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Oct 25, 2010

Office Depot chief resigns after Reg FD violation

Resignation statement makes no reference to SEC settlement

Steve Odland, chairman and CEO of Office Depot, has announced his resignation less than a week after the SEC charged him and his company with violating Regulation FD rules.

Five days ago, the SEC fined Office Depot $1 mn for selectively releasing information to analysts and institutional investors during 2007. Odland and Patricia McKay, Office Depot’s former CFO, also received fines of $50,000 each.

In a statement announcing Odland’s resignation, Office Depot makes no reference to the SEC settlement: the company says Odland resigned by mutual agreement with the board. And in an article from Bloomberg, a spokesperson for Office Depot says the resignation has nothing to do with the SEC fine.

Analysts say Odland had been performing badly and investors would be happy to see him go. ‘His tenure at the company started on a promising note, but ended frustratingly for investors,’ comments Colin McGranahan, an analyst at Sanford C Bernstein, in the Bloomberg article.

Last Thursday the SEC announced action against Office Depot relating to a series of phone calls to selected analysts and investors in the company’s second quarter for 2007, aimed at driving down analysts’ estimates.

In the calls, Office Depot implied it would not meet earnings estimates by highlighting statements made by similar companies about the negative effect the economy was having on their performance, says the SEC. Office Depot also used the calls to remind analysts and investors about previous cautionary statements it had made.

Odland proposed the idea of the calls to McKay, who then ‘assisted Office Depot’s investor relations personnel in preparing talking points for the calls,’ according to the SEC statement.

Under the settlement with the regulator, Office Depot, Odland and McKay all accepted the fines without admitting or denying any wrongdoing.