Bill Sjostrom broke the news of the disgraceful absence of directors at the recent Home Depot shareholders’ meeting here. I found the story so scandalous, however, that I did a bit more digging, just to see what sort of rationale for missing the meeting was proffered by the truant HD directors. All I found was the following little nugget of PR wizardry from Home Depot:
“While we understand that the approach we took to the annual meeting was a departure from past practice, it should in no way be construed as either a lack of respect for our shareholders or a lessening of our commitment to high standards of corporate governance and transparency. . . . If the board of directors’ absence or the structure of our annual meeting offended any shareholder, that was certainly not our intent.â€?
Allow me to offer three things:
1. If, according to HD, the directors’ absence should “in no way be construed as … a lack of respect for our shareholders,� how *should* it be construed? It is hard to alternatively interpret the facts: A bunch of important shareholder proposals were up for vote at the annual meeting, the directors knew or should have known that some shareholders had significant concerns that they would probably like to raise, the annual meeting is the one big shareholder gathering of the year (and the shareholders do *own* the company, after all), there are planes AND trains AND car services that regularly, frequently, and cheaply go from Atlanta, GA (HD headquarters, where the directors were), to Wilmington, DE (where the annual meeting was held). On those facts, how *should* the directors’ absence be construed?
2. We are told by HD that it was “certainly not� the intent of the HD directors to offend their shareholders. Now, I am admittedly no Dr. Phil, but I would like to think that I could have seen the shareholder offense coming down the pike if I were an HD director deciding whether or not to skip the annual meeting. Does HD want its investors to believe that *not a single one* of the 10 below-listed directors, with their incredible backgrounds and experience, could have predicted and warned of the shareholder offense? If it was fairly clear that the shareholders would be offended, and I maintain that it was, can HD say with a straight face that they really did not . . . expect (and therefore basically intend) to offend investors?
3. Is the statement issued by HD regarding the missing directors really the *best* that could have been offered by HD at such a time of upset? It was bad enough for the derelict 11 directors to no-show. HD’s absolutely pathetic responsive public statement just added insult to injury. Without being too cynical, it *might* appear to an outside observer – maybe, perhaps – that HD actually believes that their shareholders are neither (a) important nor (b) smart enough to realize that the press release is arguably . . . *ahem* disingenuous.
I am not a PR person, *and* I am shooting off the top of my head here, but if I had drafted the HD press release, I would have added a huge dose of crow and said something along the lines of:
“Clearly, we, the HD directors, misjudged the impact that our absence would have on our investors, and we are chagrined. Obviously our absence was not intended to evince a lack of respect for our shareholders, and we apologize. We anticipated that there would be less distraction and friction, and, thus, a more productive meeting, if we remained in Atlanta, attending to important matters at our headquarters. We painfully miscalculated how this venue decision would be perceived by our investors, and we want to express most sincerely our apologies and our continued commitment to serving HD and our shareholders.�
If the above proposed statement (which took me about two minutes to draft) required more time and thought than HD had available when issuing their pathetic public statement, I would have at least hoped the directors could have individually punted and shown some creativity in justifying their absences to avoid further offense:
“It was a ‘black-out’ date for my frequent flier miles.�
“My six-year old was graduating from first grade.�
“Wilmington, Delaware? Blasted Mapquest – I was in Wilmington, North Carolina.�
“I get car/train/plane sick.�
“Annual meeting? What annual meeting?�
“It’s not you. It’s me.�
Perhaps Joe Nocera said it best (in the NYT, dated 5/27/06 (Section C – The Board Wore Chicken Suits)) when he observed:
“I’m sure there are plenty of boards and chief executives who have contempt for their shareholders, but most of them are at least smart enough to keep it to themselves.�
No-Show Directors:
| Gregory D. Brenneman Chairman & CEO TurnWorks, Inc. |
| John L. Clendenin Retired Chairman, President, and CEO BellSouth Corporation |
| Claudio X. González Chairman and CEO Kimberly-Clark de Mexico, S.A. de C.V. |
| Milledge A. Hart, III Chairman of the Board Hart Group, Inc. |
| Bonnie G. Hill President B. Hill Enterprises, LLC |
| Laban P. Jackson Jr. Chairman & CEO Clear Creek Properties, Inc. |
| Lawrence R. Johnston Chairman, CEO & President Albertsons, Inc. |
| Kenneth G. Langone Chairman of the Board, CEO, and President Invemed Associates, Inc. |
| Angelo Mozilo Chairman and Chief Executive Officer Countrywide Financial Corporation |
| Thomas J. Ridge Former Secretary of Homeland Security and Governor of Pennsylvania |