Office Depot (ODP -0.78%) has reached a settlement agreement with its largest shareholder, Starboard Value, the company announced yesterday.
As part of that agreement, three Starboard nominees -- Cynthia Jamison, Jefferey Smith, and Joseph Vassalluzzo -- will join the Office Depot board of directors upon the resignations of current directors Marsha J. Evans and W. Scott Hedrick tomorrow, one day after the company's annual shareholders' meeting.
The board will be expanded to 11 members to make room for the additional director. Starboard has also agreed to support Office Depot's director nominees.
"We are very pleased to have reached an agreement with Starboard which we believe is in the best interests of all our shareholders," said Office Depot Chairman and CEO Neil Austrian in the company's statement. "The resolution will allow us to continue our progress and momentum in our proposed merger with OfficeMax."
Office Depot is in the middle of a $1.2 billion merger with rival OfficeMax and executives have said Starboard's push to oust some of board members would impede the search for a CEO to lead the company. Evans was on the committee tasked with finding a new chief executive.
Office Depot's announcement of an agreement came after its announcement earlier that same day that no agreement had been reached because Office Depot could not "reach a good-faith compromise" with Starboard Value LP.
Starboard's take on that earlier failure to reach agreement was Office Depot being "entirely unwilling to entertain any settlement offer that involved the replacement of three incumbent directors with three of Starboard's highly qualified nominees."
The compromise that worked seems to be Office Depot only losing two of its directors while Starboard added three, mandating the increase in board size.
-- Material from The Associated Press was used in this report.
