Woodbridge Determines Not to Nominate Candidates for Election to Office Depot Board
18 Aprile 2008 - 1:24AM
PR Newswire (US)
Urges Shareholders to Withhold Votes from Company Nominees FORT
LAUDERDALE, Fla., April 17 /PRNewswire/ -- Woodbridge Equity Fund
LLLP and Levitt Corporation (NYSE:LEV), together "Woodbridge,"
today announced that they no longer intend to nominate candidates
for election to the board of directors of Office Depot (NYSE:ODP)
at the Company's upcoming annual meeting on April 23, 2008.
Woodbridge also urges Office Depot shareholders to withhold votes
from the Company's nominees. Alan B. Levan, President of Woodbridge
Capital Corporation, the General Partner of Woodbridge Equity Fund
LLLP, commented: "Our objective in waging this proxy fight was to
provide a strong wake-up call to Office Depot's board and
management team that the current governance, oversight and overall
performance of the Company are unacceptable and that steps must be
taken to increase shareholder value. We believe we have been
successful in delivering that message, as well as drawing attention
and scrutiny to the unacceptable performance of Office Depot. "As
Office Depot shareholders, we hope that the board and management
take the necessary steps to deliver value for all shareholders.
Since we are withdrawing our nominees, we recommend all
shareholders withhold their votes for the Office Depot directors in
order to send the strongest message possible to this management
team and board that Office Depot's performance, left unchanged, is
unacceptable," continued Mr. Levan. In making its determination not
to proceed with the nominations, Woodbridge took into account the
fact that the proxy advisory firms have expressed strong
reservations about the performance of the current board and
management. Accordingly, the proxy advisory firms have recommended
that shareholders either withhold votes, or suggested that in the
absence of the proxy contest they would have recommended that
shareholders withhold votes, from a significant number of the
Company's nominees. Our decision will make it easier for Office
Depot shareholders to express their dissatisfaction with the
current Office Depot board by withholding their votes from the
Company's nominees and Woodbridge urges all Office Depot
Shareholders to do so. "Rather than continue this costly battle we
have decided not to propose our candidates for election at the
meeting. However, we hope that Office Depot's board and management
heed our call for action, as well as the calls for change delivered
by the proxy advisory firms," continued Mr. Levan. Woodbridge's
withdrawal does not change the fact that the Company continues to
perform poorly, as most recently evidenced by Standard & Poor's
decision to lower Office Depot's debt rating to junk bond status.
In fact, each proxy advisory firm echoed Woodbridge's criticisms of
Office Depot and the need for change: RiskMetrics Group's ISS
Governance Services ("ISS"):(1) -- "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...." -- "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." -- "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." -- "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 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...." PROXY Governance:(3) -- "According to
PROXY Governance's performance analysis, the company has
underperformed peers over the past five years; the company ranks at
the 40th percentile relative to the S&P 1500 compared to peers
at the 46th percentile, and is declining relative to peers at a
rate of 3 percentile points per year." -- "The average three-year
compensation paid to the CEO is 243% above the median paid to CEOs
at peer companies and the average three-year compensation paid to
the other named executives is 3% below the median paid to
executives at peer companies." -- "We have concerns regarding the
company's CEO compensation, which is high compared to peers and
given the company's financial performance relative to peers." --
"While we recognize that part of the award is directly related to
strong 2006 performance and the remainder is structured as a
retention package with a strong performance basis, we would not
expect to see these levels of compensation going forward,
particularly without correspondingly strong shareholder returns."
-- "A 67% loss in share value over just nine months is undeniably
striking. If Odland's execution on his retailing initiatives cannot
claw back a meaningful portion of those losses, the board may well
be required -- as we believe both the board and the CEO are keenly
aware -- to take other actions or face a more substantial challenge
at the next annual meeting." Glass Lewis & Co.(4) -- "We note
that, since mid-2007, the Company's market value has declined by
approximately 64.4%. Though the broader industry has been impacted
by the same macro conditions effecting Office Depot, we note that
its shares underperformed the S&P 500 Special Retail Index by
more than 50.0% during the same period. For the period between July
2007 and April 2008, the S&P 500 Specialty Retail Index
declined approximately 25.0% while the Company's shares fell
approximately 60.0%" -- "In light of the Company's performance
troubles in the second half of 2007, we are concerned that the
Company paid bonuses to Mr. Odland of $10.0 million in addition to
$7.0 million in long term equity grants in 2007. Further, we are
hard pressed to understand the compensation committee's rationale
for its $5.0 million long term equity grant to Mr. Odland in 2008.
We note that Office Depot received an F grade in the Glass Lewis'
Pay-for-Performance model for 2007." -- "It is clear that Office
Depot is struggling and, in our opinion, the Dissident has raised a
number of valid concerns." -- "... the directors of Office Depot
should consider themselves to have been put on notice. In the
absence of the Woodbridge's contest, given the above mentioned
audit and compensation committee issues with Office Depot, Glass
Lewis would recommend that shareholders withhold support from a
majority of the directors on the current board. ... Though the
board may get an unearned passed here, time will tell whether its
directors proactively address the Company's issues and effect
positive change for shareholders. If that does not occur, investors
should not be surprised to see further shareholder activism at the
Company." (1) Permission to excerpt was neither sought nor
obtained. (2) Same store sales. (3) Permission to excerpt was
neither sought nor obtained. (4) Permission to excerpt was neither
sought nor obtained. "While Woodbridge was criticized by many of
the proxy governance firms for not offering an operating plan, it
is our firm contention that the right management team must
orchestrate and execute their own operating plan. It is the board's
responsibility to provide guidance and oversight and hold
management responsible for execution in a timely manner," said Mr.
Levan. "It was and still is Woodbridge's recommendation that Office
Depot form an independent board 'Strategic Planning Committee' as
well as a board 'Operating Committee' that has greater oversight
and holds management accountable for their actions." Under Office
Depot's Bylaws, the election will no longer be a contested election
and the directors should be elected by a majority voting standard
in accordance with the terms of the Company's Bylaws. IMPORTANT
NOTICE If you voted on a Gold proxy card or submitted a Gold voting
instruction form to your bank or broker, your card will be voted in
accordance with your instructions; provided, that your shares will
not be voted for the election of Mark Begelman or Martin Hanaka
because Woodbridge will not be nominating them or any substitute
nominees for election at the annual meeting. For example, if you
voted on the Gold proxy card or Gold voting instruction form in
favor of the election of the ten Office Depot nominees other than
Steve Odland or David Fuente, your shares will be voted in favor of
the election of those ten nominees and in accordance with your
instructions with respect to the approval of the 2008 Office Depot,
Inc. Bonus Plan for Executive Management Employees and the
ratification of the selection of Deloitte & Touche LLP as the
Company's independent registered public accounting firm for the
year 2008. If you voted to withhold your vote from one or more of
the Office Depot's ten nominees other than Steve Odland and David
Fuente, your shares will be voted accordingly. If you submitted a
Gold proxy card or Gold voting instruction form you may change your
vote by submitting the Company's White proxy card in accordance
with the instructions in Office Depot's proxy statement or by
submitting a White voting instruction form to your bank or broker.
You may also vote by toll-free telephone or Internet in accordance
with the instructions contained in Office Depot's proxy statement.
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 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 previous 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. 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, +1-212-333-3810; or
Investors, Georgeson, +1-877-651-8856; all for Woodbridge Equity
Fund LLLP
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