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Tickers in this Article: ODP, SPLS, OMX
Office supply retailer Office Depot (NYSE:ODP) has been under pressure for some time now. A quick look at its ugly chart and recent comments about the company in the financial media show just how intense the pressure has been. However, I think the tide could start to turn for the beleaguered retailer thanks to the involvement of Woodbridge Group - an activist shareholder.

Hold Those Feet To The Fire
Even if you are an Office Depot shareholder you may have never heard of Woodbridge before. The Florida-based activist hedge fund doesn't make headlines all that often, and it owns only about 1% or so of Office Depot's outstanding stock. Its name recognition may be about to change, however. (To learn more about what an activist shareholder can do, check out Activist Hedge Funds.)

Woodbridge recently sent a letter to Office Depot shareholders where it criticized management and urged people to vote for two members it supports for election to the company's board.

As a common stockholder, albeit a relatively small one, Woodbridge would most likely agitate for changes that are beneficial to the common shareholder base. And frankly, I think that change and a little agitation is just what the board at Office Depot needs right now. Fact is, it's up against extremely stiff competition from the likes of Staples (Nasdaq:SPLS) and OfficeMax (NYSE:OMX). It's also facing a difficult macroeconomic environment. Many shareholders have already abandoned the stock and lost interest as evidenced by the waning share price.

Even if the fund is unable to capture board seats or gain the support of a large number of shareholders, the board will hopeful take the hint and act to gain market share, enhance shareholder value and get the stock price back up. Pressure, has a funny way of inspiring change and results. (For related reading, see our article The Basics Of Corporate Structure.)

A Hankering For Hanaka
Many readers probably never heard the name Martin Hanaka either. Hanaka is one of the two nominees Woodbridge wants to elect to the board. He could be quite a boon for shareholders.

Hanaka was the COO and president at Staples, Office Depot's arch rival. He was a part of that highly successful team, and I think he could bring a lot to the table, helping Office Depot become more competitive and potentially assist it in its efforts to pick up market share. Hanaka could give the board some credibility with Wall Street. Institutional players want to know a company's long-term strategy is sound before they pour the big money into the stock. Hanaka might be able to better provide that vision, and perhaps provide some tips to make the company more attractive to the investment community.

Investors should be warned that in response to the Woodbridge letter, Office Depot's board fired back with some nastiness of its own. In the company's responding letter, Office Depot says Hanaka "has a track record of destroying stockholder value and has engaged in personal misconduct".

"Most troubling is that Hanaka resigned as President and COO of Staples after being arrested for [allegedly] assaulting a female co-worker who, according to an article published in the Wall Street Journal on October 21, 1997, told police they had been involved in a two-year extramarital affair," the letter to shareholders continues. The assault charge was later dropped, although Office Depot doesn't mention this. All of this vitriol and animosity sets the stage for a prolonged proxy battle, a battle that could be quite expensive in terms of money and shareholder value.

Bottom Line
With its stock down and out Office depot needs solutions - and fast. Woodbridge offers those solutions, even if the board doesn't like to hear them. Hanaka could make an excellent addition to the board. He understands the business, and if he could help rival Staples, perhaps he's got what it takes to turn Office Depot around, too.

For further information on how you as a shareholder can have a say, read our articles Pay Attention To The Proxy Statement, and Your Vote May Change Corporate Policy.

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