do with their lives and their companies.

    Fourputt has a point – if you all knowing-all caring liberals have the best way – then do it and then tax yourselves into bankruptcy – whether you actually owe that much or not. After all, you wish to stick taxes on everyone else.

    While you are starting your company that will fail, you may want to look at all the countries that are either gone or collapsing that follow the liberal blueprint. They are communist and socialist countries. Go move to one you morons.

  • http://satiricmutt.blogspot.com/ Bob Johnson

    Hey Dave,

    Your wrote:

    “Then why don’t you liberals start a corporation and do things the “right” way instead of complaining so much?”

    How do you know we haven’t?

    You’re embarrassing yourself.

  • Chris Marlowe

    Dave Fourputt:

    There may be too much subtlety here for you, but this is not about being conservative or liberal, this is about doing what’s right.

    The job of any corporation’s board is to represent its shareholders and to supervise the management. When a board pays out too much to the CEO as in the Nardelli case, it shows that they have absolutely failed to represent the shareholders. The board should be sued and held responsible because such a huge payout means that other shareholders are going to make less.

    A healthy free society is built on a system of checks and balances. Our founding fathers knew very well that power had a corrupting influence; that’s why the US was designed with a system of checks and balances which favored the the individual. When the checks and balances disappear, injustices happen. In the end, the democracy collapses.

  • http://lqblog.com Dave Fourputt

    Then why don’t you liberals start a corporation and do things the “right” way instead of complaining so much?

  • http://takeaction.wordpress.com/ A. Citizen

    No, no, no…you don’t understand. See God or Jeebus, I fergit which one, determined that the head of Home Depot is just plain worth more than some 11-b in The MeatGrinder. After all if that young man had stuck with Republican principles he could have been rich too.

    Anybody can do it!

    After all look at The Preznint! He’s rich. He did all on his lonesome.

    So…

    It would really be better if you ‘little people’ just shut up and died in The MeatGrinder like you were born to do.

    So irritating to have to listen to you uncivil bloggers.

  • BrendaStewart

    Thanks you Susan, for writting about this. It is true that war begets much from the streets of America. If we should just open our eyes, we would see much that we have been missing for so many years from our past to the present day. Yet America seems to greet ppl from the complexes of the very rich to do more for America than the veteran. What a twisted view of we the ppl. It is such a shame….hugs

  • GSD

    It is really staggering to watch a country fall into a state of moral decay.

    This fish is rotten from the head on down.

    -GSD