Key investor demands more returns for OfficeMax shareholders
19 Jun 2012
Investment firm Neuberger Berman LLC has called on Naperville-based OfficeMax Inc's chief executive and board to return money to shareholders by way of a dividend or share repurchases and held out the prospect of a proxy fight next year in the event of the failure of the office supply chain fails to comply.
OfficeMax is the third-largest US office supply chain and competes with Office Depot Inc and Staples Inc.
In a filing, with the US Securities and Exchange Commission yesterday, it also disclosed it held 5 per cent of OfficeMax's shares, or 4.35 million, up from the 4 per cent it held earlier.
However, in a letter to CEO Ravi Saligram dated 18 June, Neuberger Berman managing director Benjamin Nahum said that the "anemic" job recovery and demand for office suppliers posed "significant hurdles" to maintaining earnings growth and boosting OfficeMax's share price.
Neuberger's Nahum cited the "palpable frustration" among shareholders due to the company not paying dividends or buying back shares. He added, the absence of a repurchase plan told the marketplace that "the board does not believe in (OfficeMax's) future."
Last month OfficeMax reported stronger than expected earnings, raising hopes that its turnaround plan was gaining traction even as companywide same-store sales declined 1.5 per cent last year, hit by a weak back-to-school season.
