Big payday for Office Depot CEO
Executive who took over in late 2013 could receive $39 million if Staples completes proposed merger.
BOCA RATON — Office Depot Chief Executive Roland Smith could receive $39 million if Staples completes its deal to combine the Fortune 500 retailers.
Smith took the helm at Office Depot in late 2013, after Office Depot bought OfficeMax. His golden parachute ballooned after Staples said last week it would pay a premium for Office Depot — an announcement that boosted shares of Office Depot (NYSE: ODP) 22 percent in one day.
Smith’s stock payout could total $32 million, said Aaron Boyd, director of governance research at Equilar, an executive compensation firm in Redwood City, Calif.
If the merger receives regulatory and shareholder approval, Smith would take immediate possession of 1.2 million restricted shares and 1.2 million shares as a reward for the company’s performance, Office Depot told the Securities and Exchange Commission last year. At Wednesday’s price of $9.55 a share, those shares are worth about $23 million.
Smith also could cash in options to buy 1.5 million shares at $5.21 each, which would bring a profit of $6.5 million at Wednesday’s price.
Boyd said he also count- ed the value of Staples shares Smith would receive. But, Boyd said, the precise amount of Smith’s golden parachute is uncertain because it’s unclear how many performance-based shares he’ll receive.
Smith’s severance also would include twice his annual salary of $1.4 million, plus twice his bonus. Smith’s bonus can vary widely based on his performance. In 2013, Office Depot paid him a bonus of $2.35 million.
“By any measure, $39 million for a little more than a year’s work is excessive compensation,” said Brandon Rees of the AFL-CIO.
If $39 million is the final number, Smith’s exit package would be more generous than those received by his predecessors when Office Depot bought OfficeMax. After that merger, former co-CEO Neil Austrian got $22 million in severance and stock awards, and co-CEO Ravi Saligram was paid $13 million, according to Office Depot’s proxy statement.
Staples (Nasdaq: SPLS) of Framingham, Mass., has offered $6.3 billion for Boca-based Office Depot. The two retailers have shrunk as Amazon and Wal-Mart push onto their turf. The deal still must win antitrust approval from the Federal Trade Commission.
If the marriage happens, the combined company would be headquartered in Massachusetts, and Staples CEO Ron Sargent will be the CEO of the combined company.