Home Depot Inc. was asked by the AFSCME pension plan to provide the records related its May 25 annual meeting and the failure of 10 of its 11 directors to attend, as well as documents regarding executive compensation, according to a statement released today by plan officials.
In a June 26 letter sent to Frank L. Fernandez, Home Depot corporate secretary and general counsel, Gerald W. McEntee, AFSCME president and chairman of the union's $800 million pension plan, demanded the right to inspect "meeting minutes and drafts thereof, and/or communications between and among directors and/or officers reflecting or relating to the board's decision not to attend the company's 2006 annual meeting." He also asked for records dating to 2000 regarding how Home Depot set up the compensation of Robert L. Nardelli, chairman, president and CEO, and other executive officers. The American Federation of State, County and Municipal Employees Pension Plan, Washington, also seeks documents related to the company's stock option practice dating to 1996.
The AFSCME plan demanded that Home Depot produce the documents within five days of receiving the letter, citing corporate law in Delaware, where the company is incorporated. The letter demands documents relating to 13 issues, including how each of the current directors was selected for nomination and screened for conflicts of interest, as well as records about nominations suggested by investors not connected with Home Depot.
The pension plan owns 22,749 shares of the company and seeks the documents "to value its shares of Home Depot and to make an informed decision when voting on future shareholder proposals and director elections, and to investigate the board members' compliance with their fiduciary duties to the company and its shareholders," according to the letter.
"Mr. Nardelli was the lone director among Home Depot's 11-member board to attend the meeting," a statement from the plan about the letter said. "Shareholders were strictly limited in the length of their questions and spoke against the backdrop of a giant ticking clock. Mr. Nardelli did not provide answers to a single substantive question and adjourned the meeting in less than an hour.
"The board of directors at Home Depot abdicated their responsibility and in doing so, they ducked a basic accountability obligation to company shareholders," Mr. McEntee said in the statement. "The real question is, what are they trying to hide?"
David B. Sandor, Home Depot vice president-public relations, said: "We received the letter. We'd be please to meet with AFSCME to discuss their concerns." Mr. Sandor declined to state if Home Depot executives contacted AFSCME officials about the letter.
