Office Depot seeks CEO after SEC settlement
Steve Odland has resigned as chairman and CEO of Office Depot just days after the Securities and Exchange Commission released a settlement agreement detailing how he and former CFO Patricia McKay violated the agency’s fair disclosure rules. Board member Neil Austrian will fill the CEO role on an interim basis while the executive search firm of Heidrick & Struggles locates a replacement.
The company also used the occasion of the CEO’s departure to preannounce that third-quarter sales declined 4% to approximately $2.9 billion but profits increased to $54 million compared with a prior year loss of $413 million.
“During his tenure, the company grew and achieved record revenues and profits, and we have seen some improvement in margins coming out of the depths of the recession,” Austrian said of the five years Odland spent as chairman and CEO of Office Depot. “Now that the worst of the recession is behind us and margins are improving, we believe that this is an appropriate time to seek new leadership to make the most of the platform we have in place, return to sales growth, improve financial performance and reinvigorate our franchise.
Austrian also indicated the company will take its time in locating a replacement, which is the same strategy the company employed the last time Austrian was called upon to serve as interim CEO. That was back in October 2004 when then CEO Bruce Nelson resigned. Austrian served as interim CEO for five months until Odland was appointed chairman and CEO in March 2005. Then, as now, the company retained the firm of Heidrick & Struggles to aid in the search for a new CEO.
Odland’s resignation follows news last week of a settlement with the SEC relating to what the agency deemed inappropriate communications with investors stemming from an incident in 2007. The SEC determined that Odland and former CFO Patricia McKay provided 18 analysts with information about the company’s deteriorating financial results in advance of that information being shared broadly with the market. The availability of that information enabled analysts to lower their estimates, which prompted a sell off in shares.
Although Odland is stepping down at Office Depot, he remains on the board of General Mills where shareholders last month re-elected him and the entire slate of directors for an additional one-year term. Odland has been on the General Mills board since 2004 and serves on the corporate governance and finance committees.