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.
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. …
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. …
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.