Rejects Recommendation from Proxy Advisory Firm, ISS FORT
LAUDERDALE, Fla., April 14 /PRNewswire/ -- Woodbridge Equity Fund
LLLP and Levitt Corporation (NYSE:LEV), together "Woodbridge,"
today reiterated its recommendation that shareholders of Office
Depot, Inc. (NYSE:ODP) elect Woodbridge's two highly-qualified
nominees, Mark Begelman and Martin E. Hanaka, to the Office Depot
board of directors at Office Depot's upcoming 2008 annual meeting,
which is scheduled for April 23, 2008. Shareholders can vote their
GOLD proxy card FOR Woodbridge's nominees by Internet, telephone or
mail today. Commenting on the proxy advisory report issued by
RiskMetrics Group's ISS Governance Services (ISS) on April 11,
2008, Alan B. Levan, President of Woodbridge Capital Corporation,
the General Partner of Woodbridge Equity Fund LLLP said, "While ISS
did not recommend for our nominees, we are pleased that ISS has
clearly recognized that change at Office Depot is necessary and
that the status quo is not working. ISS has agreed that Office
Depot is underperforming its peers despite operating in a virtually
identical macro environment. ISS has also noted that Office Depot's
latest strategic plan is aimed at addressing issues the Company has
faced, and unsuccessfully addressed, since 2005. Furthermore, we
are pleased that ISS concurs that Office Depot's executive
compensation is egregious and has recommended shareholders to
withhold votes on five incumbent directors on the compensation
committee. "In addition to those issues raised in the ISS report,
we are also very concerned by the recent losses of key customers
due to overcharging and service issues, the troubling vendor
payment issues, the ongoing investigations into earnings
restatements and what we see as a track record of Steve Odland
managing for short term results. We firmly believe that our
highly-qualified nominees will bring to the board the necessary
leadership, expertise and corporate governance oversight required
to enact real change at the Company. If elected, Mr. Begelman and
Mr. Hanaka will work with the entire board to ensure that
management delivers on strategic plans to turn-around the Company,
address governance issues and protect shareholders' investments,"
concluded Mr. Levan. For additional information regarding
Woodbridge's nominees, go to http://www.rebuildofficedepot.com/.
The full text of Woodbridge's letter appears below: PROTECT YOUR
INVESTMENT, VOTE FOR WOODBRIDGE'S DIRECTOR NOMINEES SIGN, DATE AND
RETURN THE ENCLOSED GOLD PROXY CARD TODAY Dear Fellow Shareholder:
As we get closer to the date of Office Depot's annual meeting on
April 23rd, we urge you to send the management of Office Depot a
strong message by voting for Woodbridge nominees Mark Begelman and
Martin E. Hanaka. If elected, our highly-qualified nominees will
not only provide the necessary expertise and leadership to finally
turn around Office Depot, but will also ensure that the Company's
senior management and board are held accountable for the Company's
performance, instead of allowing them to consistently blame the
macro environment for their failure to deliver on their promises
and rewarding them for their mismanagement and inability to effect
their strategic plans. RECENT ISS RECOMMENDATION CONFIRMS THAT
CHANGE IS NEEDED NOW AT OFFICE DEPOT DUE TO CONTINUED
UNDERPERFORMANCE AND NO SIGN OF PROGRESS IN TURNING AROUND COMPANY
OVER LAST SEVERAL YEARS The report issued by RiskMetrics Group's
ISS Governance Services ("ISS") on April 11, 2008(1) confirms that
change at Office Depot is needed, as we have highlighted
repeatedly. ISS agrees that Office Depot has substantially
underperformed its competitors and has not returned any value to
shareholders over the last several years. The ISS report states:
"The decline in the company's stock price is substantially greater
than that witnessed by its peers. The rapid deterioration in the
company's stock price has adversely impacted Total Shareholder
Return ("TSR") despite approx. $2 billion in share repurchases from
FY2005 to FY2007. We note that ODP underperformed all its peers in
terms of 1-year, 3-year and 5-year total shareholder returns (TSR)
for the period ending March 31, 2008 ... " We have called on Office
Depot to stop blaming the macro economic environment for its dismal
operating results. It is time for the Company to assume
responsibility and stop pointing to the economy for all its
troubles. ISS also agrees that after evaluating competitor
performances, the macro economic landscape does not explain the
Company's declining metrics: "While it is difficult to ascertain
the exact impact of the Florida and California markets on the
financials, we note that 24.8% of ODP and 19.0% of SPLS U.S. based
stores are in California and Florida. Though both ODP and SPLS have
relatively significant exposure to the two states, SPLS' SSS(2) and
margins were not as significantly affected by the regional dynamics
as ODP was." In addition, the ISS report highlights as we have
stated all along that the Company has been facing the same issues
since 2005 without making adequate progress in turning around the
business: "We note that ODP's current strategic initiatives,
announced in response to the deterioration in 2HFY2007 performance,
seem to address similar issues that have affected the company since
2005. This, we believe, lends credibility to the dissidents'
concern that some of the underlying issues facing the company have
yet to be fully resolved." The ISS report goes on to list the
ongoing issues at the Company including in the supply chain,
integration and information technology areas and concludes: "Hence,
a comparison of the issues facing the company in 2005 with those
that it aims to resolve now indicates that the company has been
affected by similar issues for a considerable time." We believe
that it is imperative that there be fresh representation on the
Company's board. The status quo cannot go on any longer. If the
incumbent directors are re-elected, we firmly believe that
shareholders will be hearing about the same supply chain, IT and
integration issues three years from now with no progress yet again.
ISS states: " ... we believe the dissidents have met the burden of
proof that change is warranted at the company, and Mr. Begelman and
Mr. Hanaka have relevant industry experience ... we believe that
the dissidents have made a valid case for greater management
oversight ... " In addition to those issues raised in the ISS
report, as a shareholder, Woodbridge is also very concerned by the
recent losses of key customers such as the State of Georgia due to
overcharging and service issues, the troubling vendor payment
issues, the ongoing investigations into earnings restatements and
what we see as a track record of Steve Odland managing for short
term results. Both Mark Begelman and Martin E. Hanaka are
highly-experienced executives with over 70 years of combined
relevant retail merchandising expertise, including in the office
supply retailing space and directly at Office Depot and its primary
competitor Staples. We are confident that our nominees have the
skill and commitment to quickly effect change at the Company and
restore Office Depot as a premier office supply retailer once
again. Mr. Begelman co-founded Office Club, an office supply
retailer, in 1986 and eventually merged it with Office Depot.
Following the merger, Mr. Begelman served as President and Chief
Operating Officer of Office Depot from 1991 to 1995. During this
time, Office Depot's revenues grew from approximately $900 million
to $5.5 billion and the store base grew from approximately 127
stores to 460 stores. Furthermore, Office Depot's stock split three
times. After leaving Office Depot in 1995, Mr. Begelman founded
Mars Music, a musical instrument retailer growing to over 52
superstores, which he led until 2002. Following his time at Mars
Music, Mr. Begelman served as President of MDB222 Inc., a
management consulting firm, and currently holds operating roles at
BankAtlantic. Mr. Hanaka was the President and Chief Operating
Officer of Staples, Inc. from 1994 to 1997 and served as a director
from 1996 to 1997. Staples' share price increased 249% from when
Mr. Hanaka joined the company on August 15, 1994 to when he left on
October 20, 1997. Revenues grew 159% to $5.2 billion from $2.0
billion during the 1994-1997 period. In addition, operating margins
rose by 110 basis points to 5.2% in 1997 from 4.1% in 1994 and net
income climbed 228% to $131 million from $40 million in the same
period. Furthermore, free cash flow increased to positive $170
million from negative $69 million in 1994. From 1998 until 2003,
Mr. Hanaka was the Chief Executive Officer of The Sports Authority,
Inc., where he served as Chairman of the Board from 1999 until
2004. At The Sports Authority, Mr. Hanaka led the very successful
turnaround of the $1.5 billion retailer. Currently, he is the
interim Chief Executive Officer and non-executive Chairman of the
Board of Golfsmith International Holdings, Inc., a golf products
retailer, and he is also a director of Trans World Entertainment
Corp., one of the largest specialty music and video retailers in
the United States. We believe this depth of experience and track
record of working with companies in growth stages, as well as those
facing challenging times, will provide the board with the
perspective required to help address Office Depot's ongoing
problems. ISS REPORT RECOMMENDS SHAREHOLDERS TO WITHHOLD VOTES FOR
FIVE INCUMBENT DIRECTORS GIVEN EGREGIOUS EXECUTIVE COMPENSATION We
are pleased that ISS agrees that Office Depot's executive
compensation is out of line with its underperformance and its
peers. We have raised the issue of executive compensation in our
previous letters to you and clearly ISS has also found it
unacceptable. As such, ISS is recommending shareholders to withhold
votes for five incumbent directors on the compensation committee,
including Lee A. Ault, David W. Bernauer, Abelardo E. Bru, Marsha
J. Evans, and W. Scott Hedrick. ISS states: "In conclusion, ISS is
concerned with the special retention grant made to Mr. Odland even
though 50 percent of the award has performance-vesting conditions.
Mr. Odland has been with the company for two years and he has
received two special equity awards of large magnitude. The special
retention grant seems to ignore the fact that he has an employment
agreement with the company. Therefore, ISS recommend shareholders
WITHHOLD from the Compensation Committee members namely, Lee A.
Ault III, David W. Bernauer, Abelard[o] E. Bru, Marsha J. Evans,
and W. Scott Hedrick." We find the following amount of compensation
awarded to Steve Odland to be outrageous: "Mr. Odland joined the
company on March 11, 2005 to be the Chairman & CEO. Pursuant to
his employment agreement, he received 300,000 time-vested
restricted shares, 300,000 performance-based restricted shares, and
2,000,000 standard and performance-vested stock options. The
estimated grant value totaled approximately $33 million." Our
nominees will work to ensure that the Company's compensation
policies reflect performance and the value created for
shareholders. Such lack of oversight should no longer be tolerated
and a disciplined, fair approach to executive compensation is
required. WE ARE NOT THE ONLY ONES THAT BELIEVE THAT FRESH
LEADERSHIP IS NECESSARY ISS also highlights Wall Street's lack of
confidence in the current management team and its capabilities:
"Our review of Wall Street research indicates general skepticism
about the management's ability to successfully execute its
strategic plan. According to Reuters Knowledge database, of the 15
analysts who cover the stock, 13 have Hold, 1 has Outperform and 1
has a Buy rating on ODP. These ratings are also reflected in the
mean target price estimates, which have declined from $40.11 per
share 12-months ago and $28.6 per share 6-months ago, to $14.1 per
share presently." It is time for new leadership and representation
on the Company's board. We are not the only ones calling for change
to execute a successful turnaround of the Company! We urge you to
sign, date, and return the enclosed GOLD proxy card today with a
vote FOR our nominees. If you have any questions, or need
assistance in voting your shares, please call our proxy solicitor,
Georgeson Inc., toll free at 877-651-8856. For more information
about our nominees and their plans for restoring Office Depot's
value, please visit: http://www.rebuildofficedepot.com/. Sincerely,
Woodbridge If your shares are registered in your own name, please
sign, date and mail the enclosed GOLD Proxy Card to Georgeson Inc.
in the self-addressed, postage- paid envelope provided today. If
your shares are held in the name of a brokerage firm, bank nominee
or other institution, please sign, date and mail the enclosed GOLD
Voting Instruction Form in the self-addressed, postage-paid
envelope provided. Remember--only your latest dated proxy will
determine how your shares are to be voted at the meeting. If you
have any questions or need assistance in voting your shares, please
contact our proxy solicitor: 199 Water Street, 26th Floor New York,
NY 10038 Shareholders Call Toll Free: 877-651-8856 Woodbridge
Equity Fund LLLP Woodbridge Capital Corporation, a wholly-owned
subsidiary of Levitt Corporation, is the general partner of, and
Levitt Corporation is the limited partner of, Woodbridge Equity
Fund LLLP. Woodbridge Equity Fund LLLP is a beneficial owner of
Office Depot, Inc. (the "Company") securities and a participant in
the proxy solicitation. Levitt Corporation Levitt Corporation,
directly and through its wholly-owned subsidiaries, historically
has been a real estate development company. Going forward, Levitt
Corporation intends to pursue acquisitions and investments
opportunistically within and outside the real estate industry.
Additional Information Levitt Corporation and Woodbridge Equity
Fund LLLP (together, "Woodbridge"), and Mark Begelman and Martin E.
Hanaka (together, the "Nominees" and, together with Woodbridge, the
"Proponents") filed a proxy statement with the Securities and
Exchange Commission (the "SEC") on March 27, 2008 containing
information about the solicitation of proxies for the 2008 Annual
Meeting of the shareholders of the Company. Investors and security
holders of the Company are urged to read the proxy statement
because it contains important information. Detailed information
relating to the Proponents and Alan B. Levan, John E. Abdo and Seth
Wise, participants in the solicitation of proxies from Company
shareholders, can be found in the proxy statement filed by the
Proponents. The proxy statement and other relevant documents
relating to the solicitation of proxies by the Proponents are
available at no charge on the SEC's website at http://www.sec.gov/.
In addition, the Proponents will provide copies of the proxy
statement and other relevant documents without charge upon request.
Requests for copies should be directed to the Proponent's proxy
solicitor, Georgeson Inc. at 1-877-651-8856. Forward-Looking
Information Some of the statements contained herein include
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that involve substantial risks and uncertainties.
Some of the forward-looking statements can be identified by the use
of words such as "anticipate," "believe," "estimate," "may,"
"intend," "expect," "will," "should," "seeks" or other similar
expressions. Forward-looking statements are based largely on
management's expectations and involve inherent risks and
uncertainties. In addition to the risks identified below, you
should refer to Levitt Corporation's and the Company's periodic and
current reports filed with the SEC for specific risks which could
cause actual results to be significantly different from those
expressed or implied by those forward-looking statements. Any
number of important factors which could cause actual results to
differ materially from those in the forward-looking statements
include: the costs and disruption to Levitt Corporation's or the
Company's business arising from the proxy contest and related
litigation; the diversion of management time to issues related to
the proxy contest; the ability to successfully solicit sufficient
proxies to elect the Nominees to the board of directors of the
Company; the ability of the Nominees to influence the other
directors and the management of the Company and to improve the
corporate governance and strategic direction of the Company; risk
factors associated with the business of Levitt Corporation, as
described in Levitt Corporation's periodic reports filed with the
SEC, which may be viewed free of charge on the SEC's website at
http://www.sec.gov/; and risk factors associated with the business
of the Company as described in the Company's Form 10-K for the
fiscal year ended December 29, 2007, and in other periodic reports
of the Company, which are available free of charge on the SEC's
website at http://www.sec.gov/. Accordingly, you should not rely on
forward-looking statements as a prediction of actual results. (1)
Permission to excerpt was neither sought nor obtained. (2) Same
store sales Contacts: Steve Lipin/Nina Devlin Brunswick Group
212.333.3810 Investors: Georgeson 877-651-8856 DATASOURCE:
Woodbridge Equity Fund LLLP CONTACT: Steve Lipin or Nina Devlin,
both of Brunswick Group for Woodbridge Equity Fund LLLP; or
Investors, Georgeson, +1-877-651-8856 Web site:
http://www.rebuildofficedepot.com/
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