Yesterday, Office Depot (NASDAQ:ODP) announced that it will increase the size of its board following its shareholder meeting on Aug. 21 to include "any of the three Starboard [Value] nominees recommended by proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis," only if current Office Depot board and CEO selection committee members Tom Colligan and Marsha Evans are re-elected. That didn't sit well with Starboard, the investment advisory firm announced today.
Starboard Value owns approximately 14.6% of Office Depot's outstanding stock, making it Office Depot's largest shareholder, and it's unhappy with current management, the 2010 appointment of current chairman and CEO Neil Austrian, and what it considers an inadequate CEO selection committee.
Managing member, chief investment officer, and CEO of Starboard Jeffrey Smith was quoted in the company's statement saying, "It is neither the right decision nor proper governance to insist on keeping less qualified and underperforming Board members just because the Board has chosen to trust these people with an incredibly important decision-making position on the CEO Selection Committee."
Speaking to the appointment of Austrian, advisory firm ISS echoed Starboard's concerns, saying, "In 2010, the [Office Depot] board thought it appropriate that Austrian serve on the CEO selection committee and, in effect, help select himself."
Today's statement from Starboard also noted the concerns over Office Depot CEO selection committee member Evans: "Given the significant lack of oversight provided by Ms. Evans during her tenure at Lehman [2006 to 2008], particularly in the area of risk management, we question her continued service on any public company board."