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Office Depot execs get bonuses to stay [Sun Sentinel :: ]
[March 26, 2014]

Office Depot execs get bonuses to stay [Sun Sentinel :: ]


(South Florida Sun Sentinel (FL) Via Acquire Media NewsEdge) March 26--Office Depot paid six-figure bonuses to retain top executives before and after its merger with OfficeMax, according to newly filed documents.

The $1.2 billion merger was closed in November, and new chief executive Roland Smith has been forming his top executive team, naming people from both companies to top jobs as well as those from the outside.

The bonuses -- as much as $1.5 million over three years -- are only a portion of the executives' total compensation, which includes annual salary, performance bonuses and stock awards. Only compensation to the top 10 executives is disclosed in the proxy filing with U.S. Securities and Exchange Commission.



"Retention awards to company executives are an accepted practice in such situations to ensure business continuity," said Karen Denning, spokeswoman for Office Depot, based in Boca Raton.

Elisa Garcia, chief legal officer at Office Depot, received a $1.5 million bonus over three years, from 2011 to 2013. The bonus is not included in her total direct compensation of $2.6 million in 2013, according to the filing.


In December, Smith named Garcia to his executive committee, and she remains the company's general counsel.

Before the merger, $500,000 retention bonuses were awarded to Michael Allison, then executive vice president for human resources, and Robert Moore, executive vice president for marketing and merchandising. The executives "were among the few executive officers without retention agreements in place at the time of the merger," the securities filing noted.

Allison was named Office Depot's "chief people officer" in December, while Moore left the company at that time. But both are eligible for the retention bonuses, which vest on June 30, the filing says.

Moore also received $2.7 million in severance in January.

OfficeMax's former co-chief financial officer, Deborah O'Connor, also has a new job: senior vice president of integration for Office Depot, but that job was not technically equal to the position she had occupied. That triggered provisions that made her eligible for extra pay, said Aaron Boyd, director of corporate governance for Equilar, an executive compensation firm.

O'Connor received a $162,500 retention bonus from her OfficeMax agreement after the merger closed and still could receive another $162,500 -- the other half of bonuses awarded. She also is eligible for a retention payment of $150,000 if she remains actively employed with Office Depot until June 30, according to the securities filing.

Office Depot, the nation's No. 2 office-supply retailer, chose Boca Raton as its headquarters in mid-December after the merger. Since then, the combined headquarters staff has been reduced by 35 percent, the company has said.

Office Depot has notified the state of Illinois that it plans to close the OfficeMax headquarters in Naperville, Ill., a Chicago suburb, by early 2015, which will result in the layoff of 1,600 employees.

Boyd said companies going through mergers sometimes grant retention awards "to ensure that key management pieces are in place to help with the transition." He said stability at the top can be valuable for companies as they make changes.

Office Depot had "a lot of overlapping positions with the two companies being fairly similar," he said.

Liang Feng, analyst for Morningstar, said he believes investors would support the extra payments, for the long-term prospects of the struggling office-supply retailer. Office Depot posted losses for 2013 and its fourth-quarter ended Dec. 28.

"You don't want everybody looking for their next job immediately. That's too much disruption," Feng said.

Severance packages for departing top executives also are disclosed in the filing.

Former Office Depot CEO Neil Austrian, who left the company in December, will receive a severance payment of $7.9 million to be paid on May 13, according to the SEC filing. He also will receive a $1.6 million performance cash bonus from 2012 on the same date.

The filing also reveals that former OfficeMax CEO Ravi Saligram -- who took his name off the CEO short list in September -- left the company in 2013 with compensation including a $920,000 performance bonus. He also received a severance package of $3.68 million.

Michael Newman, former chief financial officer of Office Depot, lost his job in December and received severance of $2.8 million, the filing said.

The filing said the company will hold its annual meeting at 10 a.m. April 24 at the Boca Raton Marriott hotel. Last year's annual meeting was held in August after a special meeting of shareholders in July to vote on the merger.

[email protected] or 561-243-6650 ___ (c)2014 the Sun Sentinel (Fort Lauderdale, Fla.) Visit the Sun Sentinel (Fort Lauderdale, Fla.) at www.sun-sentinel.com Distributed by MCT Information Services

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