The cost of change rises at Office Depot…

November 3, 2010

Office Depot (ODP) moved pretty swiftly in the wake of its settlement announcement with the Securities and Exchange Commission a couple weeks ago, walking Chief Executive Stephen Odland to the door after he agreed to pay $50,000 as part of the pact with the government (while not acknowledging any wrongdoing, natch).

Odland’s departure cost Office Depot a pretty penny, as Sonya noted here on footnoted last week. Now we learn that it also won’t be cheap to staff the corner office while the company looks for a permanent occupant.

In announcing Odland’s departure, the company named Neil R. Austrian as interim chief executive, but the 8-K that Office Depot filed at the time didn’t include pay details. With the filing of yesterday’s 8-K/A, we learn Austrian will be pulling down a salary of $200,000 a month — a cool $2.4 million a year, should the gig last that long. That’s more than double the salary Odland took home last year, after five years on the job, and just a hair less than his total cash compensation of $2.6 million in 2009, according to Office Depot’s March 12 proxy filing.

Austrian is also getting options on 400,000 shares, with a $4.43 exercise price (the closing price on November 2, the date of Austrian’s offer letter). Those options vest over three years, but half of them vest immediately once a permanent CEO is named (in which case the rest would vest on schedule unless Austrian quits the company’s board).

Office Depot’s transition costs are clearly rising, and we still don’t know how much Odland is being paid as a consultant to the company through the end of this year.

Given that Austrian’s options are under water at the moment, he clearly has incentive to work hard to improve the company’s fortunes while he’s at the helm. Any bets on whether compensation expense is one of the areas he’ll target?

Image source: U.S. Mint

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