UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OFFICE DEPOT, INC.

Delaware		59-2663954
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2200 Old Germantown Road, Delray Beach, Florida		33445
(Address of principal executive offices)		(Zip Code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01 — Entry into a Material Definitive Agreement

On August 25, 2005, Office Depot, Inc. (the “Company”) agreed to employ Patricia A. McKay as the Company’s Executive Vice President and Chief Financial Officer (Principal Financial Officer within the meaning of Item 5.02 (b)).

Certain key terms of Ms. McKay’s employment are described herein. The description contained herein is qualified in its entirety by the actual language of the Employment Offer Letter to Ms. McKay, dated August 25, 2005 (the “Letter”), a copy of which is attached as Exhibit 99.1.1 to this Current Report on Form 8-K (this “Report”). In the event of any conflict between the description contained in this Report and the Letter, the terms of the Letter shall govern in all respects.

Term.		None stated; employment at Will
Base Salary.		$525,000 per annum
Bonuses.		60% at target, 120% at maximum; guaranteed prorata bonus at target for 2005
		Cash starting bonus of $150,000, payable after first 90 days of employment
Equity Compensation.		Initial grant of 170,000 time-based stock options, seven year term, vesting over three years; 19,000 time-restricted shares, vesting over three years
Employee Benefits.		Comparable to other senior executives of the Company
Termination of Employment.		If terminated other than for cause or for certain enumerated reasons as set forth in the Letter, continuation of base salary for 18 months, plus 1.5 times annual bonus at target, payable over the 18-month period. 18 months to exercise vested stock options.
Non-Competition; Non-Solicitation; Confidentiality Agreements.		18-month non-compete, confidentiality and non-solicitation agreement, attached to Letter.

Item 5.02(a),(b) and (c) — Departure of Director or Principal Officer; Election of Directors; Appointment of Principal Officer

Effective August 25, 2005, Patricia A. McKay has been appointed as Executive Vice President and Chief Financial Officer of the Company. She succeeds Charles E. Brown, who formerly served as Chief Financial Officer of the Company and currently serves as the Company’s President, International. Ms. McKay will assume her duties on September 12, 2005.

Concurrent with her appointment as Executive Vice President and Chief Financial Officer of the Company, Ms. McKay has resigned her position as a member of the Board of Directors of the Company, effective August 25, 2005. Ms. McKay also served as a member of the Audit Committee of the Board of the Company. Her resignation creates a vacancy on the twelve-member Board.

Ms. McKay, age 47, served as a Director of the Company from May 2004 until her resignation on August 25, 2005. She served from 2003 until September 9, 2005 as Executive Vice President and Chief Financial Officer of Restoration Hardware, Inc. a California-based public company that is a specialty retailer of high-quality home furnishings, decorative accessories and hardware. From 1997 until 2003, she worked in various executive-level positions at AutoNation, Inc., the nation’s largest retailer of automobiles, with sales of nearly $20 billion, concluding in her serving as Senior Vice President, Finance. From 1988 until 1996, Ms. McKay served in various financial positions for Dole Food Company, Inc., culminating in the position of Vice President Finance and Controller, a position she held from 1993 until 1996.

A news release, announcing Ms. McKay’s appointment as Executive Vice President and Chief Financial Officer of the Company, and her resignation as a member of the Board of Directors of the Company, was issued on August 25, 2005. A copy of such news release is attached to this Report as Exhibit 99.1.3 and incorporated by this reference.

Item 9.01 — Exhibits

Exhibit 99.1.1		Employment Offer Letter dated August 25, 2005, between Office Depot, Inc. and Patricia A. McKay

Exhibit 99.1.2		News Release Issued by Office Depot, Inc. on August 25, 2005

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		OFFICE DEPOT, INC.
Date: August 30, 2005		By: /s/ DAVID C. FANNIN
		David C. Fannin Executive Vice President and General Counsel

Index of Exhibits

Exhibit No.		Description
Exhibit 99.1.1		Employment Offer Letter dated August 25, 2005, between Office Depot, Inc. and Patricia A. McKay
Exhibit 99.1.2		News Release Issued by Office Depot, Inc. on August 25, 2005

Exhibit 99.1.1

August 25, 2005

Patricia A. McKay
479 Green Glen Way
Mill Valley, CA 94941

Dear Pat:

It is with great pleasure that I offer you the position of Executive Vice President and Chief Financial Officer. We are looking forward to your participation on our team in this role. This letter sets forth the terms of the offer.

Position:		Executive Vice President and Chief Financial Officer
Location:		Corporate Headquarters, Delray Beach, FL
Start Date:		September 12, 2005
Base Salary:		$525,000 per annum.
Annual Bonus Opportunity:		You will be eligible to participate in the Corporate Bonus Program, with a target bonus percentage equal to 60% of your base salary. In order to be entitled to a bonus for any fiscal year, you generally must remain employed when the bonuses are distributed. In addition to participation in the annual bonus program beginning in 2006, you will receive a guaranteed bonus calculated at target, prorated for the period of your employment during 2005.
Stock Compensation:		You will be eligible to participate in Office Depot’s Long-Term Equity Incentive Plan commensurate with your position, beginning in the first quarter of 2006. The specific number, type and value of stock-based awards are determined annually by the Compensation Committee of the Board of Directors. If you had received a grant in 2005 at your level, the award would have been 40,000 stock options and 20,000 performance contingent restricted shares. The ratio of options to restricted stock may change in the future, but you will always receive an award that is appropriate to your level among our senior executives.

		I also will recommend to the Compensation Committee of the Board of Directors that you receive a special one-time award of 170,000 stock options and a 19,000 time vested restricted shares. Each of these awards will contain vesting terms and other terms that are comparable to awards granted to our other senior executive officers. Naturally, the Compensation Committee reserves the right to alter the specific terms of our compensation plans at any time in the future.
Starting Bonus:		You will receive a starting bonus of $150,000, payable after the end of your first 90 days of employment.
Benefits:		You will participate in Office Depot’s group benefit programs. You will also be eligible to participate in Office Depot’s Executive Car Allowance Program at the level appropriate to your position. You will receive the relocation benefits we provide to senior executives at your level in relocating from outside the area to South Florida. In addition, you will be reimbursed for airfare for up to two round trips per month to your home in California (i.e. every other weekend) during the first six months of employment.
Non Compete Agreement:		As a condition to your commencement of employment, you must enter into the agreement attached as Attachment A, which restricts you from competing, soliciting customers or employees, or disclosing confidential information.

Employment at Will; Severance:		Your employment will be at will, meaning that it can be terminated by either of us at any time and for any reason. However, if your employment is involuntarily terminated by the Company (other than (i) by reason of your disability, (ii) by reason of your continued failure to substantially perform your duties with the Company after written notice is delivered, (iii) by reason of your engaging in illegal conduct or any other conduct which is materially injurious to the Company or which violates the Code of Ethical Behavior of the Company or which violates any other material policy of the Company, or (iv) on any anniversary of your hire date, provided the Company has given you at least 90 days notice of such termination), then you will be entitled to receive continued base salary and reimbursement of COBRA premiums in excess of applicable active employee co-premiums for eighteen months following your termination, as well as a sum equal to 1.5 times your annual bonus at target, payable over 18-month period (provided that you have not violated your non-compete agreement with the Company and in lieu of any other bonus of any sort whatsoever with respect to the year in which termination occurs). In addition, upon termination for which you are entitled to the forgoing benefits, you will have a period of 18 months from date of termination in which to exercise any vested stock options. These severance entitlements will be conditional upon your execution of a release of claims against Office Depot and its affiliates, and your compliance with the covenants contained in Attachment A. Although your job duties, title, compensation, benefits, or the Company’s policies, practices and procedures may change from time to time, the “at-will” nature of your employment may only be changed in an express writing signed by you and the Chief Executive Officer of the Company.
Arbitration:		Except as to the right of the Company to resort to any court of competent jurisdiction to obtain injunctive relief or specific enforcement of your obligations contained in Attachment A, any dispute or controversy between you and the Company arising out of or relating to your employment,

		including but not limited to disputes involving discrimination arising under common law, and/or federal, state and local laws, will be settled by arbitration administered by the American Arbitration Association (“AAA”) in accordance with the arbitration clause attached hereto as Attachment B.
Indemnification:		In accordance with Article VI of Company Bylaws.

Pat, we are excited to have you join management as Executive Vice President & CFO of Office Depot. I look forward to your response as soon as practicable.

Sincerely,

/s/ Steve Odland

Steve Odland

Agreed to and Accepted by:

/s/ Patricia A. McKay		August 25, 2005
Patricia A. McKay		Date

cc:		Lee Ault, Chairman, Compensation Committee Board of Directors

ATTACHMENT A

Employee Non-Competition, Confidentiality and Non-Solicitation Agreement

This Agreement of Non-Competition, Confidentiality and Non-Solicitation (this “Agreement”) is made and entered into as of the 25^TH day of August 2005 between Office Depot, Inc., a Delaware corporation (the “Company”) and Patricia A. McKay (the “Executive”).

Agreement

In consideration of the mutual covenants contained herein and other good and valuable consideration, including the compensation to be paid to Executive and the benefits to be received by Employee, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.		Confidential Information. Executive acknowledges that in the course of Executive’s employment with the Company, Executive shall become familiar with the Company’s trade secrets and other information, observations and data obtained by Executive while in the employ of the Company (“Confidential Information”) concerning the Company and its Subsidiaries. Executive acknowledges that such Confidential Information is the unique and special property of the Company. Executive agrees that she shall not disclose to any unauthorized person, or use for Executive’s own purposes and benefit, any Confidential Information without the prior written consent of the Company, unless and to the extent that the aforementioned matters become generally known to and available for use by the public, other than as a result of Executive’s breach of this Agreement. At the termination of Executive’s employment, she shall return to the Company, or at any other time at the Company’s request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software or other documents and data (and copies thereof) relating to the Confidential Information or the business of the Company or any Subsidiary of the Company that Executive may possess or have under her control.
2.		Agreement of Non-Competition; Non-Solicitation; No-Hire; Non-Interference. (a) During the period of time during Executive’s employment by the Company and for a period of eighteen (18) months following the termination of that employment, for whatever reason (or without reason) (the “Noncompete Period”), Executive shall not directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, or in any manner engage in any business competing with the businesses of the Company or its Subsidiaries, as such businesses exist or are in process on the date of the termination of Executive’s employment with the Company, within any geographical area in which the Company or its Subsidiaries engage in such businesses on the date of termination of Executive’s employment with the Company. Examples of such businesses include, but are not limited to, Staples, OfficeMax and Corporate Express. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

(b) During the Noncompete Period, Executive shall not directly, or indirectly through another entity, (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) hire any person who was an employee of the Company or any Subsidiary at the time of termination of the Employment Term or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary (including, without limitation, making any negative statements or communications about the Company or its Subsidiaries).

3.		Reformation of this Agreement. This Agreement shall be enforced to the fullest extent permitted by the law in the state in which Employee resides at the time of the enforcement hereof. If, at the time of enforcement of this Agreement, any court shall hold that the duration, scope or geographical restrictions stated herein are unreasonable under the circumstances then existing, the parties agree that it is their mutual desire and intent that the Company shall be afforded the maximum duration, scope or area reasonable under such circumstances, and each of them hereby requests such court to reform this Agreement so that the maximum duration, scope and geographical restrictions available under applicable law at the time of enforcement of this Agreement shall be substituted by such court for the stated duration, scope or geographical area stated herein and that the court shall be allowed to revise the restrictions contained in this Agreement to such provisions as are deemed reasonable by the court at the time such enforcement is requested.
4.		Injunctive Relief. In the event of the breach or any threatened breach by Executive of any of the provisions of this Agreement, the Company, in addition and supplementary to any and all other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce this Noncompete Agreement or to prevent any violations or threatened violations of the provisions hereof (without being required to post any bond or other security to secure such relief). In addition, in the event of any alleged breach or violation by Executive of this Agreement, the Noncompete Period shall be tolled until such breach or violation has been duly cured and thereafter the Noncompete Period shall be extended for an additional period of time equivalent to the time during which Executive was in breach of this Noncompete Agreement.

5.		Executive’s Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound, except as previously disclosed to the Company, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity, except as previously disclosed to the Company, and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that Executive has had an opportunity to consult with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that Executive fully understands the terms and conditions contained herein.
6.		Survival. This Agreement shall survive and continue in full force in accordance with its terms notwithstanding any termination of employment. Nothing in this Agreement shall be deemed to imply any obligation of continued employment of Employee by the Company which employment shall be “at will” unless otherwise specifically agreed in writing.
7.		Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

Notices to Executive:
Patricia A. McKay
c/o Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, FL 33445

Or to such residential address as may be reflected in the employment records of the Company

Notices to the Company:
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, Florida 33445
Attention: Chairman and Chief Executive Officer

and

Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, Florida 33445
Attention: General Counsel

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or mailed.

8.		Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
9.		Complete Agreement. This Agreement and those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
10.		No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
11.		Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
12.		Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign Executive’s rights or delegate Executive’s obligations hereunder without the prior written consent of the Company.
13.		Choice of Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.

In Testimony whereof, the parties have signed this Noncompete Agreement as of the 25th day of August, 2005.

Executive			Office Depot, Inc.
/s/ Patricia A. McKay			By	/s/ Steve Odland
Patricia A. McKay			Name: Steve Odland Title:   Chairman and CEO

ATTACHMENT B

Arbitration Provisions. Except as to the right of the Company to resort to any court of competent jurisdiction to obtain injunctive relief or specific enforcement of the Executive’s obligations of confidentiality and non-competition, any dispute or controversy between the Company and Executive arising out of or relating to Executive’s employment or termination of employment, including but not limited to disputes involving discrimination arising under common law, and/or federal, state and local laws, shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in accordance with its National Rules for the Resolution of Employment Disputes then in effect, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Any arbitration shall be held before a single arbitrator who shall be selected by the mutual agreement of the Company and Executive, unless the parties are unable to agree to an arbitrator, in which case the arbitrator will be selected under the procedures of the AAA. The arbitrator shall have the authority to award any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of an injunction. Each party agrees to abide by and accept the final decision of the arbitrator as to the ultimate resolution of any and all covered disputes and understands that arbitration replaces any right to trial by a judge or jury. However, either party may, without inconsistency with this arbitration provision, apply to any court otherwise having jurisdiction over such dispute or controversy and seek interim provisional, injunctive or other equitable relief until the arbitration award is rendered or the controversy is otherwise resolved. Except as necessary in court proceedings to enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief, or as may otherwise be required by law, neither a party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of the Company and Executive. The Company and Executive acknowledge that this Agreement evidences a transaction involving interstate commerce. Notwithstanding any choice of law provision included in this Agreement, the United States Federal Arbitration Act shall govern the interpretation and enforcement of this arbitration provision. The arbitration proceeding shall be conducted in Palm Beach County, Florida unless the parties mutually agree to another location. The Company shall pay the costs of any arbitrator appointed hereunder.

Exhibit 99.1.2

CONTACTS:

Ray Tharpe
Investor Relations
561/438-4540
rtharpe@officedepot.com

Brian Levine
Public Relations
561/438-2895
blevine@officedepot.com

OFFICE DEPOT NAMES PATRICIA MCKAY CHIEF FINANCIAL OFFICER

Delray Beach, Fla., August 25, 2005 — Office Depot, Inc. (NYSE: ODP), a leading global provider of office products and services, today announced the appointment of Patricia A. McKay as the Company’s Executive Vice President — Chief Financial Officer. McKay, 47, has been serving as the Executive Vice President and Chief Financial Officer of Restoration Hardware, Inc., a California-based public company that is a specialty retailer of high-quality home furnishings, decorative accessories and hardware. From 1997 until 2003, she worked in various executive-level positions in the financial group at AutoNation, Inc., the nation’s largest retailer of automobiles, headquartered in South Florida. Previous to AutoNation, McKay served in various financial positions for Dole Food Company, Inc., culminating in the position of Vice President Finance and Controller for Dole. McKay is a certified public accountant and worked for ten years with a major international public accounting firm.

McKay also has served as a member of the Board of Directors of Office Depot since May 2004. She has resigned from the Office Depot board in conjunction with her appointment as CFO. She replaces Charles E. Brown, Office Depot’s incumbent CFO, who was promoted to President, International for the Company in April 2005 and has been continuing to serve in an interim capacity while the Company searched for a new CFO. Brown now will devote his full time and attention to the International businesses of Office Depot.

“We are pleased to be able to attract a CFO of the caliber of Pat McKay,” said Steve Odland, Office Depot’s Chairman and Chief Executive Officer. “Pat is fully up to speed on our Company, having served on our Board for the past 16 months, including serving as a member of the Audit Committee of the Board. She is a seasoned financial executive and will be a great fit on our Executive Committee.”

About Office Depot

With annual sales approaching $14 billion, Office Depot provides more office products and services to more customers in more countries than any other company. Incorporated in 1986 and headquartered in Delray Beach, Florida, Office Depot conducts business in 23 countries and employs 47,000 people worldwide. The Company operates under the Office Depot®, Viking Office Products®, Viking Direct®, Guilbert®, and Tech Depot® brand names.

Office Depot is a leader in every distribution channel — from retail stores and contract delivery to catalogs and e-commerce. With $3.1 billion in online sales in FY’04, the Company is the world’s number three Internet retailer. As of June 25, 2005, Office Depot has 1,011 retail stores in North America in addition to a national business-to-business delivery network supported by 22 delivery centers and more than 60 local sales offices. Internationally, the Company conducts wholly-owned operations in 14 countries through 76 retail stores and 26 distribution centers, and operates 153 retail stores under joint venture and license arrangements in another seven countries.

The company’s common stock is listed on the New York Stock Exchange under the symbol ODP and is included in the S&P 500 Index. Additional press information can be found at: http://mediarelations.officedepot.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: Except for historical information, the matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, including without limitation all of the projections and anticipated levels of future performance, involve risks and uncertainties which may cause actual results to differ materially from those discussed herein. These risks and uncertainties are detailed from time to time by Office Depot in its filings with the United States Securities and Exchange Commission (“SEC”), including without limitation its most recent filing on Form 10-K and its 10-Q and 8-K filings made from time to time. You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. The Company’s SEC filings are readily obtainable at no charge at www.sec.gov and at www.freeEDGAR.com, as well as on a number of other commercial web sites.