Woodbridge fires back at Office Depot, asks shareholders to vote for investor's nominees

By Lisa Kerner

Charlotte, N.C., April 9 - Office Depot, Inc. investors Woodbridge Equity Fund LLLP and Levitt Corp. (together, Woodbridge) urged fellow stockholders to elect Woodbridge's nominees, Mark Begelman and Martin E. Hanaka, to the Office Depot board of directors on April 23.

Begelman is former president and chief operating officer of Office Depot, and Hanaka is the former CEO of Sports Authority, Inc.

As previously reported, Office Depot said that both Begelman and Hanaka were considered and rejected for executive positions with the company.

In a lengthy open letter to shareholders, Woodbridge expressed frustration at management's use of the macroeconomic environment "as their scapegoat for their persistent underperformance."

Woodbridge also raised concerns about the ability of Office Depot's board and management to execute on the company's recently announced long-range strategic plan.

According to Woodbridge's letter citing several news sources, Office Depot's poor customer service has led to a canceled contract with the state of Georgia and investigations into other state contracts.

Woodbridge cited declining earnings, market share and free cash flow as evidence a change is needed at Office Depot.

"Office Depot has been underperforming Staples on virtually all key retailing metrics for over five years, across good economic times and bad!" the letter said.

Woodbridge took issue with former chief executive officer David Fuente's 21-year tenure on the Office Depot board, noting it was well beyond the company's guideline limiting board member terms to 10 years.

"Mr. Fuente received $8.6 million in severance and has continued to serve on the board after being replaced as CEO in 2000 following the company's disappointing results," Woodbridge said in the letter.

On March 31, Office Depot asked its shareholders to vote for the company's director nominees at its 2008 annual meeting and to reject the "unqualified" dissident nominees proposed by Woodbridge.

Office Depot's nominees are its current chairman and CEO, Steve Odland, and Fuente.

According to Office Depot, from March 2005 to March 2007, its earnings per share grew 62% and its share price increased 70%. Odland joined the company in 2005.

Office Depot noted that Alan Levan, Levitt chairman and CEO, and his affiliates reported owning less than 1.1% of the company's outstanding common stock, with all but 200 of their shares acquired during the week before the investors launched their proxy contest, a prior news release said.

In its letter to shareholders, the Delray Beach, Fla., office products company said Levitt's share price has dropped some 93% over the past three years and the company's wholly owned subsidiary, Levitt and Sons, is in bankruptcy.

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