Home Depot Dumps Despot

In exiling Nardelli, who had been roundly criticized on Wall Street for taking home nearly $300 million in compensation over the past six years, the board is merely shuffling players in the executive suite. The board hasn't done anything to address the issue of runaway executive pay at Home Depot, which is one of the things that led activist shareholder Relational Investors to begin demanding change at the retailing giant.

Relational's co-founder, Ralph Whitworth, has yet to weigh in on the news of Nardelli's departure. But don't look for Relational, a San Diego-based investment fund with a history of agitating for better corporate governance, to walk away just because Nardelli is.

When Relational went on the offensive last month, it blamed both Nardelli and Home Depot's board for the company's poor performance. In a letter to Nardelli, Whitworth said: "We attribute this performance to deficient strategy, operations, capital allocation, and governance."

One of the things Relational, which owns more than $500 million in Home Depot stock, is calling for it is the creation of a special board committee to consider a corporate restructuring, or a partial or complete sale of the company.

One of Home Depot's board members is investment banker Kenneth Langone, who has been widely blamed for pushing through a huge pay package for former New York Stock Exchange(NYX - Cramer's Take - Stockpickr) Chairman Dick Grasso.

If you're a CEO, it seems to pay to have Langone on your side.