Office Depot says its five top executives will collect golden parachute payments totaling $85 million if it completes a proposed merger with Staples.
The biggest chunk would go to Chairman and Chief Executive Roland Smith, who stands to make $46.8 million, according to a regulatory filing Friday.
The proposed golden parachute for Smith, head of Office Depot since late 2013, includes vesting of shares and cashing of options worth $39.3 million, plus cash severance of $7.5 million. That sum would top the largest annual compensation ever received by the head of a publicly traded company based in Palm Beach County.
The tally raised eyebrows among critics of hefty pay packages. Ken Thomas, a Miami economist who has argued that the merger would create a price-gouging monopoly, said the golden parachute will boost Smith’s pay into the neighborhood of $1 million per week worked at Office Depot.
“Most people dream of making $1 million in a lifetime, and this guy is making it in a week,” Thomas said Sunday after learning of the golden parachute. “Hundreds of stores closed, thousands of people laid off — private interests really trump the public interest.”
Smith, 60, isn’t the only Office Depot executive who would cash in on a deal that would remove the Fortune 500 company’s headquarters from Palm Beach County.
Mark Cosby, president of Office Depot’s North American operations, would get $12.5 million; Chief Financial Officer Stephen Hare would collect $10.5 million; Chief Legal Officer Elisa Garcia would get $9 million; and “Chief People Officer” Michael Allison would receive $6.3 million.
The generous payouts are a contrast to the deals being offered rank-and-file employees, some of whom moved here after Office Depot bought OfficeMax of Naperville, Ill. Office Depot this month told employees it wouldn’t pay to move them back to Illinois if they lose their jobs after the Staples merger.
Shareholders can vote against the severance packages, Office Depot said. But, it noted, shareholder votes on the topic are nonbinding — and the board, which counts Smith among its members, already has unanimously approved the golden parachutes.
Meanwhile, Office Depot said that for 2014, Smith was paid a salary of $1.4 million, and he landed a cash bonus of $3.15 million, the maximum possible under Office Depot’s incentive plan.
According to the retailer’s proxy, Smith and other executives easily landed their maximum cash bonuses for the year. Reaching that level required Boca Raton-based Office Depot (NYSE: ODP) to bring in $197 million in adjusted operating income in 2014. Office Depot beat that goal by nearly $100 million, reporting adjusted operating income of $289 million.
Smith’s compensation for 2014 also included relocation expenses of $429,343, personal use of the company plane worth $84,737, a car allowance of $25,000 and a 401(k) match of $5,200.
Smith took over as CEO of Office Depot in late 2013, after the company completed its purchase of smaller rival OfficeMax. Now Office Depot itself is being sold to Staples, a deal that requires approval of the Federal Trade Commission. Staples and Office Depot are banking on their dwindling market share to allay regulators’ concerns about an office supplies monopoly.
Amid a contentious national debate about income inequality and stagnant wages for the middle class, executives of publicly traded companies have enjoyed years of robust raises and record-breaking compensation. The average pay package for 106 executives at 23 area companies rose 9 percent to $3.1 million in 2013, the highest level The Palm Beach Post has found in its annual compensation surveys.