IE 11 is not supported. For an optimal experience visit our site on another browser.

Investors asks OfficeMax CEO to forego $14.3M

A large shareholder in OfficeMax Inc. asked Thursday to have the chief of the struggling office products retailer forego $14.3 million he is due upon retirement this summer.
/ Source: The Associated Press

Citing the company's "weak performance," a large shareholder in OfficeMax Inc. sought Thursday to have the head of the struggling office products retailer forego $14.3 million he is due to be paid upon retirement this summer.

K Capital Partners LLC, which owns nearly 6 million shares or 6.2 percent of OfficeMax, asked Executive Chairman George Harad to give up the pay and pension benefits in a letter sent to him at OfficeMax headquarters in Itasca, Ill.

The investment firm, which last month publicly urged the OfficeMax board to take steps to improve its stock price, then released the letter to the media.

Harad did not immediately respond, K Capital said. OfficeMax spokesman Bill Bonner declined comment.

OfficeMax, the No. 3 office products retailer behind Staples Inc. and Office Depot Inc., has seen its recent performance marred by sluggish sales, an accounting scandal and the departure of three top-level officials this year.

Harad, who previously headed OfficeMax predecessor Boise Cascade Corp., got the lucrative sendoff package last Oct. 29 when he agreed to became executive chairman for eight months. He added the duties of interim CEO in February when Christopher Milliken resigned in the wake of the accounting scandal, although OfficeMax said he gets no additional pay for taking on that job.

"Given OfficeMax's weak performance and the significant and ongoing challenges that the company has faced since Boise Cascade's acquisition of OfficeMax, we respectfully request that you voluntarily forego both the $10 million payment due to you in June 2005 and the $4.3 million in additional pension benefits," K Capital said in the letter, signed by managing director Brian Steck. "We are confident that by voluntarily forgoing these payments, you will realign your interests with those of the company and its shareholders."

Harad spent 30 years at Idaho-based Boise Cascade, including 10 years as CEO, and helped orchestrate its purchase of then Cleveland-based OfficeMax in 2003. Boise Cascade then changed its name to OfficeMax, sold off its wood products business for $3.7 billion and moved its headquarters to the Chicago suburb of Itasca.

Pay experts have said Harad's package isn't outrageous in light of Harad's efforts to buy OfficeMax and sell off the rest of his company, which helped boost the market value of the company's stock by 40 percent. But they acknowledged it might not be well-received by investors.

Asked about K Capital's intentions, the investment firm's spokesman Matthew Sherman said: "We are a concerned shareholder focused on the company's weak performance and the poor quality of historical decisions made by the board and management under Mr. Harad. We believe that adding a new independent director to the board should improve the company's decision making process and ensure the quality of future decisions."