More on Office Depot

The complaints that have led some shareholders to contest two seats on the board of the office-supply company, Office Depot, ahead of an upcoming annual meeting, provided me with the gist of yesterday's entry here.

ODP has been doing rather poorly of late when compared with its rival, Staples. I suggested yesterday that just looking at the stock price move in isolation might be misleading -- one should look at dividend policy, too.

Although that's a sound general rule, it doesn't help the case for ODP's incumbent management any. This is from ODP's website: "The Company has never declared or paid cash dividends on its Common Stock and does not intend to pay cash dividends in the foreseeable future."

Staples, on the other hand, just last week paid a cash dividend of $0.33 per share. It has been in the habit of paying dividends each March, like giving away an Easter egg, and this year's was larger than that of either of the two eggs. Though that may sound flip of me, I'm a very pro-dividends kind of guy, and I'll write something more on that point tomorrow.

So if ODP is going to justify their underperformance vis-a-vis Staples, it won't be on the basis of the dividend stream! What might they say, though? Well, as it happens, ODP did send out a letter to its shareholders yesterday making its case.

It didn't say anything at all about the ODP/Staples comparison. It did acknowledge recent troubles, but qualified that with the comment that there already has been a lot of turnover in board membership lately. There is no need for the dissidents' proposed "fresh faces," then, since the incumbents are new enough to still be fresh.

The statement also discussed in general terms the ODP turnaround plan these fairly-fresh faces have produced and should be left free to execute. Slowly growth to enhance focus, store remodelling, loyalty programs, revisions in both catalog and on-line marketing, etc.

There's nothing in it that bowls me over. If I had this stock, I'd be ticked off. But would I fight, or would I just sell it. That's always the question in these situations, isn't it?