Shares of Office Depot Inc. (NYSE: ODP) are climbing today following the filing of an SEC document last night which revealed the company had entered into a new change-in-control (CIC) agreement with several top executives.
ODP shares are up 7.6 percent as of 1:45 p.m. (EDT).
The measure might indicate that Office Depot, which has struggled all year, might be a takeover candidate.
According to the filing, the CIC agreement with chief financial officer Michael Newman, Charles Brown (president, international), and Steven Schmidt (president, North American business solutions division) guarantees the three executives continued employment for a year after a change of control at an annual salary at least equal to twelve times the highest monthly base salary plus a bonus equal to the highest received in the prior three years, as well as cash if they decide to leave.
A “change in control” is defined when any person or group becomes the beneficial owner of 30 percent or more of the combined voting power of shares outstanding, without the approval of the board.
The measure was instituted, the company explained, in order to diminish the potential distraction due to personal uncertainties and risks that inevitably arise when a change of control is threatened or pending.
In late October, the company’s CEO Steven Odland agreed to step down after five years.
Subsequently, Office Depot entered into a retention agreement with CFO Newman which provided for a retention payment of up to almost $2-million if his employment is terminated for any reason other than cause.