Case | HBS Case Collection | June 2007 (Revised December 2007)

AFL-CIO: Office of Investment and Home Depot

by Rakesh Khurana and James Weber

Abstract

Describes the AFL-CIO: Office of Investments activities in their campaign to improve governance at Home Depot by calling attention to Home Depot CEO Robert Nardelli's compensation package and the company's poor performance. The AFL-CIO Office of Investments advocates for improved corporate governance at public companies, focusing on the problems of excessive chief executive compensation, improperly backdated stock options, insufficiently independent corporate board members, poor responsiveness to shareholders concerns, and a lack of transparency in the activities and decisions of boards. The AFL-CIO believes that such problems were indicators of underlying problems in corporate governance that could impact the long-term value of a public company. To advance its cause, the Office targeted Home Depot. In an effort to bring about change at the company, the AFL-CIO and AFSCME corresponded with Home Depot executives, staged public protests, appeared on talk shows, and maintained several Web sites. The trillion-dollar size of the union pension funds gave the Office a platform from which to work. The departure of Home Depot's CEO had been a significant step by Home Depot and the company had made other concessions as well. The AFL-CIO Office of Investment now needed to decide whether to continue to use its limited resources focusing on Home Depot or find a new target to forward their cause.

Keywords: Investment; Corporate Governance; Governing and Advisory Boards; Executive Compensation; Labor Unions; Organizational Change and Adaptation; Business and Shareholder Relations;

Citation:

Khurana, Rakesh, and James Weber. "AFL-CIO: Office of Investment and Home Depot." Harvard Business School Case 407-097, June 2007. (Revised December 2007.)