Robert Nardelli
Encyclopedia
Robert Louis "Bob" Nardelli (born May 17, 1948, in Old Forge
, Pennsylvania
) 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".
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
.
in 1971 as an entry-level manufacturing engineer. From 1988 to 1991, Nardelli was an executive for a division of the construction equipment 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
.
management strategy also used at GE, he dramatically overhauled the company and replaced its freewheeling entrepreneurial culture. 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. 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. 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. When the board reportedly ousted him in January 2007, 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). Nardelli also hosted a garden reception/fundraiser for Bush at his Atlanta home on May 20, 2004
, starting in 2001.
, 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 given something like $30 million.)
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.
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." On April 30, 2009 Bob Nardelli announced that he would leave the company as soon as the bankruptcy was over.
On March 17, 2009, Nardelli said that Chrysler Financial would require a second round of loans. On April 21, 2009, it was revealed that a $750 million loan from the government was turned down, on the grounds that it would have required that executive compensation be capped. On April 30, 2009, Chrysler filed for Chapter 11 bankruptcy, and it was announced that Nardelli's replacement (Sergio Marchionne
) would likely face a pay cap.
Old Forge, Pennsylvania
Old Forge, Pennsylvania may refer to:* Old Forge, Franklin County, Pennsylvania* Old Forge, Lackawanna County, Pennsylvania...
, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
) was the chairman and chief executive officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of Chrysler
Chrysler
Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
. He had earlier served in a similar capacity at The Home Depot
The Home Depot
The Home Depot is an American retailer of home improvement and construction products and services.The Home Depot operates 2,248 big-box format stores across the United States , Canada , Mexico and China, with a 12-store chain...
from December 2000 to January 2007. Prior to that, Nardelli had risen to become one of the top four executives at General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
. CNBC named Nardelli as one of the "Worst American CEOs of All Time".
He attended Rockford Auburn High School
Rockford Auburn High School
Auburn High School is a public high school located in Rockford, Illinois, USA. The school is divided into two campuses: one a campus for freshmen and the other for upperclassmen....
in Rockford
Rockford, Illinois
Rockford is a mid-sized city located on both banks of the Rock River in far northern Illinois. Often referred to as "The Forest City", Rockford is the county seat of Winnebago County, Illinois, USA. As reported in the 2010 U.S. census, the city was home to 152,871 people, the third most populated...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
and received his Bachelor of Science
Bachelor of Science
A Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...
in business from Western Illinois University
Western Illinois University
Western Illinois University is a public university founded in 1899 as Western Illinois State Normal School. Like many similar institutions of the time, Western Illinois State Normal School focused on teacher training for its relatively small body of students. As the normal school grew, it became...
in Macomb
Macomb, Illinois
Macomb is a city in and the county seat of McDonough County, Illinois, United States. It is situated in western Illinois southwest of Galesburg. The population was 18,588 at the 2000 census. Macomb is the home of Western Illinois University.- Geography :...
, where he was a member of the Tau Kappa Epsilon
Tau Kappa Epsilon
Tau Kappa Epsilon is a college fraternity founded on January 10, 1899 at Illinois Wesleyan University with chapters in the United States, and Canada, and affiliation with a German fraternity system known as the Corps of the Weinheimer Senioren Convent...
fraternity
Fraternities and sororities
Fraternities and sororities are fraternal social organizations for undergraduate students. In Latin, the term refers mainly to such organizations at colleges and universities in the United States, although it is also applied to analogous European groups also known as corporations...
. Nardelli also earned an MBA
Master of Business Administration
The Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
from the University of Louisville
University of Louisville
The University of Louisville is a public university in Louisville, Kentucky. When founded in 1798, it was the first city-owned public university in the United States and one of the first universities chartered west of the Allegheny Mountains. The university is mandated by the Kentucky General...
.
General Electric
He joined General ElectricGeneral Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
in 1971 as an entry-level manufacturing engineer. From 1988 to 1991, Nardelli was an executive for a division of the construction equipment equipment maker, J. I. Case Company
Case Corporation
Case Corporation was a manufacturer of construction and agricultural equipment. In 1999 it merged with New Holland to form CNH Global, a Fiat Group division...
, which was then part of Tenneco
Tenneco
Tenneco is a $6.2 billion Fortune 500 company that has been publicly traded on the NYSE since November 5, 1999 under the symbol TEN...
.
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
Jack Welch
John Francis "Jack" Welch, Jr. is an American chemical engineer, business executive, and author. He was Chairman and CEO of General Electric between 1981 and 2001...
, whom Nardelli had ambitions to succeed as CEO of GE. When Jack Welch
Jack Welch
John Francis "Jack" Welch, Jr. is an American chemical engineer, business executive, and author. He was Chairman and CEO of General Electric between 1981 and 2001...
retired as chairman and CEO of GE, a lengthy and well-publicized succession planning
Succession planning
Succession planning is a process for identifying and developing internal people with the potential to fill key business leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become...
saga ensued. Nardelli competed with James McNerney
James McNerney
W. James McNerney, Jr, is an American business executive. He is the current CEO of Boeing Company.- Education :...
and Jeffrey R. Immelt
Jeffrey R. Immelt
Jeffrey Robert "Jeff" Immelt is an American business executive. He is currently the chairman of the board and chief executive officer of the U.S.-based conglomerate General Electric. He was selected by GE's Board of Directors in 2000 to replace Jack Welch following his retirement...
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
Kenneth Langone
Kenneth Langone, is a venture capitalist, investment banker and financial backer of The Home Depot, and a former director of the New York Stock Exchange. He was elected as director of Yum! Brands effective October 7, 1997, and is a member of the Audit Committee. Langone is also a trustee of New...
, who at the time was on the boards of both GE and The Home Depot
The Home Depot
The Home Depot is an American retailer of home improvement and construction products and services.The Home Depot operates 2,248 big-box format stores across the United States , Canada , Mexico and China, with a 12-store chain...
.
Home Depot
Nardelli became CEO of Home Depot in December 2000, despite having no retail experience. Using the Six SigmaSix Sigma
Six Sigma is a business management strategy originally developed by Motorola, USA in 1986. , it is widely used in many sectors of industry.Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and...
management strategy also used at GE, he dramatically overhauled the company and replaced its freewheeling entrepreneurial culture. 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
Lowe's
Lowe's Companies, Inc. is a U.S.-based chain of retail home improvement and appliance stores. Founded in 1946 in North Wilkesboro, North Carolina, the chain now serves more than 14 million customers a week in its 1,710 stores in the United States and 20 in Canada. Expansion into Canada began in...
stock doubled, which along with his $240 million compensation eventually earned the ire of investors. 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. 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. When the board reportedly ousted him in January 2007, Nardelli's severance package was estimated at $210 million. He was succeeded by The Home Depot vice chairman and executive vice president, Frank Blake
Frank Blake
Francis Stanton "Frank" Blake is an American business executive. He is the chairman and CEO of The Home Depot. He was appointed to this position in January 2007. Prior to this he worked for the U.S. Department of Energy and General Electric.-Education:Blake received his bachelors degree from...
. 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
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
at the White House in 2002 and was appointed to Bush's Council on Service and Civic Participation
President's Council on Service and Civic Participation
The President's Council on Service and Civic Participation was created by President George W. Bush in January 2003 by executive order. Its mission is to encourage volunteerism and to recognize the contributions Americans make through service and civic participation.In January 2002, President...
(although he is no longer a member). Nardelli also hosted a garden reception/fundraiser for Bush at his Atlanta home on May 20, 2004
Coca-Cola
While CEO of Home Depot, Nardelli was also briefly on the Board of Directors for Coca-ColaCoca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...
, starting in 2001.
Chrysler
On August 5, 2007, he became chairman and CEO of ChryslerChrysler
Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
, which had recently been taken private by private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm, Cerberus Capital Management
Cerberus Capital Management
Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by -year-old financier Steve Feinberg. Former U.S...
. 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 given something like $30 million.)
On February 17, 2008, before his first Daytona 500
Daytona 500
The Daytona 500 is a -long NASCAR Sprint Cup Series race held annually at the Daytona International Speedway in Daytona Beach, Florida. It is one of four restrictor plate races on the Cup schedule....
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
Ryan Newman
Ryan Joseph Newman is a driver in the NASCAR Sprint Cup Series. He drives the #39 United States Army/Tornados/Haas Automation Chevrolet Impala for Stewart Haas Racing under crew chief Tony Gibson. Newman graduated from Purdue University in 2001 with a B.S. in vehicle structure engineering...
, the driver of the #12 Alltel
Alltel
Alltel Corporation is a wireless service provider, primarily based in the United States. Before an acquisition by Verizon Wireless, it served 34 states. After the merger, Alltel continues to serve six states, mostly in rural areas...
Dodge, fulfilled this promise, and his car owner Roger Penske
Roger Penske
Roger S. Penske is the owner of the automobile racing team Penske Racing, the Penske Corporation, and other automotive related businesses. A winning racer in the late 1950s, Penske was named 1961's Sports Car Club of America Driver of the Year by Sports Illustrated...
collected the $1 million bounty.
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." On April 30, 2009 Bob Nardelli announced that he would leave the company as soon as the bankruptcy was over.
On March 17, 2009, Nardelli said that Chrysler Financial would require a second round of loans. On April 21, 2009, it was revealed that a $750 million loan from the government was turned down, on the grounds that it would have required that executive compensation be capped. On April 30, 2009, Chrysler filed for Chapter 11 bankruptcy, and it was announced that Nardelli's replacement (Sergio Marchionne
Sergio Marchionne
Sergio Marchionne is an international manager best known for his turnaround of the Italian automotive group Fiat and, more recently, for managing the US automotive group Chrysler from bankruptcy to profitability...
) would likely face a pay cap.