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Home Depot blasted over options gaff, meeting

The AFL-CIO asked Home Depot to oust its director over a mistake in doling out stock options and another group demanded an explanation why directors didn't show at the annual meeting.
/ Source: The Associated Press

The AFL-CIO asked The Home Depot Inc. Thursday to oust director Ken Langone over a mistake in doling out stock options for executives and another shareholder group demanded the company release documents to explain why directors were a no-show at the retailer's annual meeting.

The American Federation of Labor and Congress of Industrial Organizations said in a letter to Home Depot's board that Langone's resignation should be sought because he served on the board's stock option committee during the period of improperly granted options.

The labor group also said the Atlanta-based company should take steps to recoup any gains from stock options that were improperly granted to executives.

"Granting stock options on terms that violate the provisions of a shareholder-approved plan is a clear breach of fiduciary duty," the AFL-CIO said.

Langone, ex-chairman of the compensation committee on the NYSE board, has been accused by Attorney General Eliot Sptizer of misleading members of that board about the contested $187.5 million compensation of Richard A. Grasso, former head of the exchange.

Home Depot said June 23 that the Securities and Exchange Commission had begun an informal inquiry into the company's practices for granting stock options.

The disclosure came a week after Home Depot said its own review had turned up five instances prior to December 2000 in which the date of a meeting or resolution approving a stock option grant was later than that used to determine the stock option exercise price. In three of the five instances, the market price of the company's stock on the award date was higher than that on the date the exercise price was determined.

The company's internal review also found about $10 million in unrecorded stock option expense.

As for the annual meeting dispute, the American Federation of State County and Municipal Employees Pension Plan sent a letter to Home Depot's board seeking all books, records and internal documents related to the directors' decision not to attend the May 25 meeting in Wilmington, Del.

The company's chief executive and board chairman, Bob Nardelli, was the only director to attend the meeting, at which he was criticized for his hefty compensation in light of the company's lagging stock price.

Home Depot spokesman David Sandor said Thursday that the company has received the letter "and would be pleased to meet with AFSCME to discuss their concerns."

Asked if the company would release the documents being sought, Sandor responded, "That's the extent of my statement."

Since the meeting, Home Depot has said that it will ensure that all board members attend future annual meetings.

Sandor said he wasn't aware of the AFL-CIO letter regarding Langone and had no immediate comment. A Langone spokesman, Jim McCarthy, said he hadn't seen the letter.

"Just because someone stands up and points a critical finger shouldn't grant them a high profile position in the public discourse," McCarthy said.

Langone did not immediately respond to a message left with McCarthy seeking comment.

AFSCME's pension and benefit plan holds more than 23,000 Home Depot shares. The AFL-CIO has a small direct holding in Home Depot shares and its union-sponsored pension plans have $400 billion in assets that include significant blocks of Home Depot shares, spokesman Brandon Rees said.

The Home Depot is the nation's largest home improvement store chain with more than 2,000 stores in the United States, Canada and Mexico.