Shareholder revolt at Staples?

May 6, 2004

Investors in Staples (SPLS), the large office supply chain, are staging a revolt, judging from the proxy released yesterday. Four different shareholder proposals — two of which focus on eliminating the poison pill, a notoriously investor unfriendly practice — take aim at the board of directors. The other two proposals deal with excessive compensation — CEO Ronald Sargent received total compensation of $15.5 million last year, about 2/3 of which was in restricted stock — and a proposal that would prohibit accounting firm Ernst & Young from doing consulting and other types of non-audit work for the company. Other than noting that one of the proposals was submitted by the Council of Institutional Investors, Staples, which recommends investors vote against each of the four proposals, doesn’t identify the names behind the proposals, so it’s hard to figure out whether they’re from individuals or institutions. What is clear is that Staples’ shareholders haven’t exactly been the most vocal bunch in the past, so having 4 proposals in one year is clearly unusual. A quick look at prior proxies dating all the way back to 1995 shows that there hasn’t been a single shareholder proposal since the company went public.

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