Office Depot Governance Failures

An Office Depot store in Fremont, California.

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Office Depot (ODP) recently bid a tearful good-bye to its delinquent Chairman and CEO Steve Odland. The good-bye was so tearful that despite wrong doings relating to Reg FD and misleading investors the golden parachute was allowed to deploy. Steve Odland has been allowed to make millions of dollars while leaving behind a regulatory disaster.

Lets look at the board of directors and their backgrounds. They are ultimately to blame. The data presented below is from Office Depots investor relations section of their website. This is Office Depot’s Wall of Shame:

Lee Ault III: Chair of mutual funds managed by Capital Research & Management

Neil Austrian: Used to be President and COO of the NFL

Justin Bateman: Partner BC Partners New York office. He claims a due diligence background from Pricewaterscooper

David Berman: Retired chairman of Walgreens

David Fuente: Retired chair of Office Depot

Brenda Gaines: Retired President & COO of Diners Club

Myra Hart: Member of Harvard B School senior faculty

W Scott Hedrick: Former head of Staples. co-exists with Lee Ault III at American Funds Target Date Retirement Services

Marsha Evans: Former Rear Admiral United States Navy. On the boards of Lehman and Weight Watchers

Kathleen Mason: President and CEO of something called the Tuesday Morning Club

James Rubin: BC Partners

Raymond Svider: BC Partners

Thomas Colligan: Vice Dean Wharton School Aresty Institute of Executive Education 

This failure is attributable to the above.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

Office Depot Disclosure Challenged?

Office Depot at 4001 Durham-Chapel Hill Boulev...
Image via Wikipedia

Office Depot (ODP) fired the chairman of their board and CEO, Steve Odland. It was the only plausible action available after the Securities and Exchange Commission found him personally guilty of breaking Reg FD. Watch for the shareholder rights lawsuits to come.

The press release sounded like a tearful farewell. you know the board did not have their heart in it. Therefore what compliance culture will they have in the future? To distract investors from executive malfeasance or what could be described as very bad judgement in the executive suite, the board signalled earnings and just came out and said we will beat expectations. Desperate tactic so that the stock does not drop. Actually they got a nice initial bounce north of $5.00 and then watched the stock slide off.

It is about the culture. Steve Odland was the head man for a long time. You have to believe his value system permeated the executive suite. Has all the cancer truly been removed? The competition is just licking its chops savouring an extra big lunch soon. Private Equity Capital is considering a take over because management is not that smart and needs a shake up.

Heidrick and Struggles is doing the executive search for a permanent replacement. If they call you do you really want to go to lunch?

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.