Do you want to end up like Robert Nardelli, the recently resigned CEO of Home Depot? On Jan. 3, the company announced that its embattled chief executive was resigning, capping a year of conflict with shareholder activists unhappy with his outsized paychecks and Home Depot's floundering stock price.
Nardelli's autocratic air didn't help. He apparently failed to realise that the imperial CEO went out of style sometime in late 2001, around the time the bubble burst and Enron's Kenneth Lay was being exposed for greed and fraud. Sure, Nardelli's $210 million golden parachute will ensure a soft landing for him. But not every chief can expect to ride away with such a stash.
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Career resolutions for 2007
This year, CEOs are up against more challenges than ever before. Feisty hedge funds, ever-impatient Wall Street analysts, consumers looking for socially responsible products, increased regulation, paycheck scrutiny--all of these stressors could haunt you if you're not prepared. If you want to survive, you need to make a few New Year's resolutions.
No. 1: Understand that these days, shareholders are the kings of corporate America. That means you need to get your pay under control, says Steven Mader, vice chairman of executive search company Christian & Timbers. If investors are clamoring for you to cut your paycheck, there's a good chance the board will listen. Respond to shareholder complaints right away, instead of letting them fester and turn into a full-blown scandal.
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And if you haven't already done it, it's time to initiate an internal investigation into your stock option granting practices. The ever-widening scandal around backdated options has shown no signs of slowing down. Even if you don't run a tech company in Silicon Valley, you need to make sure your stock options are squeaky clean. And if they aren't, you need to tell shareholders everything.
You won't regret coming clean. Case in point: Apple Computer recently announced that CEO Steve Jobs was aware that some stock options were granted on particularly favorable dates, though he didn't benefit personally from those grants or "appreciate the accounting implications." Though it wasn't an altogether favorable report, the stock rose on the news.
But you need to concern yourself with more than financial statements. Nardelli lost his job in part because he just wasn't willing to play nice with his employees, shareholders and board members. Directors were unhappy that he wouldn't give up more of his pay in response to shareholder concerns. In the New Year, executives looking to avoid his fate should try to build consensus.
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That applies whether you lead a multinational conglomerate or a small, privately-held company. Make sure your employees, your board members and your leadership team all understand your vision for the company. "It sounds like such a simple concept, but it is missing in many organisations," says Gershon Mader, a principal with consulting company Quantum Performance.
Also, don't be afraid to make tough decisions. That may mean firing some of your close associates, says Mark Stevens, CEO of marketing company MSCO, and author of Your Management Sucks. Remember that New Year's maxim: Out with the old, in with the new.
If some of your senior managers are underperforming, share your concerns with board members. If they agree with your assessment, warn your lieutenants that they need to shape up or ship out. The world is changing, and slow-moving companies can no longer compete.
And don't forget to take time for non-business pursuits, says Heather Schulz, a senior vice president at the American Management Association. Pick one thing you've always wanted to do--go to the Superbowl? Spend a week in Tanzania?--and buy the tickets. That way, it will be harder to back out because of time restraints right before the trip.
In other words, learn a lesson from Bill Gates. He's giving up his job as Microsoft's chairman in a couple years in order to focus on his philanthropic efforts. What could be better than that?
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