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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Office Depot, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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OFFICE DEPOT, INC.
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FLORIDA 33445
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of Office Depot, Inc. will be held
on May 18, 1995, at 10:00 a.m. EDT, at Embassy Suites Hotel, 661 N.W. 53rd
Street, Boca Raton, Florida 33487, for the following purposes:
1. To elect nine directors to hold office until the next annual
meeting of stockholders or until their successors have been
elected and qualified;
2. To adopt the Restated Certificate of Incorporation of Office
Depot, Inc.;
3. To approve the Office Depot, Inc. Omnibus Equity Plan;
4. To approve the 1994-1998 Office Depot, Inc. Designated
Executive Incentive Plan, including amounts payable thereunder
with respect to the 1994 fiscal year;
5. To ratify the appointment of Deloitte & Touche LLP as
independent public accountants for the fiscal year ended
December 30, 1995; and
6. To transact any other business that may come before the
meeting.
Stockholders of record as of the close of business on April 7, 1995
are entitled to notice of and to vote at the annual meeting of stockholders or
any adjournment thereof.
By order of the Board of Directors,
Barry J. Goldstein
Secretary
April 20, 1995
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER YOU OWN. THEREFORE, EVEN IF YOU EXPECT TO ATTEND THE MEETING,
PLEASE SIGN AND RETURN YOUR PROXY IN THE ENCLOSED RETURN ENVELOPE PROMPTLY.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OF
OFFICE DEPOT, INC.
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FLORIDA 33445
TELEPHONE (407) 278-4800
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board") of Office
Depot, Inc. ("Office Depot" or the "Company") for use at the annual meeting of
the Company's stockholders to be held on May 18, 1995, at 10:00 a.m. EDT, at
Embassy Suites Hotel, 661 N.W. 53rd Street, Boca Raton, Florida 33487, and at
any adjournment of that meeting (the "Annual Meeting"). The purpose of the
Annual Meeting is to elect nine directors to the Board, to adopt the Restated
Certificate of Incorporation of Office Depot, Inc. (the "Restated
Certificate"), to approve the Office Depot, Inc. Omnibus Equity Plan (the
"Omnibus Equity Plan"), to approve the 1994-1998 Office Depot, Inc. Designated
Executive Incentive Plan (the "Designated Executive Plan"), including amounts
payable thereunder with respect to the 1994 fiscal year, and to ratify the
appointment of Deloitte & Touche LLP as independent public accountants for the
fiscal year ending December 30, 1995.
If a proxy in the form distributed by the Company is properly executed
and returned to the Company, the shares represented by that proxy will be voted
at the Annual Meeting. Where a stockholder specifies a choice, the proxy will
be voted as specified. If no choice is specified, the shares represented by
the proxy will be voted for the election of all nominees, for adoption of the
Restated Certificate, for the approval of the Omnibus Equity Plan, for the
approval of the Designated Executive Plan, including payment of amounts due
thereunder with respect to the 1994 fiscal year, and for the ratification of
the appointment of Deloitte & Touche LLP as independent public accountants for
the Company.
The Company's management does not know of any matters other than those
discussed in this Proxy Statement that will be presented at the Annual Meeting.
If other matters are presented, all proxies will be voted in accordance with
the recommendations of the Company's management.
Solicitation of proxies will be made initially by mail. The Company's
directors, officers and employees may also solicit proxies in person or by
telephone without additional compensation. In addition, proxies may be
solicited by certain banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries who will mail material to or otherwise
communicate with the beneficial owners of shares of the Company's Common Stock.
The Company has also engaged Corporate Investor Communications, Inc. to assist
in communicating with these institutions and forwarding solicitation materials
for a fee of $5,500 plus the reimbursement of expenses. All expenses of
solicitation of proxies will be paid by the Company.
A proxy may be revoked at any time prior to its exercise at the Annual
Meeting by written notice delivered to the Corporate Secretary of the Company
prior to the Annual Meeting or by attending the Annual Meeting and voting by
ballot.
Holders of record of Common Stock as of the close of business on April
7, 1995, will be entitled to vote at the Annual Meeting. As of April 7, 1995,
there were __________________ shares of Common Stock issued and outstanding.
Each share of Common Stock is entitled to one vote on each matter to come
before the Annual Meeting. Pursuant to Delaware law, abstentions are treated
as present and entitled to vote and thus have the effect of a vote against a
matter. A broker non-vote on a matter is considered not entitled to vote on
that matter and thus
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(i) is not counted in determining whether a matter requiring approval of a
majority of the shares present and entitled to vote has been approved or
whether a plurality of the shares present and entitled to vote has been voted
and (ii) has the effect of a vote against a matter requiring approval of a
majority of all shares outstanding.
This Proxy Statement and the accompanying proxy are being sent to the
Company's stockholders on or about April 20, 1995.
ELECTION OF DIRECTORS
The Nominating Committee of the Board has nominated the following nine
persons for election to the Board at the Annual Meeting:
Mark D. Begelman John B. Mumford
Denis Defforey Michael J. Myers
David I. Fuente Peter J. Solomon
W. Scott Hedrick Cynthia Cohen Turk
Alan L. Wurtzel
Directors are to be elected at the Annual Meeting to serve until the
next Annual Meeting of Stockholders or until their successors are elected and
qualified. The nominees are willing to be elected and to serve. In the event
that any nominee is unable to serve or is otherwise unavailable for election,
which is not now contemplated, the incumbent Board may or may not select a
substitute nominee. If a substitute nominee is selected, all proxies will be
voted for the person selected. If a substitute nominee is not so selected, all
proxies will be voted for the election of the remaining nominees. Proxies will
not be voted for a greater number of persons than the number of nominees named.
Directors will be elected by a plurality of the shares present and
voting at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
ADOPTION OF THE RESTATED CERTIFICATE
In April 1995, the Board approved amending the Company's current
Certificate of Incorporation by restating it in the form of the Restated
Certificate of Incorporation of Office Depot, Inc. (the "Restated Certificate")
and directed that the Restated Certificate be submitted to the Company's
stockholders for approval at the Annual Meeting. The purpose of the Restated
Certificate is to increase the authorized capital stock of the Company. The
full text of the Restated Certificate appears as Annex A to this Proxy
Statement, and the new text therein appears in italics. The summary of the
Restated Certificate that appears below is qualified in its entirety by
reference to the full text of the Restated Certificate.
The Company is currently authorized to issue 200,000,000 shares of
Common Stock, par value $0.01 per share (the "Common Stock"), and 1,000,000
shares of Preferred Stock, $0.01 par value per share (the "Preferred Stock").
As of April 7, 1995, there were ___________ shares of Common Stock issued and
outstanding, ___________ shares of Common Stock reserved for issuance under the
Company's employee benefit plans, 16,580,313 shares of Common Stock reserved
for issuance under the Liquid Yield Option Notes issued by the Company and no
shares of Preferred Stock issued and outstanding. The Restated Certificate
increases the authorized number of shares of Common Stock from 200,000,000 to
400,000,000.
Upon issuance, any newly issued shares of Common Stock will have
voting and other rights identical to the existing shares of Common Stock.
Nonetheless, the availability of additional shares of Common Stock may upon
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issuance make it more difficult for a third party to gain control of the
Company by diluting the ownership of such party. The effect of rendering a
change in control more difficult may be to adversely impact stockholders who
wish to participate in such a transaction. The Board is not aware, however, of
any particular effort to gain control of the Company. Cumulative voting is not
provided for in the current certificate of incorporation, the Restated
Certificate or the Company's bylaws.
The Board recommends that the Restated Certificate be adopted because
it believes that the number of shares of Common Stock available for issuance
does not provide the Company with adequate flexibility to meet future business
opportunities, including possible mergers, acquisitions or other transactions,
such as a stock split. The Company examines acquisition and other growth
opportunities when and as they arise. The Company has in the past and may in
the future engage in transactions that require the issuance of shares of the
Company's Common Stock. Depending on the size of any such transaction,
stockholders may or may not have the right to vote with respect to the
transaction and any issuance of Common Stock in connection therewith.
An affirmative vote of a majority of the shares outstanding is
required for approval of adoption of the Restated Certificate.
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ADOPTION OF THE RESTATED CERTIFICATE
APPROVAL OF THE OMNIBUS EQUITY PLAN
The Omnibus Equity Plan was established, subject to stockholder
approval, by the Executive Committee of the Board of Directors on April 4,
1995. The purpose of the Omnibus Equity Plan is to provide officers, directors
and employees, including named executive officers, identified by the
Compensation Committee as key employees of the Company or its affiliates, and
other individuals similarly identified by the Compensation Committee as
providing significant services for the Company or its affiliates, with an
equity-based incentive to maintain and enhance the performance and
profitability of the Company. It is the further purpose of the Omnibus Equity
Plan to grant options and stock appreciation rights that may constitute
performance-based compensation for named executive officers as described under
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended (the "Code"). The Omnibus Equity Plan provides, in general, for grants
of options, stock appreciation rights related to options ("Related SARs"),
stock appreciation rights not related to options ("Unrelated SARs") and
restricted stock (collectively referred to as "Grants"). As Grants to be
awarded under the Omnibus Equity Plan are made entirely in the discretion
of the Compensation Committee, the recipients, amounts and values of future
benefits to be received pursuant to the Plan, and benefits that would have been
awarded in the previous fiscal year had the Plan been in effect, are not
determinable.
The following is a summary of the proposed features of the Omnibus
Equity Plan, which is qualified in its entirety by reference to the Omnibus
Equity Plan, a copy of which may be obtained from the Company at no charge.
ADMINISTRATION
The Omnibus Equity Plan is administered by a committee designated by
the Board of Directors that is intended to consist of at least two directors
who qualify as "disinterested persons" as defined in Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and who meet
or are deemed to meet the "outside director" requirement of Section 162(m).
The Board of Directors has designated the Compensation Committee to administer
the Omnibus Equity Plan. Determinations of the Compensation Committee on all
matters relating to the Omnibus Equity Plan or any specific Grant shall be
conclusive.
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SHARES RESERVED
Subject to adjustments for certain changes in the number of issued
shares of Common Stock, a total of 4,725,000 shares of Common Stock shall be
available for issuance under the Omnibus Equity Plan; provided, however, that
(i) Grants of options and/or Unrelated SARs made to any continuing employee in
any one year shall not exceed 250,000 shares of Common Stock, (iii) Grants of
options and/or Unrelated SARs made to any individual for the year in which such
individual became an employee of the Company may not exceed 400,000 shares of
Common Stock and (iii) Grants of incentive stock options first exercisable by
any person in any one year shall not have an aggregate fair market value in
excess of $100,000. As a further limitation, the total number of shares of
Common Stock available for issuance with respect to restricted stock Grants
shall not exceed 2 percent of the number of shares of Common Stock issued and
outstanding on the date the plan is initially approved by the stockholders, as
adjusted for stock splits, the payment of stock dividends, or other changes in
capitalization effected without consideration to the Company. The 4,725,000
shares of Common Stock to be reserved under the Omnibus Equity Plan were
previously reserved for issuance under the Office Depot, Inc. Stock Option and
Stock Appreciation Rights Plan. Shares of Common Stock delivered under the
Omnibus Equity Plan may be either authorized and unissued shares, treasury
shares, reacquired shares or any combination thereof. As of April 7, 1995,
the closing price of the Common Stock as reported on the New York Stock
Exchange Composite Tape was $______ per share.
ELIGIBILITY
Grants under the Omnibus Equity Plan may be made to any employee of
the Company or any of its affiliates who is designated by the Compensation
Committee as a key employee and to any other person who performs significant
services for the Company or any of its affiliates and is so designated by the
Compensation Committee. As of March 24, 1995, the Company employed
approximately 26,000 persons.
TERM OF GRANTS
The term of each Grant shall be determined by the Compensation
Committee, except that an incentive stock option shall be exercisable for a
period of not more than 10 years from the Grant date or, in the case of a
holder of stock constituting more than 10 percent of the voting power of the
Company, five years from such date.
TYPES OF GRANTS
Options. The Omnibus Equity Plan provides for the Grants of
incentive stock options described in Code Section 422 ("Incentive Options") and
other options subject to the provisions of Code Section 83 ("Nonqualified
Options"), on such terms as the Compensation Committee may determine. The
exercise price of options (the "Option Price") may not be less than 100 percent
of the fair market value of a share of Common Stock on the Grant date, except
that Incentive Options held by a person who owns stock representing more than
10 percent of the voting power of the Company may not be granted for less than
110 percent of the fair market value of a share of Common Stock on such date.
Each option shall be exercisable during the period determined by the
Compensation Committee. The Omnibus Equity Plan permits payment of the
purchase price to be made: (i) in cash; (ii) in shares of Common Stock owned by
the grantee for at least six months or such other period as the Compensation
Committee may prescribe; (iii) through the simultaneous sale through a broker
of shares of unrestricted Common Stock acquired on exercise; (iv) with the
consent of the Compensation Committee in its sole discretion, by a full
recourse promissory note and agreement of the grantee providing for payment
with interest on the unpaid balance; or (v) any combination of the foregoing.
SARs. The Compensation Committee may grant Related or Unrelated SARs
to any eligible employee on such terms as the Compensation Committee may
determine. Related SARs shall become and remain exercisable to the same extent
as the options to which they relate. Unrelated SARs shall become and remain
exercisable under such terms as the Compensation Committee may determine.
Unless otherwise provided by the Compensation Committee,
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the exercise of Related SARs shall result in the cancellation or forfeiture of
the options to which they relate, to the extent of such exercise.
Upon exercise of an SAR, a grantee will receive an amount equal to the
difference between: (i) the fair market value of a share of Common Stock on
the date of such exercise; and (ii) an amount equal to (A) in the case of a
Related SAR, the exercise price of the option to which it relates, unless the
Compensation Committee specifies a higher amount, or (B) in the case of an
Unrelated SAR, the fair market value of a share of Common Stock on the Grant
date of such SAR (the "base amount"), unless the Compensation Committee
specifies a higher amount. The benefit upon the exercise of an SAR shall be
payable in cash or Common Stock as determined by the Compensation Committee.
Termination of Options and SARs. Generally, all options and SARs held
by a grantee upon termination of such grantee's employment shall terminate,
although the Omnibus Equity Plan provides for certain exceptions depending on
the circumstances of the employee's termination. In the case of regular
termination (i.e., other than for cause, retirement or death), a grantee is
allowed a period of 90 days after termination in which to exercise all options
and SARs that were exercisable immediately prior to the termination. In the
event of retirement, a grantee is permitted 18 months after termination in
which to exercise Grants vested as of the date of termination. Upon death
before regular termination, a grantee's representative or beneficiary receives
18 months in which to exercise all the grantee's options and SARs, whether or
not such Grants were exercisable at the time of death. Upon death after
regular termination or retirement, a grantee's representative or beneficiary
has until the earlier of (i) 12 months after the date of death, (ii) 90 days
after the date of regular termination and (iii) 18 months after the date of
retirement to exercise the grantee's options and SARs that were exercisable
immediately prior to the date of death. In none of these cases, however, may
options or SARs be exercised after the date on which they would have expired
pursuant to the terms of the Omnibus Equity Plan and the related Plan
agreement.
Restricted Stock. The Compensation Committee may grant shares of
Common Stock subject to such conditions and restrictions as the Compensation
Committee may determine ("Restricted Stock"). Restricted Stock may be awarded
alone or in tandem with other Grants. The vesting of a Grant of Restricted
Stock may be conditioned upon the completion of a specified period of
employment with the Company or any affiliate, the attainment of specified
performance goals and/or such other conditions as the Compensation Committee
may determine. The unvested portion of a grant of Restricted Stock that has
not fully vested shall terminate upon a grantee's termination of employment for
any reason. Payment of any purchase price for shares of Restricted Stock shall
be made under such terms as are determined by the Compensation Committee.
NON-TRANSFERABILITY
No Grant awarded under the Omnibus Equity Plan shall be assignable or
transferable by the grantee other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined by
the Code or ERISA) , and all rights may be exercised during the grantee's
lifetime only by the grantee.
ADJUSTMENTS OF GRANTS
The Compensation Committee may not grant an option or SAR in
substitution for a previously granted option or SAR if the new option or SAR
would have a lower per share exercise price or base amount than the Grant it
replaces. The Compensation Committee is not precluded, however, from making an
equitable adjustment to the maximum number of shares of Common Stock that may
be issued under the Omnibus Equity Plan, the maximum number of options and
Unrelated SARs that may be awarded to any one person in any year, the number of
shares
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subject to Grants and the exercise price or base amount of Grants for any
change in the number of issued shares of Common Stock resulting from the
subdivision or combination of such shares, other capital adjustments or the
payment of a stock dividend or other change in such shares of Common Stock
effected without receipt of consideration by the Company. Fractional shares
resulting from any such adjustment shall be eliminated. No such adjustment
shall be made in a manner that causes an Incentive Option to fail to continue
to qualify under Code Section 422.
AMENDMENT AND TERMINATION
The Board of Directors may from time to time in its discretion amend
or terminate the Omnibus Equity Plan, except that no such amendment or
termination shall impair any rights under any Grant made prior to the
amendment's effective date without the consent of the grantee, and provided
that no such amendment shall, without stockholder approval: (i) materially
increase benefits accruing to grantees; (ii) increase the maximum number of
shares available under the plan or that may be granted to any person in any
year; (iii) materially modify the class of employees eligible to receive
Grants; (iv) provide for Grants of stock options or SARs having an exercise
price of less than 100 percent of fair market value on the Grant date; or (v)
extend the term of the plan beyond April 4, 2005. The Omnibus Equity Plan
shall terminate on April 4, 2005 or on such earlier date as the Board of
Directors may determine.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OMNIBUS EQUITY PLAN
The following discussion is intended only as a brief summary of the
federal income tax rules relevant to stock options issued under the Omnibus
Equity Plan, as based upon the Code as currently in effect. These rules are
highly technical and subject to change in the future. In particular, the
discussion of Incentive Options is based, in part, on proposed regulations that
may be amended substantially before they are adopted in final form. Because
federal income tax consequences will vary as a result of individual
circumstances, optionees should consult their personal tax advisors with
respect to the tax consequences associated with stock options. Moreover, the
following summary relates only to optionees' federal income tax treatment, and
the state, local and foreign tax consequences may be substantially different.
Nonqualified Options. An optionee does not recognize any taxable
income, and the Company is not entitled to a deduction, upon the grant of a
Nonqualified Option. Upon the exercise of a Nonqualified Option, the optionee
recognizes ordinary income (subject to wage and employment tax withholding)
equal to the excess of the fair market value of the shares acquired over the
option exercise price. The amount of such excess is generally determined by
reference to the fair market value of the Common Stock on the date of exercise.
However, in the case of an optionee subject to six month short-swing profit
liability under Section 16b of the Exchange Act (a "16b Person") (typically,
officers, directors and major stockholders of the Company), such excess is
determined by using the fair market value on the later of the date of exercise
and the date six months after the Grant date unless such optionee elects to be
taxed based on the fair market value of the Common Stock on the date of
exercise by filing an appropriate election with the Internal Revenue Service
within 30 days after the exercise date. An optionee's basis in the stock
received is equal to such stock's fair market value on the date of exercise (or
on the date six months after the Grant date, if later, in the case on an
optionee who is a 16b Person and who makes no such election). The Company is
entitled to a deduction equal to the compensation taxable to the optionee.
If an optionee sells shares acquired pursuant to the exercise of a
Nonqualified Option, such optionee will recognize capital gain or loss equal to
the difference between the selling price of the shares and the optionee's basis
in the shares. Such capital gain or loss is long- or short-term, depending on
whether the optionee has held the shares for more than one year. In the case
of an optionee who is a 16b Person and who does not make the election described
above, any such capital gain will be long-term only if the stock has been held
for more than one year after the later of the exercise date or the date six
months after the Grant date. The Company is not entitled to any deduction with
respect to any capital gain recognized by the optionee.
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Capital losses on the sale of such shares may be used to offset
capital gains. The net capital gain of an individual taxpayer is subject to a
maximum tax rate of 28 percent. If capital losses exceed capital gains, then
up to $3,000 of the excess losses may be deducted from ordinary income.
Remaining capital losses may be carried forward to future tax years.
Incentive Options. An optionee does not recognize taxable income on
the grant or exercise of an Incentive Option. However, the excess of the
stock's fair market value on the exercise date (the fair market value on the
exercise date or six months after the Grant date, whichever is later, is likely
to govern in the case of a 16b Person) over the option exercise price will be
included in the optionee's alternative minimum taxable income and thereby may
subject the optionee to an alternative minimum tax. Such alternative minimum
tax may be payable even though the optionee receives no cash upon the exercise
of his or her Incentive Option with which to pay such tax. Upon the
disposition of shares of Common Stock acquired pursuant to the exercise of an
Incentive Option (i) more than one year after the date of exercise, and (ii)
more than two years after the Grant date (the "Required Holding Periods"), the
optionee recognizes long-term capital gain or loss, as the case may be,
measured by the difference between the stock's selling price and the exercise
price. The Company is not entitled to any tax deduction by reason of the grant
or exercise of an Incentive Option, or a disposition of stock received upon the
exercise of an Incentive Option after the Required Holding Periods have been
satisfied.
If an optionee disposes of the shares of stock acquired pursuant to
the exercise of an Incentive Option before the expiration of the Required
Holding Periods (a "Disqualifying Disposition"), the difference between the
exercise price of such shares and the lesser of (i) the fair market value of
such shares upon the date of exercise (the fair market value on the exercise
date or six months after the Grant date, whichever is later, is likely to
govern in the case of a 16b Person) or (ii) the selling price, will constitute
compensation taxable to the optionee as ordinary income. The Company is
allowed a corresponding tax deduction equal to the amount of compensation
taxable to the optionee. If the selling price of the stock exceeds the fair
market value on the exercise date (or six months after the Grant date, if
later, in the case of a 16b Person), the excess will be taxable to the optionee
as capital gain (long-term or short-term, depending upon whether the optionee
held the stock for more than one year). The Company is not allowed a deduction
with respect to any such capital gain recognized by the optionee.
Use of Common Stock to Pay Option Price. If an optionee delivers
previously acquired Common Stock, however acquired, in payment of all or part
of the option exercise price of a Nonqualified Option, the optionee will not,
as a result of such delivery, be required to recognize as taxable income or
loss any appreciation or depreciation in the value of the previously acquired
Common Stock after its acquisition date. The optionee's tax basis in, and
holding period for, the previously acquired stock surrendered carries over to
an equal number of the option shares received on a share-for-share basis. The
fair market value of the shares received in excess of the shares surrendered
constitutes compensation taxable to the optionee as ordinary income. Such fair
market value is determined on the date of exercise, except in the case of 16b
Persons as discussed above. The tax basis for such shares is equal to their
fair market value as so determined, and such shares' holding period begins on
the date on which the fair market value of such shares is determined. The
Company is entitled to a tax deduction equal to the compensation income
recognized by the optionee.
If an optionee delivers previously acquired Common Stock (other than
stock acquired upon exercise of an Incentive Option and not held for the
Required Holding Periods) in payment of all or part of the option price of an
Incentive Option, the optionee will not be required to recognize as taxable
income or loss any appreciation or depreciation in the value of the previously
acquired Common Stock after its acquisition date. The optionee's tax basis in,
and holding period (for capital gain, but not Disqualifying Disposition,
purposes) for the previously acquired stock surrendered carries over to an
equal number of the option shares received on a share-for-share basis. Shares
received in excess of the shares surrendered have a tax basis equal to the
amount paid (if any) in excess of the previously acquired shares used to pay
the exercise price, and such shares' holding period will begin on the date of
exercise (with the possible exception of 16b Persons). Proposed regulations
provide that where an Incentive Option is exercised using previously acquired
stock, a later Disqualifying Disposition of the shares received will be deemed
to have been a disposition of the shares having the lowest basis first.
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If an optionee pays the exercise price of an Incentive Option in whole
or in part with previously acquired Common Stock that was acquired upon the
exercise of an Incentive Option and that has not been held for the Required
Holding Periods, the optionee will recognize ordinary income (but not capital
gain) under the rules applicable to Disqualifying Dispositions. The Company
will be entitled to a corresponding deduction. The optionee's basis in the
shares received in exchange for the shares surrendered will be increased by the
amount of ordinary income the optionee recognizes.
One Million Dollar Compensation Limit. If an employee's total
compensation from the Company (including compensation related to options)
exceeds $1,000,000 in any given year, such compensation in excess of $1,000,000
may not be tax deductible by the Company under Section 162(m). Affected
employees are generally the Company's Chief Executive Officer and four other
most highly compensated executive officers at the end of the Company's taxable
year. Excluded from the calculation of total compensation for this purpose is
compensation that is "performance-based" within the meaning of Section 162(m).
The Company intends that compensation realized upon the exercise of an option
or SAR granted under the Omnibus Equity Plan will be regarded as
"performance-based" under Section 162(m) and that such compensation may be
deductible without regard to the limits of Section 162(m).
APPROVAL REQUIRED
The affirmative vote of a majority of the votes cast by the holders of
the shares of Common Stock represented in person or by proxy at the meeting is
required for approval of the Omnibus Equity Plan. Approval of the Omnibus
Equity Plan is required for 16b Persons who receive shares of Common Stock
pursuant to the Plan to be exempt from potential liability under Rule 16b-3
promulgated under the Exchange Act and for shares of Common Stock issued
pursuant to the Plan to be listed for trading on the New York Stock Exchange.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR APPROVAL OF THE OMNIBUS EQUITY PLAN.
APPROVAL OF THE DESIGNATED EXECUTIVE PLAN
In February 1994, the Board determined that the Company structure the
performance-based portion of the compensation of its senior executive officers
in a manner that complies with Section 162(m) of the Internal Revenue Code,
which took effect January 1, 1994 ("Section 162(m)"). Section 162(m) generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid to the chief executive officer and the other four most highly
compensated executive officers. Compensation to such an executive officer in
excess of $1 million may be deductible, however, if such compensation qualifies
as performance-based compensation within the meaning of Section 162(m). As a
result, the Board of Directors approved the 1994-1998 Office Depot, Inc.
Designated Executive Incentive Plan (the "Designated Executive Plan"), and the
Board directed that the Designated Executive Plan, including amounts payable
thereunder with respect to the 1994 fiscal year, be submitted to the Company's
stockholders for approval at the Annual Meeting. The Board concluded that
adoption of the Designated Executive Plan was necessary to permit the Company
to deduct that portion of compensation in excess of $1 million paid to its
chief executive officer and other most highly compensated executive officers.
The summary of the Designated Executive Plan that appears below is qualified in
its entirety by reference to the full text of the Designated Executive Plan, a
copy of which may be obtained from the Company at no charge. As awards to be
made under the Designated Executive Plan are made entirely in the discretion of
the Compensation Committee, the
- 8 -
<PAGE> 11
recipients, amounts and values of future benefits to be received pursuant to
the Plan are not determinable. For fiscal 1994, Mr. Fuente earned a bonus of
$1,250,000 and Mr. Begelman earned a bonus of $1,000,000 under the Designated
Executive Plan, subject in each case to stockholder approval of the plan.
The Designated Executive Plan provides for the payment of awards,
which are expressed as a percentage of base salary, to those key employees of
the Company designated by the Board each year. Awards under the Designated
Executive Plan are based upon the achievement of annual performance objectives
which are determined annually by the Compensation Committee and may be based
upon one or more of the following five measurements of the Company's
performance for the relevant period, as such measurements may be adjusted for
merger costs as presented on the Company's audited financial statements: pre-tax
earnings, net earnings, earnings per share, return on assets and return on
equity. The maximum award that any participant may receive in any single year
under the Designated Executive Plan is $2 million.
Executive officers of the Company, including participants in the
Deferred Compensation Plan, are also eligible to defer all or part of their
awards under the Designated Executive Plan in accordance with the Office Depot,
Inc. Deferred Compensation Plan (the "Deferred Compensation Plan"). Amounts
so deferred will give rise to a deduction by the Company, and will be included
in compensation subject to the $1 million cap, in the year in which they are
paid out to the participant. The Company has reserved the discretionary power
under the Deferred Compensation Plan to defer payments under such plan to the
extent necessary to prevent a participant's includible compensation from
exceeding the $1 million cap for any given year.
Administration
The Designated Executive Plan is administered by a committee of the
Board, which must consist of two or more outside directors of the Company
within the meaning of Section 162(m). The Compensation Committee, currently
consisting of Messrs. Hedrick and Wurtzel, administers the Designated Executive
Plan. The committee may adopt, amend and repeal such rules, guidelines and
practices governing the Designated Executive Plan as it deems advisable, and
interprets the terms and provisions of the Designated Executive Plan and the
awards issued thereunder. In addition, the committee may decrease or eliminate
an award under the Designated Executive Plan.
Eligibility
The committee is authorized to grant awards to such designated key
employees of the Company as the Committee selects each year. The employees
selected to participate in the Designated Executive Plan for the 1994 and 1995
fiscal years are the Company's Chief Executive Officer and its President.
Incentive Awards
Awards granted under the Designated Executive Plan are based on the
achievement of annual performance objectives, determined by the committee, but
may not exceed $2 million per participant in any single year. These
performance objectives are based on one or more of the following five
measurements of the Company's performance, as such measurements may be adjusted
for merger costs as presented on the Company's audited financial statements:
pre-tax earnings, net earnings, earnings per share, return on assets and return
on equity. The annual performance objectives and corresponding award levels for
each participant are determined by the committee each year within the first 90
days of such year.
For the 1994 and 1995 fiscal years, the Compensation Committee
established earnings per share targets as a basis for the payment of awards
under the Designated Executive Plan. Earnings per share for 1994 were $0.69,
which exceeded the "stretch" goal (the most aggressive target level)
established by the Compensation Committee for such year of a 50% increase in
earnings per share, resulting in premium bonuses for Messrs. Fuente and
Begelman of twice their respective base salaries for the period.
- 9 -
<PAGE> 12
Termination
The Designated Executive Plan may be terminated by the Board at any
time and will terminate by its own terms at the end of the 1998 fiscal year.
No incentive award may be granted under the Designated Executive Plan after
1998.
Approval Required
An affirmative vote of a majority of the shares present and voting at
the meeting is required for approval of the Designated Executive Plan,
and for payment of amounts thereunder with respect to the 1994 fiscal year.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE DESIGNATED EXECUTIVE PLAN, INCLUDING THE PAYMENT OF
AMOUNTS PAYABLE THEREUNDER WITH RESPECT TO THE 1994 FISCAL YEAR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board recommends that the stockholders ratify the appointment of
Deloitte & Touche LLP as independent public accountants to audit the Company's
consolidated financial statements for the fiscal year ending December 30, 1995.
Deloitte & Touche LLP has audited the consolidated financial statements of the
Company each year since 1990. Representatives of Deloitte & Touche LLP will be
present at the meeting with the opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions. If the
stockholders do not ratify the appointment of Deloitte & Touche LLP, the Board
will select other independent accountants.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS
SECURITY OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of April 7, 1995 by (i) each
stockholder known by the Company to own beneficially more than five percent
(5%) of the outstanding Common Stock, (ii) each director of the Company, (iii)
the Company's Chief Executive Officer and four other most highly compensated
executive officers and (iv) all executive officers and directors of the Company
as a group. Beneficial ownership of less than one percent is indicated by an
asterisk. Except as otherwise indicated below, each of the entities named in
the table has sole voting and investment power with respect to all shares of
Common Stock beneficially owned by such entity as set forth opposite such
entity's name. No effect has been given to shares reserved for issuance under
outstanding stock options except where otherwise indicated.
- 10 -
<PAGE> 13
<TABLE>
<CAPTION>
Name of Individual Number of Shares Percent of Class
or Group Beneficially Owned Outstanding
---------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
FMR Corp. (1) 11,133,942
82 Devonshire Street
Boston, Massachusetts 02109
Provident Investment Counsel (2) 9,375,775
300 North Lake Avenue
Pasadena, CA 91101
Fourcar B.V. 22,692,600
Coolsingel 139
3012 AG Rotterdam
The Netherlands
Mark D. Begelman (3) 1,362,179 *
Richard M. Bennington (4) 227,949 *
Denis Defforey (5) 65,750 *
Gary D. Foss (6) 377,938 *
David I. Fuente (7) 1,069,528 *
Barry J. Goldstein (8) 328,105 *
W. Scott Hedrick (9) 54,468 *
John B. Mumford (10) 85,797 *
Michael J. Myers (11) 24,722 *
Peter J. Solomon (12) 97,250 *
Cynthia Cohen Turk (13) 668 *
Alan L. Wurtzel (14) 52,722 *
All Executive Officers and Directors 3,940,287 _____%
as a Group (15 persons) (15)
</TABLE>
- ------------------------
(1) Based solely upon a Schedule 13G dated February 13, 1995. Of the
11,133,942 shares shown as beneficially owned by FMR Corp: (i)
10,383,392 shares are beneficially owned by Fidelity Management
Research Company ("Fidelity Research"), a wholly-owned subsidiary of
FMR Corp. and investment advisor to several investment companies, and
(ii) 750,000 shares are beneficially owned by Fidelity Management
Trust Company ("Fidelity Trust"), a wholly-owned subsidiary of FMR,
as investment manager of institutional accounts. FMR Corp. and its
chairman, Edward C. Johnson 3rd, each has sole power to dispose of the
10,383,392 shares owned by Fidelity Research, but neither FMR Corp.
nor Mr. Johnson has the sole power to vote or to direct the voting of
such shares. FMR Corp. and Mr. Johnson each have sole dispositive
power over the 750,550 shares owned by Fidelity Trust, and FMR Corp.
and Mr. Johnson each have sole power to vote or to direct the voting
of 253,950 of such shares.
(2) Based solely upon a Schedule 13G dated February 7, 1995, Provident
Investment Counsel ("Provident") and Robert M. Kommerstad, a
shareholder of Provident, share with each other (i) the power to
dispose of 9,375,775 shares, and (ii) the power to vote 7,266,827
shares. No other person has the power to vote such shares.
- 11 -
<PAGE> 14
(3) Includes options to purchase 848,220 shares issued to Mr. Begelman
pursuant to the Office Depot, Inc. Stock Option and Stock Appreciation
Rights Plan (the "Option Plan"), 22,500 shares held of record by Mark
Zwerner and Joel Koeppel Trustees, Mark D. Begelman Irrevocable Trust
f/b/o Matthew Bryan Begelman and 22,500 shares held of record by Mark
Zwerner and Joel Koeppel Trustees, Mark D. Begelman Irrevocable Trust
f/b/o Lauren Andrea Begelman.
(4) Includes options to purchase 227,504 shares issued to Mr. Bennington
pursuant to the Option Plan.
(5) Reflects options to purchase 65,750 shares issued to Mr. Defforey as a
director of the Company. Mr. Defforey is a director of the Company is
also a member of the oversight committee (but not the board of
directors) of Carrefour S.A. ("Carrefour"), which indirectly owns all
of the outstanding capital stock of Fourcar B.V. ("Fourcar").
(6) Includes options to purchase 235,618 shares issued to Mr. Foss
pursuant to the Option Plan.
(7) Includes options to purchase 699,272 shares issued to Mr. Fuente
pursuant to the Option Plan and 58,980 shares held of record by his
sons, Alan D. Fuente and Steven M. Fuente and his step-daughter,
Rebecca Mishkin. Mr. Fuente disclaims beneficial ownership of the
shares held by his sons and step-daughter.
(8) Includes options to purchase 244,107 shares issued to Mr. Goldstein
pursuant to the Option Plan.
(9) Includes options to purchase 21,947 shares issued to Mr. Hedrick as a
director of the Company.
(10) Includes options to purchase 21,947 shares issued to Mr. Mumford as a
director of the Company and 57,042 shares held of record by the John
Brese Mumford and Christine Joyce Mumford Family Trust dated October
13, 1983.
(11) Includes options to purchase 24,722 shares issued to Mr. Myers as a
director of the Company.
(12) Includes options to purchase 65,750 shares granted to Mr. Solomon as a
director of the Company.
(13) Includes 150 shares held of record by Ms. Turk's spouse. Ms. Turk
disclaims beneficial ownership of these shares.
(14) Includes options to purchase 34,722 shares issued to Mr. Wurtzel as a
director of the Company.
(15) Includes options to purchase 2,682,058 shares.
- 12 -
<PAGE> 15
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Directors are elected at the Annual Meeting of Stockholders to serve
during the ensuing year or until a successor is duly elected and qualified.
Executive officers are elected annually by the Board and serve at the
discretion of the Board.
The following table sets forth certain information concerning each of
the Company's directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position
--------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
David I. Fuente . . . . . . . . 49 Chairman of the Board and Chief Executive Officer
Mark D. Begelman . . . . . . . . 47 Director, President and Chief Operating Officer
Barry J. Goldstein . . . . . . . 52 Executive Vice President -- Finance, Chief Financial Officer
and Secretary
F. Terry Bean . . . . . . . . . 47 Executive Vice President -- Human Resources
Richard M. Bennington . . . . . 54 Executive Vice President -- Retail Division
Gary D. Foss . . . . . . . . . . 52 Executive Vice President -- Marketing
Harry S. Brown . . . . . . . . 48 Executive Vice President -- Merchandising
Judith A. Rogala . . . . . . . . 53 Executive Vice President -- Business Services Division
William P. Seltzer . . . . . . . 56 Executive Vice President -- Systems and Distribution
Denis Defforey . . . . . . . . . 69 Director
W. Scott Hedrick . . . . . . . . 49 Director
John B. Mumford . . . . . . . . 51 Director
Michael J. Myers . . . . . . . . 54 Director
Peter J. Solomon . . . . . . . . 56 Director
Cynthia Cohen Turk . . . . . . . 42 Director
Alan L. Wurtzel . . . . . . . . 61 Director
</TABLE>
DAVID I. FUENTE has been Chairman of the Board and Chief Executive
Officer since he joined the Company in December 1987. For five years prior to
that time, he was employed by The Sherwin-Williams Co. ("Sherwin-Williams") as
President of its Paint Stores Group, a chain of over 1,800 paint stores. Prior
positions included Vice President of Marketing of the Paint Stores Group and
Vice President of Marketing, Consumer Division, and Vice President of
Marketing, Automotive Aftermarket Division of Sherwin-Williams. Mr. Fuente is
a director of National Vision Associates Ltd.
MARK D. BEGELMAN has been a director, President and Chief Operating
Officer since he joined the Company in April 1991. He has substantial
experience in the office products industry and over 20 years in retail
merchandising. Prior to joining the Company, he was Chairman of the Board of
The Office Club, Inc. ("Office Club") from August 1990 until April 1991 and
Chief Executive Officer of Office Club from April 1986 until April 1991, when
Office Club became a subsidiary of the Company. From May 1981 to May 1986, he
served as Senior Vice President of John Bruener Company, a home furnishings
retailer. From June 1976 to May 1981, Mr. Begelman was Divisional Merchandise
Manager of Jordan Marsh Stores Corporation, a general merchandise retailer.
BARRY J. GOLDSTEIN has been Chief Financial Officer since he joined
the Company in May 1987, has served as Executive Vice President--Finance since
July 1991 and has served as Secretary since January 1988. From May 1987 until
June 1991, he served as Vice President--Finance. Prior to joining the Company,
he spent 22 years in public accounting, the most recent 18 of which were with
Grant Thornton, a national accounting firm. He became a partner of Grant
Thornton in 1976.
- 13 -
<PAGE> 16
F. TERRY BEAN has been Executive Vice President--Human Resources since
he joined the Company in January 1994. Prior to joining the Company, he was
employed by Roses Stores Inc., a mass merchandiser, as Senior Vice President of
Human Resources. From 1978 to 1989, he was employed by Federal Express Corp.,
a shipping company, where he held the position of Vice President of Personnel
Services from 1982 through 1989. Prior to 1978, Mr. Bean held human resource
management positions with Eaton Corp. and Johnson & Johnson Corp.
RICHARD M. BENNINGTON has been Executive Vice President -- Retail
Division (formerly known as Store Operations) since July 1991. He joined the
Company as a store manager in June 1986 and has served as the Company's
Executive Vice President -- Office Depot Store Operations, Vice President --
Operations, District Manager and Director of Store Operations. Prior to
joining the Company, he was employed for one year by Mr. How, a chain of home
products stores, as a Zone Manager and held various field operations positions
with other specialty and mass merchandise chains.
GARY D. FOSS has been Executive Vice President -- Marketing since
February 1995 and from the time he joined the Company in April 1991 until March
1993. Mr. Foss served as Executive Vice President -- Merchandising and
Marketing from April 1993 to February 1995. From July 1990 until April 1991,
he was the Executive Vice President -- Merchandising of Office Club, a
subsidiary of the Company since April 1991. From 1985 to 1990, he was Chief
Executive Officer and President of Home Express, Inc., a California-based home
furnishing retailer. From 1962 to 1985, Mr. Foss held various merchandising,
marketing and management positions with Dayton Hudson Corporation, including
Chief Executive Officer and President of the R.G. Brandens Home Store Division.
HARRY S. BROWN has been Executive Vice President -- Merchandising
since he joined the Company in February 1995. Prior to joining the Company, he
was employed by Marshall's, an off-price department store chain, where he
served in various senior merchandise management positions from 1989 until 1995,
most recently as Executive Vice President, Merchandising, Planning and
Allocation. From 1980 to 1989, he served in various merchandise management
positions within Macy's.
JUDITH ROGALA has been Executive Vice President -- Business Services
Division since she joined the Company in June 1994. Prior to joining the
Company, she served as President and Chief Executive Officer of EQ-The
Environmental Quality Company, a waste management company, from 1992 to 1994.
Ms. Rogala was President and Chief Executive of Flagship Express, Inc., an air
cargo business, from 1990 to 1992. From 1980 to 1990, she served as Senior
Vice President, Central Support Services and as a Regional Vice President of
Federal Express Corporation.
WILLIAM P. SELTZER has been Executive Vice President--Systems and
Distribution since joining the Company in August 1992. Prior to joining the
Company, he was Senior Vice President--Distribution and Systems of Revco D.S.
Inc. from November 1987 to July 1992. Mr. Seltzer was Vice President of
Systems for the H.E. Butt Grocery Company from 1977 to 1987, and was Corporate
Manager of Information Processing from 1972 to 1977 with SCM Corporation.
DENIS DEFFOREY has been a director since April 1990. He is a member
of the oversight committee ("Conseil de Surveillance") of Carrefour, a French
hypermarket chain that he co-founded in 1959 and is a director of DeNoyange
S.A., the principal shareholder of Carrefour. Mr. Defforey is a director of
Editions, S.A. and PetsMart, Inc.
W. SCOTT HEDRICK has been a director since April 1991. From November
1986 until April 1991, he was a director of Office Club, a subsidiary of the
Company since April 1991. He was a founder and has been a general partner of
InterWest Partners, a venture capital fund, since 1979.
- 14 -
<PAGE> 17
JOHN B. MUMFORD has been a director since April 1991. He was a
co-founder of Office Club, a subsidiary of the Company since April 1991. Mr.
Mumford served as Chairman of the Board of Directors of Office Club from its
inception in February 1986 to August 1990, and served as Vice Chairman of the
Board of Directors of Office Club from August 1990 until April 1991. He has
been president of Crosspoint Corporation, a venture capital firm, since 1972
and managing general partner of Crosspoint Venture Partners, a venture capital
fund, since 1982. Mr. Mumford is Chairman of the Board of Photonics
Corporation and a director of INMAC Corporation.
MICHAEL J. MYERS has been a director since July 1987. He is the
President and a director of First Century Partners Management Company, an
advisor to private venture capital equity funds, and a director of Smith Barney
Venture Corp., a wholly-owned subsidiary of Smith Barney, Inc., which acts as
the managing general partner of two private venture capital equity funds.
Until January 1992, he was a Senior Vice President and Managing Director of
Smith Barney, Harris Upham & Co., Incorporated ("Smith Barney"). He joined
Smith Barney's venture capital group in 1972 and has had a senior operating
responsibility for that group since 1976. Prior to 1972, he spent three years
with J.H. Whitney & Co., a private venture capital firm. Mr. Myers is a
director of Vista Environmental Information, Inc.
PETER J. SOLOMON has been a director since April 1990. He is Chairman
and Chief Executive Officer of Peter J. Solomon Company Limited, an investment
banking firm which provided services to the Company in fiscal 1993. From 1985
to 1989, he was a Vice Chairman and a member of the board of directors of
Shearson Lehman Hutton Inc. ("Shearson"). From 1981 to 1985, he was a Managing
Director at Shearson. Mr. Solomon is a director of Centennial Cellular
Corporation, Century Communications, Inc., Monro Muffler/Brake, Inc.,
Phillips-VanHeusen Corporation, Bradlees, Inc. and Culbro Corporation.
CYNTHIA COHEN TURK has been a director since July 1994. She is the
President of MARKETPLACE 2000, a marketing and strategy consulting firm. Prior
to founding the firm in 1990, she was a Partner of Deloitte & Touche. Ms. Turk
is a director of Loehmann's Holdings, Inc., L. Luria & Son, Inc., One Price
Clothing, Inc., Spec's Music Stores, Inc. and The Mark Group.
ALAN L. WURTZEL has been a director since February 1989. Since June
1994, he has been the Vice Chairman of the Board of Circuit City Stores, Inc.
("Circuit City"), a large consumer electronics retailing chain. From 1986 to
1994, he served as Chairman of the Board of Circuit City, and prior to 1986,
he served in several other capacities with Circuit City, including Chief
Executive Officer, President and Vice President. From December 1986 to
April 1988, he served as President of Operation Independence, a nonprofit
organization.
For fiscal 1994, Messrs. Bean, Bennington, Defforey, Foss, Goldstein,
Mumford, Seltzer, Solomon and Wurtzel, and Ms. Rogala and Ms. Turk failed to
file a Form 5 in a timely manner. John Schmidt, Vice President and Controller,
failed to file a Form 4 and a Form 5 in a timely manner and Ms. Rogala and Ms.
Turk each failed to file a Form 3 in a timely manner.
The Board met 6 times during the 1994 fiscal year. The Board has
standing Audit, Compensation, Executive and Nominating Committees. All
directors attended at least 75% of the aggregate of the total number of
meetings of the Board and the total number of meetings of all committees on
which they served.
The Audit Committee is composed of four directors (currently Messrs.
Defforey, Mumford and Myers and Ms. Turk). This committee recommends to the
Board the appointment of the Company's independent accountants. The committee
meets with the independent accountants to discuss the scope of the audit, any
nonaudit related assignments, fees, the independence of the accountants, the
results of the audit and the effectiveness of the Company's internal accounting
controls. The committee reports to the Board. The independent accountants
have access to the committee, with or without advising management, to discuss
auditing and any other accounting matters. The Audit Committee met 3 times
during the 1994 fiscal year.
The Compensation Committee is currently composed of two directors
(currently Messrs. Hedrick and Wurtzel). This committee recommends action to
the Board regarding the salaries and incentive compensation of
- 15 -
<PAGE> 18
elected officers of the Company. The committee also reviews the compensation
of certain other principal management employees and administers the Company's
employee benefit plans. The Compensation Committee met 4 times during the 1994
fiscal year.
The Executive Committee was established in February 1992 and is
composed of four directors (currently Messrs. Begelman, Fuente, Solomon and
Wurtzel). This committee handles matters arising between regularly scheduled
meetings of the Board. The Executive Committee did not meet during the 1994
fiscal year.
The Nominating Committee is composed of four directors (currently
Messrs. Begelman, Fuente, Solomon and Wurtzel). This committee evaluates the
performance of incumbent directors, considers nominees recommended by
management or stockholders of the Company and develops its own recommendations.
The committee will consider nominees recommended by stockholders, although it
has not adopted any procedures to be followed by stockholders in submitting
such recommendations. In February, 1994, the Nominating Committee adopted a
charter formalizing the duties of the Committee and evidencing the Company's
commitment to increasing the diversity of the Board. The Nominating Committee
met once during the 1994 fiscal year.
COMPENSATION
Directors Compensation. Until April 1994, directors who were not
salaried officers of the Company received $18,000 per year for serving on the
Board and were reimbursed for costs incurred in attending meetings. No
additional amounts were paid for attendance at special meetings or for service
on any committee of the Board. Directors who were not salaried officers of the
Company also each received a number of options equal to $150,000 divided by the
fair market value of Common Stock on the date of grant for their first year of
service on the Board after election by the Company's stockholders and a number
of options equal to $50,000 divided by the fair market value of Common Stock on
the date of grant for each subsequent year of service on the Board. Such
options become exercisable in equal proportions on the first, second and third
anniversary of the date of grant. Directors who are salaried officers of the
Company receive no compensation other than their compensation for such service
as officers.
From April 1994 until March 1995, directors who were not salaried
officers of the Company received $8,000 per year plus $1,000 per Board meeting
attended for serving on the Board and were reimbursed for costs incurred in
attending meetings. No additional amounts were paid for service on any
committee of the Board. Directors who were not salaried officers of the
Company also each received options to purchase 7,500 shares of Common Stock per
year, with an exercise price per share of fair market value measured on the
date of grant. Such options become exercisable in equal proportions on the
first, second and third anniversary of their date of grant. Directors who were
salaried officers of the Company received no compensation other than their
compensation for such service as officers.
Effective April 1995, directors who are not salaried officers of the
Company receive $15,000 per year plus $2,000 per Board meeting attended and
are reimbursed for costs incurred in attending meetings. No additional
amounts are paid for service on any committee of the Board. Directors who are
not salaried officers of the Company also each receive options to purchase
7,500 shares of Common Stock per year, with an exercise price per share of fair
market value measured on the date of grant. Such options become exercisable in
equal proportions on the first, second and third anniversary of their date of
grant. Directors who are salaried officers of the Company receive no
compensation other than their compensation for such service as officers.
- 16 -
<PAGE> 19
Executive Officers Compensation. The following table sets forth the
aggregate cash compensation paid by the Company for services rendered during
the 1992, 1993 and 1994 fiscal years by the Company's Chief Executive Officer
and the Company's four other most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- ----------------------------------
Awards Payouts
----------------------- -------
Securities
Other Under- All
Annual Restricted lying Other
Compen- Stock Options/ LTIP Compen-
Name and Salary Bonus sation Award(s) SARs Payouts sation
Principal Position Year ($) ($) ($)(1) ($) (#)(2) ($) ($)/(3)
------------------------ ---- ------- --------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David I. Fuente, 1994 625,000 1,250,000 -0- -0- 125,000 -0- 5,328
Chief Executive 1993 550,000 864,981 -0- -0- 112,500 -0- 4,497
Officer 1992 475,000 335,350 -0- -0- 272,655 -0- 4,364
Mark D. Begelman, 1994 500,000 1,000,000 -0- -0- 100,000 -0- 4,545
President and Chief 1993 450,000 651,384 -0- -0- 90,000 -0- 4,497
Operating Officer 1992 400,000 256,000 -0- -0- 102,330 -0- 4,364
Gary D. Foss, 1994 300,000 408,000 -0- -0- 35,000 -0- 2,958
Executive Vice Presi- 1993 250,000 344,469 -0- -0- 52,500 -0- 4,322
dent -- Marketing 1992 225,000 135,900 -0- -0- 61,537 -0- 1,211
Richard M. Bennington, 1994 300,000 396,000 -0- -0- 35,000 -0- 2,958
Executive Vice 1993 250,000 339,477 -0- -0- 52,500 -0- 4,355
President -- 1992 225,000 128,250 -0- -0- 33,750 -0- 2,700
Retail Division
Barry J. Goldstein, 1994 300,000 393,600 -0- -0- 35,000 -0- 2,958
Executive Vice 1993 250,000 335,483 -0- -0- 52,500 -0- 3,707
President -- 1992 225,000 131,400 -0- -0- 77,783 -0- 2,700
Finance, Chief
Financial Officer and
Secretary
</TABLE>
(1) Other Annual Compensation items for persons named in the summary
compensation table were not reportable in 1994, 1993 and 1992.
(2) Options granted have been adjusted to reflect a two-for-one stock split
in 1992, a three-for-two stock split in 1993, and a three-for-two stock
split in 1994.
(3) Amounts reported represent matching contributions under the Company's
Retirement Savings Plan, a defined contribution plan.
- 17 -
<PAGE> 20
The following table sets forth information with respect to all options
granted in fiscal 1994 under the Option Plan to the Company's Chief Executive
Officer and the Company's four other most highly compensated executive
officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
- ----------------------------------------------------------------------------------------- --------------------
Number of Percent of
Securities Total
Underlying Options/SARs
Options/ Granted to Exercise or Grant Date
SARs Employees in Base Price Expiration Present Value(2)
Name Granted(1) Fiscal Year ($/Sh) Date ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David I. Fuente . . . . 125,000 6.7 21.00 7/29/04 1,496,607
Mark D. Begelman . . . 100,000 5.4 21.00 7/29/04 1,197,286
Gary D. Foss . . . . . 35,000 1.9 21.00 7/29/04 419,050
Richard M. Bennington . 35,000 1.9 21.00 7/29/04 419,050
Barry J. Goldstein . . 35,000 1.9 21.00 7/29/04 419,050
</TABLE>
- -----------------
(1) All options granted in fiscal 1994 vest in three equal installments on
July 29, 1995, July 29, 1996 and July 29, 1997 and were not awarded with tandem
stock appreciation rights ("SARs"). In the event of a Sale of the Company (as
defined in the Option Plan), the committee administering the Option Plan may
stipulate in its sole discretion, that (i) outstanding options and SARs will
become immediately exercisable; (ii) outstanding options and SARs shall be
assumed by the successor corporation; or (iii) substantially equivalent options
and SARs shall be substituted by the successor corporation. In order to
prevent dilution or enlargement of rights under the options, in the event of a
reorganization, recapitalization, stock split, stock dividend, combinations of
shares, merger, consolidation or other change in the Common Stock the number of
shares available upon exercise and the exercise price will be adjusted
accordingly. The Compensation Committee may, subject to specified limitations,
advance (i) the date on which an option shall become exercisable by the grantee
and (ii) the grantee's right to designate an Appreciation Date for any SAR.
(2) The Black-Scholes option pricing model was used to determine the grant
date present value of the stock options granted in 1994 by the Company to the
executive officers listed above. Under the Black-Scholes option pricing model,
the grant date present value of each stock option referred to in the table was
calculated to be $11.97. The following facts and assumptions were used in
making such calculation: (i) an exercise price of $21.00 for each such stock
option; (ii) a fair market value of $21.00 for one share of Common Stock on the
date of grant; (iii) a dividend yield of 0%; (iv) a stock option term of 10
years; (v) a stock volatility of 27.87%, based on an analysis of weekly stock
closing prices of Common Stock during the fourth quarter of 1994; and (vi) an
assumed risk-free interest rate of 7.10%, which is equivalent to the yield on a
ten-year treasury note on the date of grant. No other discounts or
restrictions related to vesting or the likelihood of vesting of stock options
were applied. The resulting grant date present value of $11.97 for each stock
option was multiplied by the total number of stock options granted to each of
the executive officers listed above to determine the total grant date present
value of such stock options granted to each such executive officer,
respectively.
- 18 -
<PAGE> 21
The following table sets forth information with respect to all options
exercised in fiscal 1994 and the year-end value of unexercised options held by
the Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SAR's at
Fiscal Year-End Fiscal Year-End
Shares Acquired Value Exercisable/ Exercisable/
on Exercise Realized Unexercisable Unexercisable
Name (#) ($) (#)(1) ($)(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David I. Fuente . . . . -0- -0- 699,272 10,590,889
290,885 1,653,485
Mark D. Begelman . . . 236,966 4,499,376 848,220 14,181,471
194,110 980,634
Gary D. Foss . . . . . 30,000 646,958 235,618 4,258,596
90,513 500,041
Richard M. Bennington . -0- -0- 227,504 3,771,925
81,250 417,929
Barry J. Goldstein . . 9,000 174,250 244,107 3,773,162
</TABLE>
- --------------------
(1) The first number shown for each officer represents exercisable options,
and the second number represents unexercisable options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board is comprised of two directors,
currently Messrs. Hedrick and Wurtzel. Neither of such directors is or was an
officer of the Company or any of its subsidiaries, no executive officer of the
Company serves or served on the compensation committee of another entity (i)
one of whose executive officers served on the compensation committee of the
Company or (ii) one of whose executive officers served as a director of the
Company, and no executive officer of the Company serves or served as a director
of another entity who has or had an executive officer serving on the
compensation committee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation philosophy is to motivate employees to enhance
shareholder value. The Company's compensation practices are designed to
attract, motivate and retain key personnel by recognizing individual
contributions as well as the achievement of specific pre-determined goals and
objectives primarily through the use of "at risk" compensation strategies.
The Company's compensation program for executive officers consists of
three main components: (1) competitive base salaries, (2) annual cash
incentives based on overall Company performance and, with respect to those
executives who are not eligible to participate in the Designated Executive
Plan, individual performance, and (3) stock option awards intended to encourage
the achievement of superior results over time and to align executive
- 19 -
<PAGE> 22
officer and shareholder interests. The second and third components constitute
"at risk" elements of each executive's total compensation. The Compensation
Committee utilized the services of an independent consultant to assist in the
analysis of all three compensation components for the 1994 fiscal year.
Base Salary. The Compensation Committee determines base salaries for
executive officers utilizing market data developed by its independent
consultant which focuses on other high performance and specialty retail
companies. The survey focused on companies with annual revenues in the $2-$4
billion range. A number of the companies included in the comparison base for
establishing executive pay levels were included in the S&P Retail Stores
Composite and in the S&P 500, which the Company utilized in the performance
graph elsewhere in this proxy statement. The Committee targets the median
level of the executive market for comparably sized companies within these
surveys in determining executive base pay levels.
The base salary for Mr. Fuente, Chairman and Chief Executive Officer,
increased by $75,000, a 13.6% increase over his 1993 base salary. Salaries for
the next four highest compensated officers as a group rose by $200,000, or
16.7%, over 1993 base pay. These increases in salaries for the Chief Executive
Officer and next four highest compensated officers position these executives at
approximately the median for their peer group and reflect the increase in
responsibilities consistent with the Company's rapid growth.
Annual Bonus. The bonus compensation of the Company's executive officers
is determined pursuant to (i) the Office Depot, Inc. Management Incentive Plan
(the "Management Plan") or (ii) the Office Depot, Inc. Designated Executive
Incentive Plan, which is presented for stockholder approval herein (the
"Designated Executive Plan," and, together with the Management Plan, the
"Incentive Plans"). The Incentive Plans provide for cash awards to eligible
participants. Eligible participants under the Management Plan are generally
salaried employees, including executive officers, who have been employed by the
Company through the end of the related fiscal year. Under the Designated
Executive Plan, eligible participants are defined to include those key
employees of the Company who have been identified by the Board. The objective
of the Incentive Plans is to enhance shareholder value by rewarding employees
for the attainment of the Company's financial objectives and, in the case of
the Management Plan, for the attainment of other specific individual goals
linked to specified strategic elements of the business. By extending annual
bonuses deep into the organization, all managerial employees are motivated to
help achieve the Company's profit objectives as well as other key strategic
initiatives of the Company.
Awards under the Incentive Plans are expressed as a percentage of base
salary. These awards are a function of (i) the participant's level of
responsibility, (ii) the Company's financial performance for the year, and
(iii) in the case of the Management Plan, the participant's individual
performance for the year, as measured by specified goals established for such
participant. The Company has reserved the discretionary power under the
Management Plan to defer payment under such plan for up to 24 months after the
date payment would otherwise be made to the extent necessary to prevent a
participant's includible compensation from exceeding the $1 million limit under
Section 162(m) for any given year.
Under the Management Plan, performance is measured in connection with
attainment of specific earnings per share objectives as well as individual
goals that are established by the participant and his or her immediate
supervisor. Individual goals include targets which are above and beyond the
participant's normal job functions. Under the Designated Executive Plan,
performance is measured in connection with attainment of specific objectives
based on one or more of the following five measurements of the Company's
performance, as determined by the Compensation Committee each year and as such
measurements may be adjusted for merger costs as presented on the Company's
audited financial statements: pre-tax earnings, net earnings, earnings per
share, return on assets and return on equity. The maximum bonus amount payable
under the Designated Executive Plan in any single year to any single officer
is $2,000,000. The goals of and awards to the Chief Executive Officer, the
President, and the executive officers of the Company under the Incentive Plans
are approved by the Compensation Committee.
For 1994, the Compensation Committee determined that the actual Incentive
Plan awards, for executive officers only, could be as much as twice the maximum
award otherwise payable if the Company's earnings per share exceed the
"stretch" goal (the most aggressive target level) established by the
Compensation Committee by including a "performance premium" if earnings per
share exceeded the prior year by at least 50%. This goal was significantly
above the Company's earnings forecast at the time the objective was
established. Actual 1994 earnings per share were $0.69 compared to $0.45 in
1993 (prior to restatement for 1994 acquisitions accounted for on a pooling of
- 20 -
<PAGE> 23
interest basis), or an increase of 53%, resulting in premium bonus payments for
the executive officer group under both the Management Plan and the Designated
Executive Plan.
For 1994, Mr. Fuente, Chairman and Chief Executive Officer, earned a
bonus of $1,250,000 as a result of the performance premium related to the
earnings per share performance. This "at risk" portion was 66.7% of Mr.
Fuente's 1994 total cash compensation. For 1994, Mr. Begelman, President and
Chief Operating Officer, earned a bonus of $1,000,000 as a result of the
performance premium related to the earnings per share performance. This "at
risk" portion was 66.7% of Mr. Begelman's 1994 total cash compensation. Such
awards were made pursuant to the Designated Executive Plan, which is submitted
for approval herein. Approval of the Designated Executive Plan is required for
the payment of amounts payable thereunder with respect to the 1994 fiscal year.
For 1994, incentive awards to other executive officers pursuant to the
Management Plan were based on earnings per share objectives and specific
individual objectives as established by the Compensation Committee. The
incentive opportunities for the executive officers pursuant to the Management
Plan are calculated as a percentage of base salary, with an award of up to
twice the maximum award otherwise payable if the Company's earnings per share
exceed the "stretch" goal (the most aggressive target level) established by the
Compensation Committee. For 1994, the three highest paid officers (other than
Messrs. Fuente and Begelman) as a group earned bonuses pursuant to the
Management Plan totalling an aggregate of $1,197,600. The "at risk" portion
was an aggregate of 57.1% of total compensation for such executives.
Stock Based Incentive Program. The objective of stock option awards is
to motivate grantees to maximize long-term growth and profitability of the
Company. Grantees can recognize value from options granted only if the
Company's stock price increases after the date on which such options are
granted, since the exercise price of options granted must at least equal the
fair market value of the Company's stock on the date of grant. The award of
options thus aligns the long-range interests of the grantees with those of
shareholders.
Grants of options to the Company's executive officers and other key
employees in fiscal 1994 were made pursuant to the Option Plan. Grants of
options under the Option Plan were generally made annually. The Compensation
Committee determined the grant levels for grants to the Chief Executive
Officer, the President, and the executive officers of the Company after taking
into consideration prior year's grants, the organizational impact of the
participant and the level of emphasis the Company placed on participant
retention. Stock option awards below the executive officer level are a
function of position within the organization.
Awards granted to Mr. Fuente and the next four highest compensated
executives for 1994 appear in the table on page ___. Based on the
Black-Scholes option pricing model, the present value at date of grant of Mr.
Fuente's 1994 stock options represents 44.3% of his total 1994 compensation.
The total "at risk" portion, stock options plus annual bonus, was 81.3% of
total 1994 compensation.
Stock option awards granted to the next four highest compensated
executives for 1994 represent 40.5% of total 1994 compensation. The total "at
risk" portion, stock plus annual bonus, for the next four highest compensated
executives was 76.7% of total 1994 compensation.
This emphasis of "at risk" compensation is consistent with the Company's
compensation philosophy and supports continued creation of shareholder value.
Deferred Compensation Plan. The Company's executive officers and other
key employees are permitted to defer up to 25% of their base salaries and up to
100% of their bonuses under the Office Depot, Inc. Deferred Compensation Plan.
Deferrals may generally be made for any period of time selected by the
executive, but the Company has the right to further defer payouts under the
plan in order to avoid exceeding the $1 million cap on executive compensation.
Although the plan allows the Company to make additional matching deferrals and
incentive contributions at its discretion, no such contributions were made
under the plan for 1994 and no such contributions are contemplated for 1995.
- 21 -
<PAGE> 24
Split Dollar Life Insurance. Effective in April 1995, the Corporation
makes available to its executive officers the opportunity to purchase whole
life insurance policies, with the premiums payable by the Company. If the
Company's assumptions regarding mortality, dividends and other factors are
realized, the Company will recover all of its payment for premiums either from
death benefits or from the executive, if the policy is transferred to the
executive.
Compliance with Internal Revenue Code Section 162(m). Section 162(m),
which took effect January 1, 1994, generally disallows a tax deduction to
public companies for compensation over $1 million paid to the corporation's
Chief Executive Officer and four other most highly compensated executive
officers.
Qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. The Company currently intends
to structure the performance-based portion of the compensation of its executive
officers (which currently consists of stock option grants and annual bonus) in
a manner that complies with Section 162(m).
Report of Compensation Committee
Alan L. Wurtzel, Chairman
W. Scott Hedrick, member
- 22 -
<PAGE> 25
COMMON STOCK PERFORMANCE
The graph shown below compares the cumulative total shareholder return on
the Company's Common Stock since December 31, 1989 with the S&P 500 Index and
the S&P Retail Stores Composite Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
OFFICE DEPOT, INC., THE S&P 500 INDEX AND THE S&P RETAIL STORES COMPOSITE INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD OFFICE DEPOT, INC. S&P 500 S&P RETAIL STORES
<S> <C> <C> <C>
12/31/89 100 100 100
12/31/90 87 97 100
12/31/91 281 126 159
12/31/92 376 136 186
12/31/93 560 150 179
12/31/94 588 152 163
</TABLE>
- 23 -
<PAGE> 26
CERTAIN TRANSACTIONS
On April 24, 1991, the Company entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") with Carrefour S.A., a societe anonyme
organized under the laws of France ("Carrefour"), pursuant to which the Company
agreed to sell to Carrefour 6,435,000 newly issued shares of the Company's
Common Stock at a price of $6.23 per share (the "Carrefour Transaction").
These shares are currently held by an indirect wholly-owned subsidiary of
Carrefour, Fourcar B.V. The Carrefour Transaction was consummated on June 7,
1991 and resulted in proceeds to the Company of $40,040,000. Under the terms
of the Stock Purchase Agreement, among other provisions, Carrefour and its
affiliates may not, prior to July 1, 1994, without the consent of the Board and
subject to certain conditions, (i) increase their percentage ownership of the
Company's voting securities above the greater of (A) 25% or (B) 1% more than
the percentage ownership of any other stockholder or stockholder group of the
Company, (ii) sell such shares without first offering such shares to the
Company pursuant to a right of first refusal, or (iii) form or encourage the
formation of a group to acquire control of the Company. In the event of any
subsequent issuances of the Company's securities prior to July 1, 1994,
Carrefour has been granted the preemptive right to purchase additional
securities of the Company in order to retain its percentage ownership in the
Company. In connection with the Carrefour Transaction, the Company has also
granted Carrefour certain registration rights and has agreed to nominate, and
to use reasonable efforts to elect, a representative of Carrefour to the Board
so long as Carrefour and its affiliates hold at least 10% of the Company's
outstanding voting securities. Mr. Defforey was nominated to the Board in
accordance with this agreement. In addition, Carrefour has agreed not to
compete with the Company in the retail office products supply business in a
large volume, warehouse or discount store format in North America.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in proxy materials for the Company's
1996 Annual Meeting of Stockholders should be addressed to the Corporate
Secretary at the Company's principal executive offices, 2200 Old Germantown
Road, Delray Beach, Florida 33445, and must be received by the Company on or
before December 15, 1995.
OTHER MATTERS
It is not presently expected that any matters other than those discussed
herein will be brought before the Annual Meeting. If, however, other matters
do come before the meeting, it is the intention of the persons named as
representatives in the accompanying proxy to vote in accordance with the
recommendation of the Company's management.
- 24 -
<PAGE> 27
ANNEX A
RESTATED CERTIFICATE OF INCORPORATION
OF
OFFICE DEPOT, INC.
ARTICLE ONE
The name of the corporation is Office Depot, Inc.
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is the Corporation Trust Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
4.1 Capital Stock. The total number of shares of capital stock
which the corporation has authority to issue is 400 million shares of Common
Stock, par value of $0.01 per share, and 1 million shares of Preferred Stock,
par value of $0.01 per share.
4.2 Common Stock. Except as otherwise provided by the General
Corporation Law of the State of Delaware, by this restated certificate of
incorporation or any amendments thereto or by resolutions adopted by the board
of directors of the corporation providing for the issuance of Preferred Stock,
all of the voting power of the corporation shall be vested in the holders of
the Common Stock, and each holder of Common Stock shall have one (1) vote for
each share of Common Stock held by such holder on all matters voted upon by the
stockholders.
4.3 Preferred Stock. The board of directors of the corporation is
authorized, subject to the limitations prescribed by law and the provisions of
this restated certificate of incorporation, to provide for the issuance of
shares of the Preferred Stock in one or more series, to establish from time to
time the number of shares to be included in each such series and to fix the
designations, voting powers, preferences, rights and qualifications,
limitations or restrictions of the shares of the Preferred Stock of each such
series.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE SEVEN
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or
<PAGE> 28
places as may be designated from time to time by the board of directors of the
corporation or in the by-laws of the corporation. Election of directors need
not be by written ballot unless the by-laws of the corporation so provide.
ARTICLE EIGHT
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHT shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE NINE
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and
all rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE TEN
The corporation has expressly elected not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
- 2 -
<PAGE> 29
APPENDIX A
OFFICE DEPOT, INC. OMNIBUS EQUITY PLAN
ARTICLE 1. GENERAL
1.1 Purpose. The purpose of the Office Depot, Inc.
Omnibus Equity Plan (the "Plan") is to provide for certain officers, directors
and key personnel, as defined in Section 1.3, of Office Depot, Inc. (the
"Company") and certain of its Affiliates, and individuals who provide
significant services for the benefit of the Company and certain of its
Affiliates, with an equity-based incentive to maintain and enhance the
performance and profitability of the Company. It is the further purpose of
this Plan to permit the granting of options and stock appreciation rights that
will constitute performance-based compensation for certain executive officers,
as described in section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.
1.2 Administration.
(a) The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board"), which Committee shall consist of two or more directors. It is
intended that the directors appointed to serve on the Committee shall be
"disinterested persons" (within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the "Act")) and "outside directors" (within
the meaning of Code section 162(m)), so long as satisfaction of such
classifications is required for the exemptions set forth in such Rule and
section; provided, however, that the mere fact that a Committee member shall
fail to qualify under either of these requirements shall not invalidate any
award made by the Committee which award is otherwise validly made under the
Plan. The members of the Committee shall be appointed by, and may be changed
at any time and from time to time in the discretion of, the Board.
(b) The determination of the Committee on all matters
relating to the Plan or any Plan agreement shall be conclusive.
(c) No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
award hereunder.
<PAGE> 30
(d) Notwithstanding anything to the contrary contained
herein: the Board may, in its sole discretion, at any time and from time to
time, resolve to administer the Plan, in which case, the term Committee as used
herein shall be deemed to mean the Board.
(e) The Company shall bear all costs, including
attorneys' and accountants' fees and expenses, of administering the Plan.
1.3 Persons Eligible for Awards. Awards under the Plan
may be made to such officers, directors and executive, managerial or
professional employees ("key personnel") of the Company or its Affiliates, and
individuals who provide significant services for the benefit of the Company or
its Affiliates, as the Committee shall from time to time in its sole discretion
select; provided, that officers who are not employees of the Company or any of
its Affiliates shall not be eligible to receive awards under the Plan, and
provided, further, that directors who are not, and were not during the previous
year, (i) a director of the Company or any of its Affiliates who was granted or
awarded equity securities pursuant to the Office Depot, Inc. Stock Option and
Stock Appreciation Rights Plan or any other plan of the Company or any of its
Affiliates (other than the Office Depot, Inc. Amended Directors Stock Option
Plan or (ii) an officer or employee of the Company or any of its Affiliates,
shall not be eligible to receive awards under the Plan.
1.4 Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i)
stock options ("options"), (ii) stock appreciation rights related to an option
("related stock appreciation rights"), (iii) stock appreciation rights not
related to any option ("unrelated stock appreciation rights") and (iv)
restricted stock awards ("restricted stock awards"), all as more fully set
forth in Sections 2 and 3.
(b) Options granted under the Plan may be either (i)
"nonqualified" stock options subject to the provisions of Code section 83 or
(ii) options intended to qualify for incentive stock option treatment described
in Code section 422.
-2-
<PAGE> 31
(c) All options when granted are intended to be
nonqualified stock options, unless the applicable Plan agreement explicitly
states that the option is intended to be an incentive stock option. If an
option is intended to be an incentive stock option, and if for any reason such
option (or any portion thereof) shall not qualify as an incentive stock option,
then, to the extent of such nonqualification, such option (or portion) shall be
regarded as a nonqualified stock option appropriately granted under the Plan,
provided that such option (or portion) otherwise meets the Plan's requirements
relating to nonqualified stock options.
1.5 Shares Available for Awards.
(a) Subject to Section 4.5 (relating to adjustments upon
changes in capitalization), as of any date the total number of shares of Common
Stock with respect to which awards may be granted under the Plan, shall equal
the excess (if any) of 4,725,000 shares, over (i) the number of shares of Common
Stock subject to outstanding awards, (ii) the number of shares in respect of
which options and stock appreciation rights have been exercised, and (iii) the
number of shares issued subject to forfeiture restrictions which have lapsed.
In accordance with (and without limitation upon) the preceding
sentence, awards may be granted in respect of the following shares of Common
Stock: shares covered by previously granted awards that have expired,
terminated or been canceled for any reason whatsoever (other than by reason of
exercise or vesting) and with respect to which shares a grantee has received no
benefits of ownership (other than voting rights and dividends that were
forfeited on such expiration, termination or cancellation).
As a further limitation in addition to the foregoing, the
total number of shares of Common Stock with respect to which restricted stock
awards may vest under the Plan shall not exceed (subject to adjustments under
Section 4.5) 2 percent of the number of shares of Common Stock issued and
outstanding on the date the Plan is initially approved by the stockholders of
the Company.
(b) In any calendar year, a continuing employee of the
Company eligible for awards under the Plan may not be granted options and/or
unrelated stock appreciation rights under the Plan covering a total of more
than 250,000 shares of Common Stock; and
-3-
<PAGE> 32
an employee of the Company eligible for awards under the Plan who was not an
employee of the Company prior to such year may not be granted options and/or
unrelated stock appreciation rights under the Plan covering a total of more
than 400,000 shares of Common Stock.
(c) The aggregate fair market value (as of the effective
date of grant of incentive stock options) of Common Stock with respect to which
incentive stock options granted to a grantee under the Plan are exercisable for
the first time by such grantee during any calendar year shall not exceed
$100,000.
(d) Shares of Common Stock that shall be subject to
issuance pursuant to the Plan shall be authorized and unissued, treasury or
reacquired shares of Common Stock or any combination thereof.
(e) Without limiting the generality of the foregoing, the
Committee may, with the grantee's consent, cancel any award under the Plan and
issue a new award in substitution therefor upon such terms as the Committee may
in its sole discretion determine, provided that the substituted award shall
satisfy all applicable Plan requirements as of the date such new award is made;
and further provided, notwithstanding the foregoing or any other provision of
this Plan, that in no event shall an option or stock appreciation right be
granted in substitution for a previously granted option or stock appreciation
right, with the old award being canceled or surrendered as a condition of
receiving the new award, if the new award would have a lower option exercise
price or stock appreciation right appreciation base than the award it replaces.
The foregoing is not intended to prevent equitable adjustment of awards upon
the occurrence of certain events as herein provided, for example, without
limitation, adjustments pursuant to Section 4.5.
1.6 Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means any person
or entity which, at the time of reference, directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, the Company.
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(b) The term "Common Stock" as used herein means the
shares of common stock of the Company as constituted on the effective date of
the Plan, and any other shares into which such common stock shall thereafter be
changed by reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like.
(c) Except as otherwise determined by the Committee in
its sole discretion, the "fair market value" as of any date and in respect of
any share of Common Stock shall be:
(i) if the Common Stock is listed for trading on
the New York Stock Exchange, the closing price, regular way,
of the Common Stock as reported on the New York Stock Exchange
Composite Tape, or if no such reported sale of the Common
Stock shall have occurred on such date, on the next preceding
date on which there was such a reported sale; or
(ii) if the Common Stock is not so listed but is
listed on another national securities exchange or authorized
for quotation on the National Association of Securities
Dealers Inc.'s NASDAQ National Market System ("NASDAQ/NMS"),
the closing price, regular way, of the Common Stock on such
exchange or NASDAQ/NMS, as the case may be, on which the
largest number of shares of Common Stock have been traded in
the aggregate on the preceding twenty trading days, or, if no
such reported sale of the Stock shall have occurred on such
date on such exchange or NASDAQ/NMS, as the case may be, on
the preceding date on which there was such a reported sale on
such exchange or NASDAQ/NMS, as the case may be; or
(iii) if the Common Stock is not listed for trading
on a national securities exchange or authorized for quotation
on NASDAQ/NMS, the average of the closing bid and asked prices
as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, if no such prices
shall have been so reported for such date, on the next
preceding date for which such prices were so reported.
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1.7 Agreements Evidencing Awards.
(a) Options, stock appreciation rights and restricted
stock awards granted under the Plan shall be evidenced by written agreements.
Other awards granted under the Plan shall be evidenced by written agreements to
the extent the Committee may in its sole discretion deem necessary or
desirable. Any such written agreements shall (i) contain such provisions not
inconsistent with the terms of the Plan as the Committee may in its sole
discretion deem necessary or desirable and (ii) be referred to herein as "Plan
agreements."
(b) Each Plan agreement shall set forth the number of
shares of Common Stock subject to the award granted thereby.
(c) Each Plan agreement with respect to the granting of a
related stock appreciation right shall set forth the number of shares of Common
Stock subject to the related option which shall also be subject to the related
stock appreciation right granted thereby.
(d) Each Plan agreement with respect to the granting of
an option shall set forth the amount (the "option exercise price") payable by
the grantee to the Company in connection with the exercise of the option
evidenced thereby. The option exercise price per share shall not be less than
the fair market value of a share of Common Stock on the date the option is
granted.
(e) Each Plan agreement with respect to a stock
appreciation right shall set forth the amount (the "appreciation base") over
which appreciation will be measured upon exercise of the stock appreciation
right evidenced thereby. The appreciation base per share of Common Stock
subject to a stock appreciation right shall not be less than (i) in the case of
an unrelated stock appreciation right, the fair market value of a share of
Common Stock on the date the stock appreciation right is granted, or (ii) in
the case of a related stock appreciation right, the option exercise price per
share of Common Stock subject to the related option.
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ARTICLE 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 Grant of Stock Options. The Committee may grant
options to purchase shares of Common Stock in such amounts and subject to such
terms and conditions as the Committee shall from time to time in its sole
discretion determine, subject to the terms of the Plan.
2.2 Grant of Stock Appreciation Rights.
(a) Related Stock Appreciation Rights. The Committee may
grant a related stock appreciation right in connection with all or any part of
an option granted under the Plan, either at the time the related option is
granted or any time thereafter prior to the exercise, termination or
cancellation of such option, and subject to such terms and conditions as the
Committee shall from time to time in its sole discretion determine, subject to
the terms of the Plan. The grantee of a related stock appreciation right
shall, subject to the terms of the Plan and the applicable Plan agreement, have
the right to surrender to the Company for cancellation all or a portion of the
related option granted under the Plan, but only to the extent that such option
is then exercisable, and to be paid therefor an amount equal to the excess (if
any) of (i) the aggregate fair market value of the shares of Common Stock
subject to such option or portion thereof (determined as of the date of
exercise of such stock appreciation right), over (ii) the aggregate
appreciation base (determined pursuant to Section 1.7(e)) of the shares of
Common Stock subject to such stock appreciation right or portion thereof.
(b) Unrelated Stock Appreciation Rights. The Committee
may grant an unrelated stock appreciation right in such amount and subject to
such terms and conditions as the Committee shall from time to time in its sole
discretion determine, subject to the terms of the Plan. The grantee of an
unrelated stock appreciation right shall, subject to the terms of the Plan and
the applicable Plan agreement, have the right to surrender to the Company for
cancellation all or a portion of such stock appreciation right, but only to the
extent that such stock appreciation right is then exercisable, and to be paid
therefor an amount equal to the excess (if any) of: (i) the aggregate fair
market value of the shares of Common Stock subject to such stock appreciation
right or portion thereof (determined as of the date of exercise of such stock
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appreciation right); over (ii) the aggregate appreciation base (determined
pursuant to Section 1.7(e)) of the shares of Common Stock subject to such stock
appreciation right or portion thereof.
(c) Payment. Payment due to the grantee upon exercise of
a stock appreciation right shall be made in cash and/or in Common Stock (valued
at the fair market value thereof as of the date of exercise) as determined by
the Committee in its sole discretion.
2.3 Exercise of Related Stock Appreciation Right Reduces
Shares Subject to Option. Upon any exercise of a related stock appreciation
right or any portion thereof, the number of shares of Common Stock subject to
the related option shall be reduced by the number of shares of Common Stock in
respect of which such stock appreciation right shall have been exercised.
2.4 Exercisability of Options and Stock Appreciation
Rights. Subject to the other provisions of the Plan:
(a) Exercisability Determined by Plan Agreement. Each
Plan agreement shall set forth the period during which and the conditions
subject to which the option or stock appreciation right evidenced thereby shall
be exercisable, as determined by the Committee in its discretion.
(b) Exercise of Related Stock Appreciation Right. Unless
the applicable Plan agreement otherwise provides, a related stock appreciation
right shall be exercisable at any time during the period that the related
option may be exercised.
(c) Partial Exercise Permitted. Unless the applicable
Plan agreement otherwise provides, an option or stock appreciation right
granted under the Plan may be exercised from time to time as to all or part of
the full number of shares as to which such option or stock appreciation right
shall then be exercisable.
(d) Notice of Exercise; Exercise Date.
(i) An option or stock appreciation right shall
be exercisable by the filing of a written notice of exercise
with the Company, on such form and in such manner as the
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Committee shall in its sole discretion prescribe, and by
payment in accordance with Section 2.6.
(ii) Unless the applicable Plan agreement
otherwise provides, or the Committee in its sole discretion
otherwise determines, the date of exercise of an option or
stock appreciation right shall be the date the Company
receives such written notice of exercise and payment.
2.5 Limitation on Exercise. Notwithstanding any other
provision of the Plan, no Plan agreement shall permit an incentive stock option
to be exercisable more than 10 years after the date of grant.
2.6 Payment of Option Price.
(a) Tender Due Upon Notice of Exercise. Unless the
applicable Plan agreement otherwise provides or the Committee in its sole
discretion otherwise determines, any written notice of exercise of an option
shall be accompanied by payment of the full purchase price for the shares being
purchased.
(b) Manner of Payment. Payment of the option exercise
price shall be made in any combination of the following:
(i) by certified or official bank check payable
to the Company (or the equivalent thereof acceptable to the
Committee);
(ii) by personal check (subject to collection),
which may in the Committee's discretion be deemed conditional;
(iii) if and to the extent provided in the
applicable Plan agreement, by delivery of previously acquired
shares of Common Stock owned by the grantee for at least six
months (or such other period as the Committee may prescribe)
having a fair market value (determined as of the option
exercise date) equal to the portion of the option exercise
price being paid thereby, provided that the Committee may
require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery
would not result in the grantee
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incurring any liability under Section 16(b) of the Act and
does not require any Consent (as defined in Section 4.2); and
(iv) with the consent of the Committee in its sole
discretion, by the full recourse promissory note and agreement
of the grantee providing for payment with interest on the
unpaid balance accruing at a rate not less than that needed to
avoid the imputation of income under Code section 7872 and
upon such terms and conditions (including the security, if
any, therefor) as the Committee may determine.
(c) Cashless Exercise. Payment in accordance with
Section 2.6(b) may be deemed to be satisfied, if and to the extent provided in
the applicable Plan agreement, by delivery to the Company of an assignment of a
sufficient amount of the proceeds from the sale of Common Stock acquired upon
exercise to pay for all of the Common Stock acquired upon exercise and an
authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be made at the grantee's direction at the time of exercise,
provided that the Committee may require the grantee to furnish an opinion of
counsel acceptable to the Committee to the effect that such delivery would not
result in the grantee incurring any liability under Section 16 of the Act and
does not require any Consent (as defined in Section 4.2).
(d) Issuance of Shares. As soon as practicable after
receipt of full payment, the Company shall, subject to the provisions of
Section 4.2, deliver to the grantee one or more certificates for the shares of
Common Stock so purchased, which certificates may bear such legends as the
Company may deem appropriate concerning restrictions on the disposition of the
shares in accordance with applicable securities laws, rules and regulations or
otherwise.
2.7 Default Rules Concerning Termination of Employment.
Subject to the other provisions of the Plan and unless the
applicable Plan agreement otherwise provides:
(a) General Rule. All options and stock appreciation
rights granted to a grantee shall terminate upon the grantee's
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termination of employment or ceasing to provide other significant services for
any reason except to the extent post-employment or other provision of service
exercise of the option or stock appreciation right is permitted in accordance
with this Section 2.7.
(b) Termination for Cause. All options and stock
appreciation rights granted to a grantee shall terminate and expire on the day
a grantee's employment or other provision of service is terminated for cause,
the grantee resigns or ceases to provide services for cause or the grantee has
committed an act or omission upon which the Company could have terminated the
grantee's employment or other provision of service for cause.
(c) Regular Termination; Leaves of Absence. If the
grantee's employment or other provision of service terminates for reasons other
than as provided in subsections (b), (d), or (f) of this Section 2.7, the
portion of options and stock appreciation rights granted to such grantee which
were exercisable immediately prior to such termination may be exercised until
the earlier of 90 days after the grantee's termination and the date on which
such options and stock appreciation rights terminate or expire in accordance
with the provisions of the Plan (other than this Section 2.7) and the Plan
agreement; provided, that the Committee may, in its sole discretion, determine
such other period for exercise in the case of a grantee whose employment
terminates solely because the grantee's employer ceases to be an Affiliate or
the grantee transfers employment with the Company's consent to a purchaser of a
business disposed of by the Company. The Committee may, in its sole
discretion, determine (i) whether any leave of absence (including short-term
or long-term disability or medical leave) shall constitute a termination of
employment for purposes of the Plan, and (ii) the impact, if any, of any such
leave on outstanding awards under the Plan.
(d) Retirement. If a grantee's employment terminates by
reason of retirement (as defined in any tax-qualified defined benefit pension
plan maintained by the Company or any Affiliate in which the grantee
participates) the options and stock appreciation rights exercisable by the
grantee immediately prior to the grantee's retirement shall be exercisable by
the grantee until the earlier of 18 months after the grantee's retirement and
the date on which such options and stock appreciation rights terminate or
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expire in accordance with the provisions of the Plan (other than this Section
2.7) and the Plan agreement.
(e) Death After Termination. If a grantee's employment
or other provision of service terminates in the manner described in subsections
(c) or (d) of this Section 2.7 and the grantee dies within the period for
exercise provided for therein, the options and stock appreciation rights
exercisable by the grantee immediately prior to the grantee's death shall be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options and stock appreciation rights pass under the
grantee's will (or, if applicable, pursuant to the laws of descent and
distribution) until the earlier of 12 months after the grantee's death, and the
date on which such options and stock appreciation rights terminate or expire in
accordance with the provisions of subsections (c) or (d) of this Section 2.7.
(f) Death Before Termination. If a grantee dies while
employed by or providing other services for the Company or any Affiliate, all
options and stock appreciation rights granted to the grantee but not exercised
before the death of the grantee, whether or not exercisable by the grantee
before the grantee's death, shall immediately become and be exercisable by the
personal representative of the grantee's estate or by the person to whom such
options and stock appreciation rights pass under the grantee's will (or, if
applicable, pursuant to the laws of descent and distribution) until the earlier
of 18 months after the grantee's death and the date on which such options or
stock appreciation rights terminate or expire in accordance with the provisions
of the Plan (other than this Section 2.7) and the Plan agreement.
2.8 Special ISO Requirements. In order for a grantee to
receive special tax treatment with respect to stock acquired under an option
intended to be an incentive stock option, the grantee of such option must be,
at all times during the period beginning on the date of grant and ending on the
day three months before the date of exercise of such option, an employee of the
Company or any of the Company's parent or subsidiary corporations (within the
meaning of Code section 424), or of a corporation or a parent or subsidiary
corporation of such corporation issuing or assuming a stock option in a
transaction to which Code section 424(a) applies. If an option granted under
the Plan is intended to be an incentive stock option, and if the grantee, at
the time of grant, owns stock
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possessing more than 10 percent of the total combined voting power of all
classes of stock of the grantee's employer corporation or of its parent or
subsidiary corporation, then (i) the option exercise price per share shall in
no event be less than 110 percent of the fair market value of the Common Stock
on the date of such grant and (ii) such option shall not be exercisable after
the expiration of five years after the date such option is granted.
ARTICLE 3. AWARDS OTHER THAN STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
3.1 Restricted Stock Awards.
(a) Grant of Awards. The Committee may grant restricted
stock awards, alone or in tandem with other awards, under the Plan in such
amounts and subject to such terms and conditions as the Committee shall from
time to time in its sole discretion determine. The vesting of a restricted
stock award granted under the Plan may be conditioned upon the completion of a
specified period of employment with the Company or any Affiliate, upon the
attainment of specified performance goals, and/or upon such other criteria as
the Committee may determine in its sole discretion.
(b) Payment. Each Plan agreement with respect to a
restricted stock award shall set forth the amount (if any) to be paid by the
grantee with respect to such award. If a grantee makes any payment for a
restricted stock award which does not vest, appropriate payment may be made to
the grantee following the forfeiture of such award on such terms and conditions
as the Committee may determine.
(c) Forfeiture upon Termination of Employment. Unless
the applicable Plan agreement otherwise provides or the Committee otherwise
determines, (i) if a grantee's employment or other provision of service
terminates for any reason (including death) before all of his restricted stock
awards have vested, the unvested portion of such awards shall terminate and
expire upon such termination, and (ii) in the event any condition to the
vesting of restricted stock awards is not satisfied within the period of time
permitted therefor, such unvested shares shall be returned to the Company.
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(d) Issuance of Shares. The Committee may provide that
one or more certificates representing restricted stock awards shall be
registered in the grantee's name and bear an appropriate legend specifying that
such shares are not transferable and are subject to the terms and conditions of
the Plan and the applicable Plan agreement, or that such certificate or
certificates shall be held in escrow by the Company on behalf of the grantee
until such shares vest or are forfeited, all on such terms and conditions as
the Committee may determine. Unless the applicable Plan agreement otherwise
provides, no share of restricted stock may be assigned, transferred, otherwise
encumbered or disposed of by the grantee until such share has vested in
accordance with the terms of such award. Subject to the provisions of Section
4.2, as soon as practicable after any restricted stock award shall vest, the
Company shall issue or reissue to the grantee (or to the grantee's designated
beneficiary in the event of the grantee's death) one or more certificates for
the Common Stock represented by such restricted stock award.
(e) Grantees' Rights Regarding Restricted Stock. Unless
the applicable Plan agreement otherwise provides: (i) a grantee may vote and
receive dividends on restricted stock awarded under the Plan; and (ii) any
stock received as a distribution with respect to a restricted stock award shall
be subject to the same restrictions as such restricted stock.
ARTICLE 4. MISCELLANEOUS
4.1 Amendment of the Plan; Modification of Awards.
(a) Plan Amendments. The Board may, without stockholder
approval, at any time and from time to time suspend, discontinue or
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amend the Plan in any respect whatsoever, except that no such amendment shall
impair any rights under any award theretofore made under the Plan without the
consent of the grantee of such award. Furthermore, except as and to the extent
otherwise permitted by Section 4.5 or 4.11, no such amendment shall, without
stockholder approval:
(i) materially increase the benefits accruing to
grantees under the Plan;
(ii) increase the maximum number of shares which
may be made subject to awards to an individual as options or
stock appreciation rights in any year;
(iii) materially increase, beyond the amounts set
forth in Section 1.5, the number of shares of Common Stock in
respect of which awards may be issued under the Plan;
(iv) materially modify the designation in Section
1.3 of the classes of persons eligible to receive awards under
the Plan;
(v) provide for the grant of stock options or
stock appreciation rights having an option exercise price or
appreciation base per share of Common Stock less than 100
percent of the fair market value of a share of Common Stock on
the date of grant; or
(vi) extend the term of the Plan beyond the period
set forth in Section 4.13.
(b) Award Modifications. Subject to the terms and
conditions of the Plan (including Section 4.1(a)), the Committee may amend
outstanding Plan agreements with such grantee, including, without limitation,
any amendment which would (i) accelerate the time or times at which an award
may vest or become exercisable and/or (ii) extend the scheduled termination or
expiration date of the award, provided, however, that no modification having a
material adverse effect upon the interest of a grantee in an award shall be
made without the consent of such grantee.
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4.2 Restrictions.
(a) Consent Requirements. If the Committee shall at any
time determine that any Consent (as hereinafter defined) is necessary or
desirable as a condition of, or in connection with, the granting of any award
under the Plan, the acquisition, issuance or purchase of shares or other rights
hereunder or the taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not be
taken, in whole or in part, unless and until such Consent shall have been
effected or obtained to the full satisfaction of the Committee. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine not to make any payment whatsoever until Consent has been given if
(i) the Committee may make any payment under the Plan in cash, Common Stock or
both, and (ii) the Committee determines that Consent is necessary or desirable
as a condition of, or in connection with, payment in any one or more of such
forms.
(b) Consent Defined. The term "Consent" as used herein
with respect to any Plan Action means (i) any and all listings, registrations
or qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule or
regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local
law, rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies or any parties to any loan agreements or other
contractual obligations of the Company or any Affiliate.
4.3 Nontransferability. No award granted to any grantee
under the Plan or under any Plan agreement shall be assignable or transferable
by the grantee other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee
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Retirement Income Security Act, as amended, or the rules thereunder. During
the lifetime of the grantee, all rights with respect to any award granted to
the grantee under the Plan or under any Plan agreement shall be exercisable
only by the grantee.
4.4 Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to
be delivered pursuant to an award, the Committee may require as a condition of
delivery that the grantee remit an amount sufficient to satisfy all federal,
state and other governmental withholding tax requirements related thereto.
Whenever cash is to be paid under the Plan (whether upon the exercise of a
stock appreciation right or otherwise), the Company may, as a condition of its
payment, deduct therefrom, or from any salary or other payments due to the
grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto or to the delivery of
any shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i)
a grantee may elect to satisfy all or part of the foregoing withholding
requirements by delivery of unrestricted shares of Common Stock owned by the
grantee for at least six months (or such other period as the Committee may
determine) having a fair market value (determined as of the date of such
delivery by the grantee) equal to all or part of the amount to be so withheld,
provided that the Committee may require, as a condition of accepting any such
delivery, the grantee to furnish an opinion of counsel acceptable to the
Committee to the effect that such delivery would not result in the grantee
incurring any liability under Section 16(b) of the Act and (ii) the Committee
may permit any such delivery to be made by withholding shares of Common Stock
from the shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed the
date such award was exercised).
4.5 Adjustments Upon Changes in Capitalization. If and
to the extent specified by the Committee, the number of shares of Common Stock
which may be issued pursuant to awards under the Plan, the maximum number of
options and/or unrelated stock appreciation rights which may be granted to any
one person in any year, the number of shares of Common Stock subject to awards,
the 2 percent limitation on the number of shares of Common Stock which may vest
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in respect of restricted stock awards under Section 1.5(a) above, the option
exercise price and appreciation base of options and stock appreciation rights
theretofore granted under the Plan, and the amount payable by a grantee in
respect of an award, shall be appropriately adjusted (as the Committee may
determine) for any change in the number of issued shares of Common Stock
resulting from the subdivision or combination of shares of Common Stock or
other capital adjustments, or the payment of a stock dividend after the
effective date of the Plan, or other change in such shares of Common Stock
effected without receipt of consideration by the Company; provided that any
awards covering fractional shares of Common Stock resulting from any such
adjustment shall be eliminated and provided further, that each incentive stock
option granted under the Plan shall not be adjusted in a manner that causes
such option to fail to continue to qualify as an "incentive stock option"
within the meaning of Code section 422. Adjustments under this Section shall
be made by the Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
4.6 Right of Discharge Reserved. Nothing in the Plan or
in any Plan agreement shall confer upon any person the right to continue in the
employment of the Company or an Affiliate or affect any right which the Company
or an Affiliate may have to terminate the employment of such person.
4.7 No Rights as a Stockholder. No grantee or other
person shall have any of the rights of a stockholder of the Company with
respect to shares subject to an award until the issuance of a stock certificate
to him for such shares. Except as otherwise provided in Section 4.5, no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such stock certificate is
issued. In the case of a grantee of an award which has not yet vested, the
grantee shall have the rights of a stockholder of the Company if and only to
the extent provided in the applicable Plan agreement.
4.8 Nature of Payments.
(a) Any and all awards or payments hereunder shall be
granted, issued, delivered or paid, as the case may be, in consideration of
services performed for the Company or for its
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Affiliates by the grantee.
(b) No such awards and payments shall be considered
special incentive payments to the grantee or, unless otherwise determined by
the Committee, be taken into account in computing the grantee's salary or
compensation for the purposes of determining any benefits under (i) any
pension, retirement, life insurance or other benefit plan of the Company or any
Affiliate or (ii) any agreement between the Company or any Affiliate and the
grantee.
(c) By accepting an award under the Plan, the grantee
shall thereby waive any claim to continued exercise or vesting of an award or
to damages or severance entitlement related to non-continuation of the award
beyond the period provided herein or in the applicable Plan agreement,
notwithstanding any contrary provision in any written employment contract with
the grantee, whether any such contract is executed before or after the grant
date of the award.
4.9 Non-Uniform Determinations. The Committee's
determinations under the Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan (whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be entitled,
among other things, to make non-uniform and selective determinations, and to
enter into non-uniform and selective Plan agreements, as to (a) the persons to
receive awards under the Plan, (b) the terms and provisions of awards under the
Plan, (c) the exercise by the Committee of its discretion in respect of the
exercise of stock appreciation rights pursuant to the terms of the Plan, and
(d) the treatment of leaves of absence pursuant to Section 2.7(c).
4.10 Other Payments or Awards. Nothing contained in the
Plan shall be deemed in any way to limit or restrict the Company, any
Affiliate or the Committee from making any award or payment to any person under
any other plan, arrangement or understanding, whether now existing or hereafter
in effect.
4.11 Reorganization.
(a) In the event that the Company is merged or
consolidated with another corporation and, whether or not the
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Company shall be the surviving corporation, there shall be any change in the
shares of Common Stock by reason of such merger or consolidation, or in the
event that all or substantially all of the assets of the Company are acquired
by another person, or in the event of a reorganization or liquidation of the
Company (each such event being hereinafter referred to as a "Reorganization
Event") or in the event that the Board shall propose that the Company enter
into a Reorganization Event, then the Committee may in its discretion, by
written notice to a grantee, provide that any one or more of the following
conditions shall apply: (a) the options or stock appreciation rights shall
become immediately exercisable by any grantees who are employed by or provide
services to the Company or any of its Affiliates at the time of the
Reorganization Event and that such options or stock appreciation rights shall
terminate if not exercised prior to the date of the Reorganization Event or
other prescribed period of time, (b) the options or stock appreciation rights
shall be assumed by the successor entity or a parent of such successor entity
or (c) substantially equivalent options or stock appreciation rights shall be
substituted by the successor entity or a parent of such successor entity. The
Committee also may in its discretion by written notice to a grantee provide
that all or some of the restrictions on any of the grantee's awards may lapse
in the event of a Reorganization Event upon such terms and conditions as the
Committee may determine.
(b) Whenever deemed appropriate by the Committee, the
actions referred to in Section 4.1 l(a) may be made conditional upon the
consummation of the applicable Reorganization Event.
4.12 Section Headings. The section headings contained
herein are for the purposes of convenience only and are not intended to define
or limit the contents of said sections.
4.13 Effective Date and Term of Plan.
(a) The Plan shall be deemed adopted and become effective
upon the approval thereof by the Board or such other date as the Board shall
determine, in each case subject to the approval of a majority of the Company's
shareholders.
(b) The Plan shall terminate upon the earlier of (i) 10
years after the earlier of the date on which it becomes effective or is
approved by the Company's shareholders, and no awards shall
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thereafter be made under the Plan and (ii) such date as the Board shall
determine. Notwithstanding the foregoing, all awards made under the Plan prior
to such termination date shall remain in effect until such awards have been
satisfied or terminated in accordance with the terms and provisions of the Plan
and the applicable Plan agreement.
4.14 Governing Law. The Plan shall be governed by the
laws of the State of Delaware without giving effect to any choice of laws
provisions.
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APPENDIX B
1994-1998 OFFICE DEPOT, INC. DESIGNATED EXECUTIVE INCENTIVE PLAN
SECTION 1. PURPOSE. The purpose of the Plan is to advance the interests of
the Company and its stockholders by providing incentives to certain designated
key employees of the Company in order to attract, retain and reward such key
employees and to strengthen the existing mutuality of interests between such
designated key employees and the Company's stockholders.
SECTION 2. DEFINITIONS.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended, and any successor thereto.
(c) "Committee" means a committee of the Board consisting of
two or more outside directors within the meaning of Section 162(m) of the Code.
(d) "Company" means Office Depot, Inc., a Delaware
corporation, or any successor corporation.
(e) "Incentive Award" means an award under Section 5 that is
based on achievement of annual performance objectives.
(f) "Participant" means the designated key employees of the
Company selected by the Committee each year to participate in the Plan.
(g) "Plan" means this 1994-1998 Office Depot, Inc. Designated
Executive Incentive Plan.
SECTION 3. ADMINISTRATION. The Plan shall be administered by the Committee.
The Committee shall determine the annual performance objectives for the
Incentive Awards for each Participant. The Committee shall have the authority
to adopt, amend and repeal such rules, guidelines and practices governing the
Plan as it shall, from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any Incentive Award issued under the Plan; and to
otherwise supervise the administration of the Plan. All decisions made by the
Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons. The
Committee shall have the power to decrease or eliminate an Incentive Award.
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SECTION 4. ELIGIBILITY. Key employees of the Company are eligible to be
granted Incentive Awards under the Plan.
SECTION 5. INCENTIVE AWARDS. The Committee may grant Incentive Awards based
on achievement of annual performance objectives. These performance objectives
shall be based on one or more of the following criteria, as adjusted for merger
costs as presented on the Company's audited financial statements: pre-tax
earnings, net earnings, earnings per share, return on assets and return on
equity. The Committee shall determine the annual performance objectives and
the corresponding award levels for each Participant each year within the first
90 days of such year. An Incentive Award shall be paid out in cash and may be
paid only after the Committee has certified in writing that the corresponding
annual performance objective was achieved.
SECTION 6. MAXIMUM COMPENSATION. The maximum dollar amount that any
Participant may be paid in any single year under the Plan may not exceed
$2,000,000.
SECTION 7. TERMINATION. The Board may terminate the Plan at any time.
SECTION 8. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of
January 1, 1994, subject to approval of the Plan by the Company's stockholders.
Any Incentive Awards made under the Plan prior to such approval shall be
effective when made, but shall be conditioned on, and subject to, such approval
of the Plan by such stockholders.
SECTION 9. TERM OF THE PLAN. No Incentive Award may be granted under the Plan
after 1998.
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APPENDIX C
PROXY
OFFICE DEPOT, INC.
2200 OLD GERMANTOWN ROAD
DELRAY BEACH, FL 33445
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David I. Fuente, Mark D. Begelman and
Barry J. Goldstein as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote as designated below all the
shares of common stock of Office Depot, Inc. held of record by the undersigned
on April 7, 1995, at the annual meeting of shareholders to be held on May 18,
1995 or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS
[ ] FOR all of the nominees listed below (except [ ] WITHHOLD AUTHORITY
as marked in the space provided below) to vote for all of the nominees listed below
Mark D. Begelman, Denis Defforey, David I. Fuente, W. Scott Hedrick, John B. Mumford, Michael J. Myers, Peter J.
Solomon, Cynthia Cohen Turk and Alan L. Wurtzel
(INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name in the space
provided below.)
_______________________________________________________________________________________________________________________
2. PROPOSAL TO ADOPT THE RESTATED CERTIFICATE OF INCORPORATION OF OFFICE DEPOT, INC.:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO ADOPT THE OFFICE DEPOT, INC. OMNIBUS EQUITY PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(OVER)
4. PROPOSAL TO ADOPT THE 1994-1998 OFFICE DEPOT, INC. DESIGNATED EXECUTIVE INCENTIVE PLAN, INCLUDING AMOUNTS
PAYABLE THEREUNDER WITH RESPECT TO THE 1994 FISCAL YEAR:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
___________________________________________________________
Signature
___________________________________________________________
Signature if held jointly
DATED: ____________________________________, 1995
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
