UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

THE ODP CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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		THE ODP CORPORATION

2022 ANNUAL MEETING NOTICE

and PROXY STATEMENT

March 17, 2022

NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of The ODP Corporation:

Items of Business:

1. To elect nine (9) members of the Company’s Board of Directors named in, and for the term, described in the Proxy Statement;

2. To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2022;

3. To approve, in a non-binding, advisory vote, the Company’s executive compensation;

4. To approve the amendment to the Amended and Restated Limited Liability Company Agreement of Our Wholly-Owned Subsidiary, Office Depot, LLC, to Eliminate the Pass-Through Provision; and

5. To consider such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Only shareholders of record at the close of business on March 1, 2022 (the “Record Date”) are entitled to notice of and to vote at the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) or any adjournment or postponement thereof.

Pursuant to rules promulgated by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials by notifying you of the availability of our proxy materials on the Internet. Instead of mailing paper copies of our proxy materials, we sent shareholders the Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on April 27, 2022, with instructions for accessing the proxy materials and voting via the Internet (the “Notice”). The Notice, which was mailed on or around March 17, 2022, also provides information on how shareholders may obtain paper copies of our proxy materials if they so choose. The Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 25, 2021 (“2021 Annual Report”) may be accessed at www.proxyvote.com. If requested, certain shareholders were sent a full set of printed proxy materials or an email with instructions on how to access the proxy materials electronically based on their previously indicated delivery preferences.

Your vote is important. To ensure your shares are voted, you may vote your shares over the Internet, by telephone or by requesting a proxy card to complete, sign and return by mail. Internet and telephone voting procedures are described in the section “Questions and Answers About Our Annual Meeting” beginning on page 83 of the Proxy Statement and on the proxy card.

Due to the COVID-19 pandemic, for the safety of our associates, including our shareholders, and in accordance with federal, state and local guidance, we have determined that the Annual Meeting will be held in a virtual meeting format only, via a live webcast, with no physical in-person meeting. If you plan to participate in the virtual meeting, please see “Questions and Answers About Our Annual Meeting” beginning on page 83 of the Proxy Statement. Shareholders will be able to attend, vote, submit questions and view the shareholder list during the Annual Meeting from any location via the Internet. A technical support phone number will be posted on the virtual meeting log-in page if you experience technical difficulties during the check-in process or during the webcast.

Boca Raton, Florida

March 17, 2022

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 27, 2022. Financial and other information concerning The ODP Corporation is contained in our 2021 Annual Report. The Proxy Statement and 2021 Annual Report are available free of charge at www.proxyvote.com, a site that does not have “cookies” that identify visitors to the site.

TABLE OF CONTENTS

Proxy Statement Summary

Proxies are being solicited by the Board of Directors of The ODP Corporation (“ODP,” the “Company,” “we,” or “our”) to be voted at our Annual Meeting of Shareholders to be held virtually on Wednesday, April 27, 2022 at 9:00 a.m. Eastern Time (“Annual Meeting”). The proxy materials were first made available to shareholders on or about Thursday, March 17, 2022. This summary provides an overview of selected information in the Proxy Statement. We encourage you to read the entire Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 25, 2021 (“2021 Annual Report”) before voting. Questions and Answers about our Annual Meeting can be found beginning on page 83 of the Proxy Statement.

Annual Meeting Agenda and Voting Recommendations

Casting your vote:

INTERNET		PHONE		MAIL		VIA LIVE WEBCAST
Visit www.proxyvote.com. You will need the control number in your notice, proxy card or voting instruction form.		Dial toll-free (1-800-690-6903) or the telephone number on your voting instruction form. You will need the control number in your notice, proxy card or voting instruction form.		If you received a paper copy of your proxy materials, send your completed and signed proxy card or voting instruction form using the enclosed postage-paid envelope.		Participate in the Annual Meeting and vote your shares electronically by visiting www.virtualshareholdermeeting.com/ODP2022. Online access begins at 8:45 a.m. Eastern Time. You will need the control number in your notice, proxy card or voting instruction form.

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Strong Board Diversity

Our Board of Directors (the “Board”) values a board that reflects diverse perspectives. While we do not have a specific diversity policy for our Board, our Corporate Governance Guidelines provide for selecting Directors who reflect a diverse set of skills, professional and personal backgrounds, perspectives and experiences. We are proud to have Directors who are highly diverse, including with respect to gender, ethnicity and experience.

During 2021, our Board of Directors consisted of individuals with diverse and complementary business, leadership and financial expertise. Many of our Directors have leadership experience at major U.S. and multinational companies, as well as experience on the boards of other companies and organizations, which provide an understanding of different business processes, challenges and strategies. In addition, many of our Directors have industry and public policy experience that provides insight into issues faced by public companies.

88%				33%				33%
8 of 9 director nominees are independent				3 director nominees are women 3 women Board committee chairs				3 director nominees are ethnically diverse

Relevant Skills and Experience of our Board of Directors

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The ODP Corporation At-A-Glance

The ODP Corporation (NASDAQ:ODP) is a leading provider of business services, supplies, products and digital workplace technology solutions to small, medium and enterprise businesses, through an integrated business-to-business (B2B) distribution platform, which includes world-class supply chain and distribution operations, dedicated sales professionals and technicians, online presence, and approximately 1,100 stores.

u		OUR   CULTURE PERMEATES EVERYTHING WE DO

Our 5C Culture

Customer:

We relentlessly focus on serving our

customers to ensure their success.

Commitment:

We do what we say we will do with

transparency and integrity.

Change:

We seek and embrace change in the pursuit

of excellence.

Caring:

We challenge ourselves to be our best, treating

each other, our customers and communities

as we want to be treated.

Creativity:

We are innovators, disrupting to deliver new ways of

doing business that drive sustainable, profitable growth.

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Highlights as of the end of fiscal 2021 include the following:

Strong Balance Sheet		$1.7B available Liquidity		$743M in Cash		$1B available under Credit Facility
Reinstated Share Buyback Program

Leverage Broad B2B Ecosystem		Global Sourcing & Supply Chain		Multiple Routes to Market
		Go-to-Market Engine		Broad Products & Services

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Corporate Governance Highlights

Our Board of Directors is committed to strong governance practices, which promote the long-term value of the Company for its shareholders. The Board of Directors regularly reviews our governance practices to ensure they reflect the evolving governance landscape and appropriately support and serve the best interests of the Company and its shareholders. The Corporate Governance section beginning on page 22 describes our governance framework in further detail, which includes the following highlights:

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Snapshot of Director Nominees

All Director nominees meet The NASDAQ Stock Market governance standards (“Nasdaq rules”) for director independence except for Gerry P. Smith, who is not independent due to his position as our Chief Executive Officer (“CEO”).

  C = Committee Chair

   = Financial Expert

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PROPOSAL No. 1: ELECTION OF DIRECTORS

The Role of the Board of Directors

Our Board of Directors is currently comprised of nine (9) talented directors, three (3) of whom are women, with diverse skill sets and professional backgrounds as reflected in their biographies beginning on page 12. Under our Amended and Restated Bylaws (the “Bylaws”), the Board of Directors has the authority to determine its size and to fill any vacancies. Effective December 31, 2021, Francesca Ruiz de Luzuriaga retired from the Board of Directors, and, as a result, the Board decreased its size from ten (10) to nine (9) members.

The Board of Directors, elected annually by our shareholders, oversees the business and management of the Company. Members of the Board monitor and evaluate the Company’s business performance and advise on strategic direction through regular communication with the CEO, other key members of management, and by participating in Board and Board committee meetings. Corporate review sessions are also provided to Directors to give them more detailed views of specific areas of our business, including targeted presentations, operational visits and facility tours. The Board is committed to sound and effective corporate governance policies and high ethical standards.

Director Nomination Process

Board Membership Criteria

We believe that a director should possess the highest professional ethics, integrity and values, and be committed to representing the long- term interests of our shareholders. He or she should have an inquisitive and objective perspective, practical wisdom and mature judgment. We endeavor to have a board representing a range of experiences in business and in areas that are relevant to our business operations. We believe that directors with significant leadership experience, especially those serving in CEO positions, provide the Company with special insights.

As such, in identifying Director nominees, we seek individuals with:

Director Independence and Independence Determinations

The Corporate Governance Guidelines require that a majority of the Board of Directors must be “independent” under the Nasdaq rules, and all Directors who are members of the Company’s Audit, Compensation & Talent and Corporate Governance & Nominating committees, must also be independent. To maintain its objective oversight of management, the Board of Directors consists, currently, of all independent Directors, with the exception of Gerry P. Smith, the current CEO of the Company.

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The Board of Directors evaluates the independence of each Director nominee in accordance with the Corporate Governance Guidelines, which incorporate the Nasdaq rules and the SEC rules. The Board considered transactions and relationships between the Company and its subsidiaries and affiliates on the one hand and, on the other hand, Directors, immediate family members of Directors, or entities of which a Director or an immediate family member is an executive officer, general partner or significant equity holder. Specifically, the Board of Directors considered that Mr. Dunlop is an employee of HG Vora, affiliates of which own approximately 9.5% of ODP’s common stock as of January 19, 2021. However, the Board determined that this relationship does not impair the independence of Mr. Dunlop under the Nasdaq rules and SEC rules. The Board also considered whether there were any transactions or relationships between any of these persons or entities and any members of the Company’s senior management or their affiliates.

Based on an annual evaluation performed, and recommendations made, by the Corporate Governance & Nominating Committee, the Board of Directors affirmatively determined that each of the following Directors who served in fiscal year 2021 was, or is a current Director nominee is, independent of the Company and its management under the standards set forth in the Corporate Governance Guidelines.

The only member of the Board of Directors who is not independent is Gerry P. Smith. Mr. Smith, our CEO, is the only employee member of the Board.

The Board of Directors also affirmatively determined that, none of its members has a material relationship with the Company that would impair independence from management, and that all members serving on the Audit, Compensation & Talent and Corporate Governance & Nominating committees have been determined by the Board to be comprised of independent Directors. The Board of Directors’ evaluation included consideration that a relative by marriage of Ms. Campbell is a managing director of Deloitte Consulting LLP, which is a separate legal entity from the Company’s independent registered public accounting firm Deloitte & Touche LLP, and such relative does not personally perform any audit or other services for the Company while working at Deloitte Consulting LLP. In addition, none of the Directors serve as an executive officer of a charitable organization to which the Company made contributions during fiscal year 2021.

Board Diversity

Pursuant to the Corporate Governance Guidelines, the Corporate Governance & Nominating Committee seeks to create a board of directors that represents diversity as to skills, experiences, age, race, gender and ethnicity. While the Board of Directors does not have a formal diversity policy, the Board is committed to a diversified membership. The Corporate Governance & Nominating Committee considers the Board’s overall composition when seeking a potential new candidate, including whether the Board has an appropriate combination of professional experience, skills, knowledge and variety of viewpoints and backgrounds in light of the Company’s current and future business needs. The Corporate Governance & Nominating Committee also considers, among others, the character, expertise, sound judgement, ability to make independent analytical inquires, business experiences, understanding of the Company’s business environment, ability to make time commitments to the Company, demonstrated teamwork, and the ability to bring unique and diverse perspectives and understandings to the Board. In identifying prospective Director candidates, the Corporate Governance & Nominating Committee may seek advice and recommendations from other Board members, management, shareholders or outside advisors. In addition, the Corporate Governance & Nominating Committee may, but need not, retain a third-party independent search firm in order to assist it in identifying candidates to serve as Directors of the Company.

Service on Other Public Company Boards

Each member of the Board of Directors must have the time and ability to make constructive contributions to the Board as well as a clear commitment to fulfilling the fiduciary duties required of directors and serving the interest of the Company’s shareholders. To that end, the CEO and any independent Directors who serve as the chief executive officer of a publicly

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traded company may not serve on more than two public company boards in addition to our Board, and other independent Directors should not sit on more than four public company boards in addition to our Board.

Candidates Recommended by Shareholders

The Corporate Governance & Nominating Committee will consider Director candidates recommended by shareholders using proxy access. Proxy access permits a shareholder, or group of up to 20 shareholders, owning at least 3% of the Company’s outstanding common stock continuously for at least three years as of both: (i) the date of nomination to nominate and include in the proxy statement director nominees and (ii) the record date for determining shareholders eligible to vote at the applicable annual meeting and through the date of the annual meeting, constituting up to the greater of two individuals and 20% of the number of directors then serving. The shareholder(s) and the nominee(s) must satisfy the requirements specified in our Bylaws, including that written notice of a nomination be provided to the Corporate Secretary at the Company’s address not less than 120 days nor more than 150 days prior to the first anniversary of the date on which the Company’s definitive proxy statement was released to shareholders in connection with the prior year’s annual meeting. Additional information, including Company address, and submission of non-proxy access director nominations and other shareholder proposals can be found under the caption “2023 Shareholder Proposals.”

All nominations received by the Corporate Secretary that satisfy our Bylaw requirements relating to director nominations will be presented to the Corporate Governance & Nominating Committee for consideration. Shareholders also must satisfy the notification, timeliness, consent and information requirements set forth in this Proxy Statement and in our Bylaws. The Corporate Governance & Nominating Committee’s evaluation of shareholder-proposed director candidates will be the same as for any other proposed candidates.

Majority Vote Standard for Election of Directors

Each Director nominee must be elected by a majority of the votes cast in an uncontested election. This means that the number of votes cast “FOR” a Director nominee must exceed the number of votes cast “AGAINST” the Director nominee. If a nominee who currently serves as a Director is not re-elected, Delaware law provides that the Director would continue to serve on the Board until his or her successor has been elected and qualified.

Director Resignation Policy

Under our Bylaws, if a nominee for Director who is an incumbent Director is not re-elected and no successor has been elected at such meeting, the Director is required to promptly tender his or her resignation to the Board of Directors. In that situation, the Corporate Governance & Nominating Committee would make a recommendation to the Board of Directors about whether to accept or reject the resignation, or whether to take other action. Within ninety (90) days from the date that the Director submitted his or her resignation, the Board of Directors would act on the Corporate Governance & Nominating Committee’s recommendation and publicly disclose its decision and the rationale behind it. If the Board of Directors determines that there is a compelling reason for such incumbent Director to remain on the Board and does not accept the resignation, the Director will continue to serve until the next annual meeting or until his or her successor is duly elected, or his or her earlier resignation or removal. If a Director’s resignation is accepted by the Board of Directors, then the Board, in its sole discretion, may fill any resulting vacancy. The Director who tenders his or her resignation will not participate in the Board’s decision.

Retirement Age and Term Limits

As stated in our Corporate Governance Guidelines, the Board of Directors recommends, but does not require, that a Director not be nominated for re-election or reappointment to serve on the Board after having attained the age of 75 years. The Board of Directors recognizes, however, that a Director who has attained the age of 75 years may continue to be involved in activities, positions or relationships which are compatible with continued service on the Board and the Corporate Governance & Nominating Committee will review annually such Director’s fitness to serve on the Board.

The Board of Directors does not believe that it should establish term limits. Term limits could result in the loss of Directors who have been able to develop, over a period of time, increasing insight into the Company and its business and operations, and an institutional memory that benefits the entire Board as well as management. As an alternative to term limits, the Corporate Governance & Nominating Committee annually reviews with each Director his or her desire to

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continue as a member of the Board which allows the Company the opportunity to conveniently replace Directors who are no longer interested or effective.

Board Oversight of Risk

Risk is an inherent part of ODP’s business activities and risk management is critical to the Company’s innovation and success. The Board of Directors has overall responsibility for risk oversight and focuses on the most significant risks facing the Company. The Board of Directors discharges its risk oversight responsibilities, directly and through delegation to its committees, and is responsible for evaluating the Company’s major risks for determining that appropriate risk management and control procedures are in place ensuring that management takes the appropriate steps to manage all major risks. The Board oversees a formal enterprise-wide approach to risk management, designed to support the achievement of organizational and strategic objectives, to improve long-term performance and enhance shareholder value. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company.

The involvement of the Board of Directors in setting ODP’s business strategy is a key part of its assessment of management’s appetite for risk and determination of what constitutes an appropriate level of risk for the Company. The Company’s risk governance is facilitated through a top-down and bottom-up approach, with the tone established at the top by Mr. Smith, our CEO, and other members of senior management, specifically the Senior Leadership Team. The senior leadership team utilizes an Enterprise Risk Management (ERM) steering committee as described below. For additional information see “Corporate Governance” under subheading “Role of the Board Committees in Risk Oversight.”

2022 Director Nominees

The Board of Directors has nominated nine (9) individuals listed below for election as Directors to each serve a one-year term of office to expire at the 2023 annual meeting of shareholders, or until their successors have been elected and qualified, or until their resignation or removal. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the nine nominees named in this Proxy Statement. Each of the nominees is an incumbent Director of ODP recommended for election or re-election by the Corporate Governance & Nominating Committee. Biographical information regarding each of the Director nominees is set forth below.

The Board of Directors has determined that nine (9) Director nominees satisfy the definition of independent director under the Nasdaq rules. In making these nominations, the Board reviewed the backgrounds, qualifications, attributes, experiences and contributions to the Board of the Director nominees and determined to nominate each of the current Directors for re-election. See “Director Independence and Independence Determinations” above for more information.

Pursuant to our Bylaws, should any of the Director nominees be unavailable or unable to serve at the time of the Annual Meeting, the Corporate Governance & Nominating Committee may propose a substitute nominee. If a substitute nominee is named, all proxies voting FOR the Director nominee who is unable to serve will be voted for the substitute nominee so named. If a substitute nominee is not named, all proxies will be voted for the election of the remaining Director nominees (or as directed on your proxy). Each individual nominated for election has agreed to serve if elected and the Board has no reason to believe that any Director nominee would be unavailable or unable to serve. Pursuant to a Cooperation Agreement dated January 6, 2021 between the Company and HG Vora Capital Management, LLC (“HG Vora”), as extended by First Amendment to the Cooperation Agreement dated December 30, 2021 between the Company and HG Vora (as extended, the “Cooperation Agreement”), except in the event HG Vora (together with any affiliates of HG Vora) ceases to own at least five percent (5%) of the Company’s then outstanding shares of common stock (the “Company Ownership Level Minimum”) or HG Vora has materially breached the Cooperation Agreement and failed to cure such breach within five (5) business days of notice thereof, the Board of Directors has agreed to nominate Marcus B. Dunlop for election as one of the Directors of the Company at the Annual Meeting.

Pursuant to the Cooperation Agreement, in the event that Marcus B. Dunlop (or any replacement director appointed in accordance with the provisions of the Cooperation Agreement) is unable to serve, resigns or is removed as a Director during the term of the Cooperation Agreement, HG Vora has the ability to recommend a replacement director who is a “Partner” or a more senior member of HG Vora and meets the conditions set forth in the Cooperation Agreement (a “Replacement Director”), so long as HG Vora (together with any affiliates of HG Vora) satisfies the Company Ownership Level Minimum and HG Vora has not materially breached the Cooperation Agreement and failed to cure such breach within five (5) business days of notice thereof.

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The Cooperation Agreement provides that Mr. Dunlop, or the Replacement Director, as the case may be, must offer to resign from the Board on December 31, 2022, or earlier if (a) HG Vora (together with any affiliates of HG Vora) ceases to satisfy the Company Ownership Level Minimum, (b) HG Vora otherwise ceases to comply with or breaches any material provision of the Cooperation Agreement, or (c) HG Vora submits a notice of director nominations in connection with the 2023 Annual Meeting of Shareholders of the Company (the “2023 Annual Meeting”).

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The Right Board at the Right Time

The Corporate Governance & Nominating Committee and the Board believe that the Director nominees for 2021 provide the Company with the right mix of skills and experience necessary for an optimally functioning Board. The following reflects Board demographics of our Director nominees. Further information on each Director nominee’s qualifications and relevant experience is provided in the individual biographical descriptions above.

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DIRECTOR COMPENSATION

The Compensation & Talent Committee, together with its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), regularly reviews our non-management Directors’ compensation program to ensure that it is appropriate in light of market circumstances and prevailing “best practices” for corporate governance and to determine its competitiveness against the compensation of the boards of directors of our peer group (as shown in the Compensation Discussion and Analysis or “CD&A” section of this Proxy Statement). Effective January 1, 2021, the Compensation & Talent Committee set the annual retainer fee for our non-management Directors at $235,000 per year, consisting of a cash retainer of $85,000 per year and equity compensation of $150,000 per year. The non-Executive Chairman receives an additional $ 200,000 retainer fee. No deferrals of cash payments are permitted by the Directors. The $150,000 equity portion of the annual retainer fee was granted as stock unless the Director elected to defer his/her stock in the form of Restricted Stock Units (“RSUs”) to be distributed in shares following termination of service on the Board, with such election made by the end of the prior tax year for existing Directors and prior to appointment to the Board for new Directors. The equity portion is typically awarded as soon as administratively practicable following the release of voting results from the annual shareholders’ meeting, and the number of shares is calculated based on the closing price of the Company’s common stock on the date of grant.

In October 2021, FW Cook presented its annual review of director compensation to the Compensation & Talent Committee and recommended an increase in non-management Director compensation to maintain alignment with market median range and to recognize the time commitment of the Directors associated with oversight of the strategic plan, including the separation of ODP and Office Depot. Accordingly, effective October 1, 2021 the Compensation & Talent Committee approved an increase in the retainer fee for our non-management Directors by $15,000, for an annualized total of $250,000 per year. Total cash payments were increased by $7,500 annually to a total of $92,500. A pro-rata portion of the $7,500 increase applied to the fourth quarter retainer payment. Equity compensation was increased by $7,500 to a total of $157,500 per year, effective for the 2022 service year. In addition, as of October 1, 2021, in order to further align interests of non-management Directors with shareholders, all equity awards will be deferred in the form of Restricted Stock Units (“RSUs”) to be distributed in shares following termination of service on the Board, and Directors will no longer be able to elect to do otherwise.

For fiscal year 2021, the following compensation for services as a chair or as a member of the Board committees was paid in cash on a pro-rated, quarterly basis to the incumbent Directors:

In connection with his role as a director, Mr. Dunlop is entitled to receive the standard compensation for service on the Board of Directors by the Company’s non-management Directors. Mr. Dunlop has waived his right to compensation as a member of the Board of Directors.

Director Stock Ownership Guidelines

Non-management Directors are required to own no less than five times the directors’ cash portion of the annual retainer fee (equal to $462,500) in shares of our common stock. Directors must also retain 100% of net shares awarded until termination of their service on the Board.

The Compensation & Talent Committee reviews these ownership guidelines, on an annual basis, with assistance from its independent compensation consultant, to ensure that such guidelines align with best market practices, including the practices of a majority of our peer group, and with management’s ownership guidelines. In addition, the Compensation & Talent Committee annually reviews each Director’s progress toward meeting the ownership guidelines. Wendy Schoppert was elected to the Board in July of 2020 and will meet the ownership guidelines during 2022. Marcus Dunlop is exempt from the ownership requirements as he has waived his right to compensation as a member of the Board of Directors. All of the Company’s other directors have met the stock ownership requirements

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Indemnification Agreements

The Company has entered into indemnification agreements with its Directors and certain of its officers. The indemnification agreements require the Company to indemnify these Directors and officers to the full extent permitted by Delaware law against any and all expenses (including advances of expenses), judgments, fines, penalties, and amounts paid in settlement incurred in connection with any claim against the indemnified person arising out of services as a director, officer, employee, trustee, agent, or fiduciary of the Company or for another entity at the request of the Company, and maintain directors and officers liability insurance coverage.

DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2021

(1)        For fiscal year 2021, all Directors received annual compensation of: (a) $86,875 in cash, prorated for time in position, and (b) fees paid in cash for both serving as the Chair of a Committee and as the member of a Committee prorated for time in position. Since February 2017, Mr. Vassalluzzo has served as the independent non-executive Chairman of the Board to lead the Board of Directors and receives an additional annual cash retainer of $200,000 to serve as non-Executive Chairman.

(2)        The dollar amounts in column (c) reflect the aggregate grant date fair value of equity awards granted within the fiscal year in accordance with the FASB Accounting Standards Codification Topic 718 for stock-based compensation. These amounts reflect the total grant date fair value for these awards, and do not correspond to the actual cash value that will be recognized by each of the Directors when received. See Notes 1 and 14 of the consolidated financial statements in our 2021 Annual Report regarding the underlying assumptions used in the valuation of equity awards.

(3)        The “Equity Compensation Paid to Directors for Fiscal Year 2021” table that follows represents the aggregate grant date fair value of stock or RSUs granted to our Directors under the Company’s 2021 Long-Term Incentive Plan (the “2021 Plan”). Annual awards are calculated by a dollar value that is then translated into stock or RSUs based on the closing stock price of our common stock on the date of grant.

(4)        As of December 25, 2021, the aggregate number of RSUs convertible into shares of our common stock, outstanding for our Directors is set forth as follows: Quincy Allen 11,979, Kristin Campbell 28,050, Francesca Ruiz de Luzuriaga 54,159, Cynthia Jamison 32,191, Shashank Samant 11,979, Wendy Schoppert 8,643, David Szymanski 53,805, and Joseph Vassalluzzo 33,610. All RSUs are fully vested as of December 25, 2021, but distribution is deferred until either the Director’s separation date or six months following the Director’s separation date, as applicable. Please see the “Equity Compensation Paid to Directors for Fiscal Year 2021” table that follows for all equity awards granted in fiscal year 2021.

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(5)        As of December 25, 2021, the aggregate number of option awards outstanding for our Directors is set forth as follows: Francesca de Luzuriaga 1,213. All options are fully vested. There were no options granted to Directors in fiscal year 2021.

(6)        Ms. Luzuriaga retired from the Board of Directors effective December 31, 2021.

EQUITY COMPENSATION PAID TO DIRECTORS FOR FISCAL YEAR 2021

(1)        Amounts are determined using the closing stock price of our common stock on the grant date. See footnote 2 in the previous “Director Compensation Table for Fiscal Year 2021” for additional information.

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CORPORATE GOVERNANCE

Corporate Governance Guidelines

Strong corporate governance principles and practices are a long-standing priority at ODP. The Board of Directors is committed to sound governance policies and practices that are designed and routinely assessed to enable the Company to operate its business responsibly, with integrity, and to position ODP to operate more effectively, sustain its success, and build long-term shareholder value. The Board of Directors has adopted Corporate Governance Guidelines, which set forth a framework within which the Board, assisted by its three standing committees, directs the affairs and business of the Company and engages in meaningful discussions with management to ensure long-term growth for the benefit of the shareholders and other stakeholders, becomes informed of the Company’s operating plans and strategic objectives, promotes public trust in the Company, and strengthens management accountability. The Corporate Governance & Nominating Committee reviews the Corporate Governance Guidelines annually to reflect evolving corporate governance standards identified by shareholders and other stakeholders, and any changes to these Guidelines are recommended to the Board of Directors for review and approval.

Board Leadership Structure

The Corporate Governance Guidelines specify that the Corporate Governance & Nominating Committee review the Board’s leadership structure periodically, considering the Company’s circumstances from time to time. After such review and evaluation, the Corporate Governance & Nominating Committee will make its recommendation to the full Board which will approve the leadership structure of the Board.

The Board of Directors annually elects one of its own members to serve as the Chairman of the Board of Directors. Our Bylaws provide that the Chairman of the Board may also serve as the CEO. The Board of Directors believes that there is a wide array of leadership structures that could apply to many different business models and, therefore, the Board should have the flexibility to consider the appropriate leadership structure for the Company, which leadership structure may change over time.

The Corporate Governance Guidelines provide that in the event that the offices of the CEO and the Chair of the Board of Directors are not separate, or the Chair of the Board has been determined by the non-management Directors to no longer satisfy the independence qualifications under the Nasdaq rules, the non-management Directors shall select a Director to serve as the “Lead Director” of the Board. The Lead Director must be a non-management Director. If applicable, upon recommendation by the Corporate Governance & Nominating Committee, the Board of Directors annually elects the Lead Director.

Since 2017, the roles of Chairman and CEO have been separated, enabling the Chairman to focus on leading the Board of Directors in its responsibilities and helping the Board ensure that management is acting in the best interests of the Company and its shareholders, and the CEO to lead the Company’s transformation from a tactical, product-based transactions company to a services-driven B2B platform and focus on the Company’s day-to-day business operations. In February 2021, the Board of Directors determined that the designation of

Mr. Vassalluzzo as an independent, non-executive Chairman is the current optimal leadership structure for the Company because it provides the Board of Directors with independent leadership and meaningful coordination between management and the non-management Directors. This leadership structure has no impact on the Board of Directors’ oversight of risk.

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Role of the Board Committees in Risk Oversight

The Board of Directors delegates oversight of certain specific risks to each Board committee based on the risk categories relevant to the subject matter of the Board committee. Below is a summary of the key risk oversight responsibilities that the Board has delegated to the Board committees.

In addition, the Audit and Compensation & Talent Committees annually have a joint meeting to review the Company’s incentive compensation plans for a risk assessment conducted by the Company’s internal audit team and the Compensation & Talent Committee’s independent compensation consultant. See “Compensation Programs Risk Assessment” on page 56.

Annual Risk Assessment

The Company conducts an enterprise risk management (ERM) process, led by the Company’s senior internal audit executive, where risk is assessed periodically by a steering committee, comprised of members of the senior leadership team from each business unit and corporate function, and is tasked with championing risk management practices and integrating them into their functional business unit or function. The steering committee discusses and monitors the most significant enterprise risks in a cross-functional setting and evaluates and prioritizes company-wide risks. The results of the enterprise risk assessment help the steering committee focus on and select the key risks that are first presented to, and evaluated by, the Company’s executive officers, and then presented to the Board of Directors. In addition to this annual presentation made to the full Board, the Audit Committee receives periodic updates on certain risk areas the Board has identified for focus, and the independent Directors periodically discuss risk management during executive sessions without management present.

Director Attendance

The Board of Directors held 23 meetings during fiscal year 2021. The non-management Directors met in 14 executive sessions during fiscal year 2021. In fiscal year 2021, each of the current Directors attended at least 75% of the total number of Board and applicable committee meetings on which each member served (and held during the periods they

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served). Pursuant to the Corporate Governance Guidelines, each Director is expected to attend the Annual Meeting. All incumbent Directors who are up for re-election attended the 2021 Annual Meeting of Shareholders.

Board and Committee Responsibilities

The Board of Directors has established three (3) standing committees — (i) Audit, (ii) Compensation & Talent and (iii) Corporate Governance & Nominating. The Board of Directors delegates various responsibilities and authority to its Board committees. The Board committees regularly report on their activities and actions to the full Board.

Each of the Board committees operates under a written charter and annually reviews such charter in light of new developments in applicable regulations and may make additional recommendations to the Board to reflect evolving best practices. Each Board committee can engage outside experts, advisors and counsel to assist each committee in its work. Each charter of the Board committees is posted to our website at http://investor.theodpcorp.com under the heading “Corporate Governance/Committee Charters.” We will also provide a printed copy of the Board committee charters to shareholders upon written request to our Corporate Secretary at The ODP Corporation, 6600 North Military Trail, Boca Raton, Florida 33496.

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The following describes the responsibilities and current membership of the standing committees of the Board and the number of times each committee met in regular and executive sessions in fiscal year 2021.

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Delegation of Authority; Subcommittees

Beginning in December 2011 and from time to time, the Compensation & Talent Committee has delegated certain of its responsibilities to the Company’s internal compensation and benefits committee (the “CBC”) and employee benefits committee (the “EBC,” and together with CBC, the “subcommittees”). The subcommittees are comprised of certain senior executives of the Company. The Compensation & Talent Committee provides oversight for the establishment and termination, amendment, participating employers, administration, claims review and service provider functions of the qualified retirement, non-qualified deferred compensation and health and welfare benefit plans sponsored by the Company or its subsidiaries for eligible employees of the Company or its subsidiaries who work in North America, with the exception of all such plans sponsored separately by entities acquired by the Company or its subsidiaries other than such plans sponsored by CompuCom Systems, Inc. During fiscal year 2021, the Compensation & Talent Committee delegated authority to the CBC to make certain amendments to and carry out certain administrative responsibilities regarding the tax-qualified retirement plans, health and welfare benefit plans and nonqualified deferred compensation plans sponsored by the Company or its subsidiaries. Day-to-day administration and the authority to make certain other amendments to such plans were further delegated to the EBC.

Certain Relationships and Related Person Transactions Policy

The ODP Corporation Related Person Transactions Policy sets forth the policies and procedures governing the review and approval or ratification by the Corporate Governance & Nominating Committee of transactions between the Company, on the one hand, and (i) an executive officer; (ii) Director; (iii) an immediate family member of an executive officer or Director; (iv) any security holder who is known by the Company to own of record or beneficially more than five percent of any class of ODP’s voting securities at the time of the transaction; or (v) an immediate family member of such five percent security holder, on the other hand. Persons in the categories described above are collectively referred to as “related persons.”

This Policy applies to all related person transactions, and under the Policy a “related person transaction” is any transaction:

No related person transaction shall be approved or ratified if such transaction is contrary to the best interests of the Company and its stakeholders. Unless different terms are specifically approved or ratified by the Corporate Governance & Nominating Committee, any approved or ratified transaction must be on terms that are no less favorable to the Company than would be obtained in a similar transaction with an unaffiliated third party under the same or similar circumstances. All related person transactions or series of similar transactions must be presented to the Corporate Governance & Nominating Committee for review and pre-approval or ratification. A copy of the Policy is available for review on our website at http://investor.theodpcorp.com under the headings “Corporate Governance/Governance Documents.”

On an annual basis, each Director and executive officer of the Company is required to complete a questionnaire which requires disclosure of any related person transaction. The Company’s Chief Legal & Administrative Officer (“CLAO”) is

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responsible for determining whether any related person transaction is required to be disclosed in the Company’s applicable SEC filings and will ensure that such transaction or any series of similar transactions required to be disclosed will be presented to the Corporate Governance & Nominating Committee for pre-approval or ratification if required under the Policy. During fiscal year 2021, all transactions that were potentially subject to the Policy were reviewed and approved or ratified by the Corporate Governance & Nominating Committee and, there were no related person transactions that were required to be disclosed pursuant to Item 404(a) of Regulation S-K or affected our Directors’ independence.

Executive Sessions

The non-management Directors of the Company meet in executive sessions without management on a regular basis. The non-executive Chairman of the Board presides at such executive sessions. In the absence of the non-executive Chairman of the Board, the non-management Directors will designate another Director to preside over such executive sessions.

Board and Committee Evaluations

The Board of Directors is committed to continuous improvement and recognizes the importance of a rigorous evaluation process to enhance Board performance and effectiveness. The evaluations focus on the Board’s and each committee’s and their respective members’ performances and contributions to the Company as well as provide constructive feedback. The Corporate Governance & Nominating Committee is responsible for overseeing a formal evaluation process to assess the composition and performance of the Board and each committee on an annual basis. The assessment is conducted to identify opportunities for improvement and skill set needs, as well as to ensure that the Board, committees, and individual members have the appropriate blend of diverse experiences and backgrounds and are effective and productive. As part of the process, each Director completes an evaluation form, or participates in an interview or other method the Corporate Governance & Nominating Committee utilizes to seek feedback. While results are aggregated and summarized for discussion purposes, individual responses are not attributed to any individual and are kept confidential to ensure honest and candid feedback is received.

The Corporate Governance & Nominating Committee discusses opportunities and makes recommendations for improvement as appropriate to the full Board, which implements agreed upon improvements. A Director will not be nominated for reelection unless it is affirmatively determined that he or she is substantially contributing to the overall effectiveness of the Board.

Director Orientation and Continuing Education

In accordance with the Corporate Governance Guidelines, the Corporate Governance & Nominating Committee will arrange an orientation program for newly elected Directors and, together with the CEO, determine the content of such orientation. The orientation enables new Directors to become familiar with the Company’s business and strategic plans; significant financial matters; core values, including ethics; compliance programs; corporate governance practices; and other key policies and practices.

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It is important for Directors to stay abreast and informed on developments in corporate governance best practices in order to effectively discharge their duties. Our Directors are provided updates on corporate governance developments at regularly scheduled Board meetings, and Directors are encouraged to participate in programs that specialize in director education on a regular basis but at least one session every two (2) years. The Company pays for attendance fees to participate in such programs and reimburses the Directors for their reasonable out-of-pocket costs associated with attending these programs.

Code of Business Conduct (Code of Ethical Behavior)

The Board of Directors has adopted a Code of Ethical Behavior which is applicable to all Company employees, including the principal executive officer, the principal financial officer, the principal accounting officer, and the Board of Directors. If the Board amends or waives the Code of Ethical Behavior with respect to the executive officers of the Company, the Company will post the amendment or waiver on its website at http://investor.theodpcorp.com, under the headings “Corporate Governance/Governance Documents.”

The Company has established a confidential hotline to assist its employees in complying with their ethical and legal obligations and to report suspected violations of applicable laws or Company policies or procedures. The hotline enables employees, vendors and the public to express their concerns about possible violations of law or Company policies by the Company and/or management without fear of retribution or retaliation of any kind. It is the Company’s express policy that no retaliatory action be taken against any employee for using the hotline procedure. The hotline is operated by an independent third party, not by Company personnel. The hotline can be accessed by either calling the following toll-free number or visiting the following website:

1-866-634-6854

www.odhotline.com

The Corporate Governance Guidelines and the Code of Ethical Behavior are available on the Company’s website at http://investor.theodpcorp.com, under the heading “Corporate Governance/Governance Documents.” In addition, a printed copy of such documents will be provided to any shareholder upon written request to the Corporate Secretary at The ODP Corporation, 6600 North Military Trail, Boca Raton, Florida 33496.

Shareholder Engagement and Investor Outreach

Management and the Board of Directors are committed to a proactive shareholder engagement program. We believe that strong corporate governance should include meaningful dialogue with our shareholders and key stakeholders to understand their perspectives on corporate governance, executive compensation, ESG and sustainability matters and other issues that are important to them. Engagement with shareholders builds mutual understanding and a basis for progress, and the feedback we receive from them impacts our corporate governance practices. Senior management from Legal and Investor Relations and subject matter experts from the Company communicate with institutional investors throughout the year to gain their perspectives on current issues and address any questions or concerns. We also respond to individual shareholders and other stakeholders who provide feedback about our business. Our Vice President of Investor Relations and/or our CFO provide feedback from the investor and analyst meetings formally to the Board and its committees, where applicable, on a quarterly basis.

During fiscal year 2021, we sought feedback from our top 20 shareholders representing approximately 70% of the Company’s outstanding common stock to discuss risk management, governance practices, executive compensation, board composition, ESG issues, and other matters that the shareholders wished to discuss.

We will continue our shareholder engagement and investor outreach during fiscal year 2022, including our regular participation at analyst meetings and industry conferences and communication of the Company’s strategy to continue to roll out its B2B integrated distribution platform providing high value products and services. We remain committed to these ongoing discussions and welcome feedback from all shareholders, who may reach our Investor Relations team by calling (561) 438-4629 or visiting http://investor.theodpcorp.com or can contact our Directors or executive officers as described below.

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Communicating with our Board of Directors

As stated in the Corporate Governance Guidelines, shareholders and other interested parties who wish to communicate with the Board of Directors may contact any member (or all members) of the Board of Directors, or the non-management Directors as a group, any committee of the Board or any chair of any such committee by mail. The Corporate Secretary reviews all communications sent to the Board related to the duties and responsibilities of the Board and its committees and provides these communications to the non-executive Chairman of the Board, the applicable committee chair or the full Board as necessary.

In addition, any person who desires to communicate a confidential specific matter to the Audit Committee may do so by addressing a letter to the Chair of the Audit Committee, c/o Corporate Secretary, at the corporate headquarters address below. Mark “Confidential” on the outside of the envelope. Any confidential communications submitted anonymously will not be opened for any purpose other than for appropriate security inspections. Such communications will be reviewed by the Chair of the Audit Committee with follow-up action as he or she deems appropriate.

Correspondence should be sent “c/o Corporate Secretary,” The ODP Corporation, 6600 North Military Trail, Boca Raton, Florida 33496.

Corporate Responsibility and Sustainability

The ODP Corporation, together with its subsidiaries Office Depot, LLC (“Office Depot”) and Grand & Toy Limited (collectively, the “Company”), provides business services, products and digital workplace technology solutions aligned around the shared purpose of being exceptional corporate citizens. The Company is focused on managing environmental, social, and governance (“ESG”) factors that support its “5C” culture based on Customer, Commitment, Change, Caring and Creativity. We aim to incorporate the 5Cs into every aspect of our work, integrate sustainability solutions into our operations and support causes that align with our business and speak to who we are as an organization.

Our Response to the COVID-19 Pandemic

The COVID-19 pandemic continued to have significant adverse impacts on the national and global economy during 2021. From the beginning of the COVID-19 pandemic, we have remained committed to making the health and wellness of our employees and customers a priority. Based upon the guidance of the U.S. Centers for Disease Control (“CDC”) and local health authorities, we maintain appropriate measures to help reduce the spread of infection to our employees and customers, including increased frequency of cleaning and sanitizing in our facilities. While we have reopened our corporate headquarters, certain employees who are able to, continue to work from home. We continue to have employees in our retail stores, customer support and distribution centers working on-site at our facilities, as well as technicians and field support on-site at customer locations. Employee business travel remains limited to only essential business needs.

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ODP’S Sustainability Strategy

Governance

The Board of Directors recognizes the increasing importance of sustainability and ESG issues and seeks to integrate sustainability considerations into the Company’s business strategies, products, services, thought leadership and operations. The oversight, management, and program implementation of the Company’s sustainability and ESG efforts are structured to ensure these topics are integrated into the foundation of its strong governance framework. The Corporate Governance & Nominating Committee’s responsibilities include oversight of the Company’s strategy and programs on corporate social responsibility, the environment and sustainability. The Company’s sustainability strategy focuses on conducting its business to ensure that it preserves the environment for future generations and provides a safe and healthy working environment for all its employees. The Company’s Sustainability Governance Council (the “Council”) consists of Company-wide leaders representing key departments across the organization. Working under the Corporate Governance & Nominating Committee, the Council implements and supports the Company’s vision and mission by identifying the sustainability issues most critical to our business and our stakeholders, recommends initiatives to advance the Company’s public facing goals and identifies the metrics needed to measure and report progress.

A copy of our current sustainability report and our landing page are available for review on our website at http://investor.theodpcorp.com under the heading “Corporate Sustainability.”²

Protecting Our Planet

The Company believes that sustainability plays an essential role in the success of our Company, our industry and our communities, and is committed to operating in a socially responsible manner. To that end, we are not only managing our own environmental footprint as we continue to grow, we also participate in initiatives to help our customers, suppliers and vendors achieve their own sustainability goals.

The Company has an environmental policy to buy greener, be greener and sell greener. We have adopted a “cradle to grave” approach with our products and services and offer thousands of high-quality, long-lasting products, and when those products have met the end of their useful life, we assist with the correct disposal in an environmentally responsible way. As an example, under “buy greener,” we are committed to sourcing, using and selling paper products that reduce our impact on the world’s forests. We remain committed to using recycled fiber, supporting responsible forestry certification, increasing supply chain transparency and growing markets for greener paper products.

Some of our accomplishments in other areas include the following:

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Supplier Guiding Principles

The Company requires its suppliers who produce private brand products for Office Depot to follow and adhere to its Supplier Guiding Principles. The Supplier Guiding Principles is our supplier code of conduct and represents the Company’s commitment to source from suppliers that strive to comply with all applicable laws and regulations. Office Depot endeavors to partner with suppliers who meet internationally recognized standards in dealing with its workers, the environment in which products are made as well as their supply chain operations.

ODP’S Social Responsibility Strategy

Elevate Our People

‘Elevate Our People’ program was introduced as part of our commitment to ensuring our organization is equipped to navigate and thrive in a dynamic environment. This program serves as an individual call to action for all associates to proactively engage in supporting and elevating our organization, our teams, our colleagues, and ourselves as we navigate the future. Elevate Our People is about fostering a positive mindset, exploring and sharing in the vision of our future and approaching challenges with a view to embracing them as opportunities to learn and grow.

Diversity and Inclusion or “D&I”. We elevate our people through our commitment to maintaining a diverse and inclusive workplace in which our associates from all backgrounds can fully contribute to the growth and success of our business. In 2021, we expanded the D&I reach by continuing to grow the Associate Resource Groups (ARGs) and introducing a Diversity Captain role to focus and drive awareness around our diversity and inclusion efforts within a specified district/market. We also promoted gender inclusivity with a proactive campaign to raise awareness around pronouns and preferred name utilization. In 2020, the charter of the Compensation & Talent Committee was amended to explicitly state that the committee’s responsibilities include oversight with respect to diversity and inclusion, pay equity, recruiting, retention, training and development, and workplace environment and safety consistent with the Company’s culture, objectives and strategy. We create a culture of inclusion for associates regardless of gender, race, color, creed, religion, marital status, age, national origin, physical or mental disability, medical condition, veteran status, citizenship, sexual orientation, gender identity, or any other protected group status. The Company creates a diverse and inclusive workplace culture when it attracts and hires associates of all abilities and backgrounds. The Company’s commitment to equal opportunity is driven by its 5C Culture, and diversity and inclusion are intrinsic to the Company’s values and contribute to the Company’s success in the markets it serves. In addition to the Company’s values, it is also guided by the following principles:

The Company’s Diversity Council is comprised of leaders from across the business, including the executive sponsors of our Associate Resource Groups (ARGs) as further described below. The Diversity Council provides oversight and counsel for the Company’s diversity and inclusion efforts and provides a platform for identifying and advising on areas of opportunity to continue evolving processes, policies and procedures in alignment with our 5C Culture.

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The Company has been recognized in local communities and on a national level for its inclusion efforts and is committed to an inclusive work environment that values and respects the talents and contributions of every associate. In 2021, the Company was honored with the Tripp Scott Diversity Champion Award in recognition of diversity and inclusion work, and named Top Employer on the 2021 Best of the Best list by Black EOE Journal, Hispanic Network Magazine, and Professional Woman’s Magazine. The Company was also recognized as one of America’s Top Corporations for Women’s Business Enterprises by Women’s Business Enterprise National Council (WBENC), named one of WE 100 Corporations of the Year by WE USA (Women’s Enterprise) Magazine, and 2021 Top 50 Best Companies for Latinas to Work for in the U.S. by LATINA Style Magazine. Awarded the 2021 LGBTQ Business Equality Excellence Award by The Business Equality Network (BEQ) for the fifth consecutive year, and 2021 Best Place to Work for LGBT Equality by the Human Rights Campaign Foundation for the tenth consecutive year.

The Company recognizes that disability inclusion is a fundamental value tightly interwoven into the Company’s everyday function and long-term goals. The Company devotes resources and efforts for disability training and recruiting initiatives and works closely with local communities to maximize the benefits of these programs. In 2021, through an existing relationship with our newly formed STAND (See Talent, Ability, Not Disability) Associate Resource Group (ARG),the Company partnered with Best Buddies International to pilot their Integrated Employment program in the Retail and Supply Chain business to secure jobs for people with IDD (Intellectual or Developmental Disabilities).

The 2020 U.S. workforce data provided below is from the EEO-1 Report for Office Depot and is based on employees’ voluntarily self-disclosure of gender and race/ethnicity. The information below does not include data from certain regional office supply companies recently acquired by Office Depot, which continue to operate as separate entities, and may not be required to collect and compile such data.

Office Depot — Gender Representation:

MANAGEMENT		ALL OTHER EMPLOYEES

Office Depot — Racial/Ethnic Group Representation:

MANAGEMENT		ALL OTHER EMPLOYEES

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Employee Engagement. As part of our listening strategy, in 2021 we continued our annual employee engagement survey cadence to gauge how our employee feel about work and launched our first culture survey to gain insight on cultural strengths and opportunities.To further foster employee engagement and promote diversity and inclusion, we continued to encourage the formation of ARGs. ARGs are voluntary, employee-led, and company-sanctioned organizations of employees who share similar backgrounds, such as age, gender, race, ethnicity, sexual orientation, military experience, life experiences, and other non-merit factors. ARGs work to foster a welcoming and inclusive work environment, drive awareness, and facilitate engagement, leadership, development and support within affinity groups. At the end of 2021, we had 11 ARGs representing various dimensions of diversity: Asian Professionals, Emerging Professionals, Men of Color, LGBTQ+, Military- Veterans, SOMOS Office Depot, STAND (See Talent, Ability, Not Disability), Women’s Affinity Group, Women in Leadership, Women of Color, and Young Professionals. Our SOMOS ARG was selected as one of the top 15 employee resource groups of the year for 2021 by LATINA Style, Inc for the second consecutive year.

Supplier Diversity. We believe supplier diversity is an imperative business practice in today’s economic environment. We are committed to supplier diversity as a business strategy that displays commitment by our company to equal opportunity, satisfies the voice of our customers, complies with all laws and regulations, and sustains the economic development of diverse businesses in the communities where they are located and the economy as a whole. In 2021, we reorganized our Supplier Diversity Program within our corporate structure to maximize its impact. We work continuously to increase sourcing opportunities with diverse businesses — including certified minority-, women-, disabled-, LGBT-, veteran-owned and small businesses. There are over 1,700 featured items in our Diverse Supplier Digital Catalog.

During 2021, we worked with over 450 diverse and small business suppliers and increased our diversity spend by 20% with diverse and small businesses. Also, in 2021, Office Depot was recognized as America’s Top Corporation for Women’s Business Enterprises by Women’s Business Enterprise National Council for successfully driving sustainable inclusion of women-owned businesses within corporate and government supply chains and empowering local communities through economic growth and job creation. The Company was also recognized by Professional Woman’s Magazine as WE 100 Corporations of the year impacting Supplier Diversity and received the Tripp Scott Diversity Champion award by the Urban League of Broward County.

Health and Safety. We are committed to be an environmental steward that supports healthy communities and helps our customers do the same. ODP makes every effort to maintain a safe and healthy work environment. It is our intent to comply with all required U.S. Federal and state safety and health regulations and standards. Our Injury and Illness Prevention Program helps in eliminating or reducing the severity of job-related illnesses and injuries within our Company with the engagement of our leadership and associates by assigning responsibility, requiring ongoing training at all levels, driving a safety culture through constant communication, identifying and eliminating hazards, recognizing safe acts and correcting unsafe behaviors, and accurate incident reporting, investigations, and recordkeeping.

Community Investment. The Company including its subsidiaries believes that part of being responsible corporate citizens is improving the communities where its associates live and work. This commitment spans a wide variety of engagement and activities, both in terms of the Company’s associates’ volunteerism, in-kind contributions and monetary donations on behalf of the Company and by its associates, with the aim of strengthening our communities. We encourage associate volunteerism at all our locations through organized activities and by contributing to local charitable organizations and educational efforts. Our associates are passionate about their communities and enjoy working together for the greater good.

Examples of how the Company supported local communities in 2021 include:

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CEO and Executive Management Succession Planning

The Corporate Governance & Nominating Committee oversees CEO succession planning, which is formally reviewed at least annually, in executive session with only non-management Directors present. During these executive sessions, the non-management Directors evaluate the requirements for the CEO position and regularly review potential permanent and interim candidates for the CEO role.

The Compensation & Talent Committee annually evaluates the succession planning process for the executive management team (other than the CEO), including the professional development of senior and midlevel management employees identified as potential successors to the executive management team to ensure that plans are in place for orderly succession of executive management, whether arising from natural career growth and development, voluntary turnover, retirements, or other reasons.

The Board of Directors also established steps to address emergency CEO succession planning in extraordinary circumstances. Our emergency CEO succession planning is intended to enable the Company to respond in the event of our CEO’s termination of employment with the Company for any reason (including death or disability) or other sudden departure, to ensure the stability and accountability of the Company during periods of transition and minimizing potential disruption or loss of continuity to the Company’s business and operations. The Board of Directors reviews and discusses the emergency plan once at least annually.

Anti-Hedging and Anti-Pledging Policies

The Company maintains anti-pledging and anti-hedging policies. See Compensation Discussion and Analysis under subheading “Other Compensation and Governance Matters” for further information about these policies.

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AUDIT COMMITTEE REPORT

The Audit Committee assists the Board of Directors in its oversight of the Company’s financial reporting process. The Audit Committee operates pursuant to a written charter which is reviewed annually by the Audit Committee and approved by the Board of Directors. A brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under the heading “Corporate Governance — Board and Committee Responsibilities.” Under the Audit Committee charter, management is responsible for the preparation, presentation and integrity of the Company’s financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America.

To perform its oversight function, the Audit Committee has:

Based on the foregoing reviews and discussions, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 25, 2021 filed with the SEC.

Submitted by the Audit Committee of the Board of Directors:

Cynthia T. Jamison (Chair)

Quincy L. Allen

Wendy L. Schoppert

David M. Szymanski

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PROPOSAL No. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Deloitte & Touche LLP (“D&T”) to serve as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements and internal control over financial reporting for the fiscal year ending December 31, 2022. D&T has served as the Company’s independent auditors each year since 1990. Although ratification is not required by our Bylaws or otherwise, the Board of Directors is submitting the appointment of D&T to our shareholders for ratification because we value our shareholders’ views on the Company’s independent auditors. In the event the shareholders do not ratify the appointment of D&T as the independent auditors to audit our financial statements for fiscal year 2022, the Audit Committee, in its discretion, will consider the voting results and evaluate whether to select a different independent auditor. Representatives of D&T will attend the Annual Meeting and will be available to respond to appropriate questions. Although D&T has indicated that no statement will be made, an opportunity for a statement will be provided.

Audit and Non-Audit Fees

In connection with the audit of fiscal year 2021 consolidated financial statements and internal control over financial reporting, the Company entered into an agreement with D&T which sets forth the terms by which D&T will perform audit services for the Company.

The following table sets forth the aggregate fees for professional services rendered by D&T for the audit of the Company’s consolidated financial statements for fiscal years 2021 and 2020 and fees billed for other services rendered by D&T for those periods.

(1)        Audit Fees — These amounts represent fees of D&T for professional services rendered in connection with: (i) the audits of our annual consolidated financial statements and the effectiveness of our internal controls over financial reporting for the fiscal years ended December 25, 2021 and December 26, 2020; (ii) the review of the consolidated financial statements included in each of our Quarterly Reports on Form 10-Q during those fiscal years; (iii) consultations on accounting matters; and (iv) SEC registration statements.

(2)        Audit Related Fees — Audit-Related Fees relate to assurance and related services that are reasonable related to the performance of the audit or review of our financial statements or other filings.

(3)        Tax Fees — Tax Fees consist of fees billed for professional services performed by D&T with respect to tax compliance and advisory services.

(4)        All Other Fees — All Other Fees consist of permitted services other than those that meet the criteria above and are primarily fees for advisory services.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee has established policies and procedures under which all audit and non-audit services performed by the Company’s independent registered public accounting firm must be separately approved in advance by the Audit Committee. The policy also provides that the Audit Committee has delegated pre-approval authority to the Chair of the Audit Committee for non-audit services provided that the pre-approval of each service permitted by the Chair is limited to a pre-established threshold of up to $250,000 and reported to the full Audit Committee at its next meeting. All audit and non-audit services provided in fiscal years 2021 and 2020 were pre-approved by the Audit Committee in accordance with these policies and procedures.

THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2022.

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EQUITY COMPENSATION PLAN INFORMATION

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COMPENSATION DISCUSSION AND ANALYSIS

This compensation discussion and analysis (the “CD&A”) describes our executive compensation programs and explains how the Compensation & Talent Committee (the “C&T Committee”) made its compensation decisions for our named executive officers (also referred to in this CD&A as “NEOs”) for fiscal year 2021. The NEOs for fiscal year 2021 are:

While the discussion in the CD&A is focused on our NEOs, many of our executive compensation programs apply broadly across our management ranks, including our cash Annual Bonus Plan that covers approximately 2,100 employees.

2021 Business Highlights

The ODP Corporation is a leading provider of business services and supplies, products and digital workplace technology solutions to small, medium and enterprise businesses, through an integrated business-to-business (B2B) distribution platform, which includes world-class supply chain and distribution operations, dedicated sales professionals and technicians, online presence, and approximately 1,100 stores. Through its banner brands Office Depot^®, OfficeMax^®, ODP Business Solutions^TM, Varis^TM and Grand&Toy^®, as well as others, we offer our customers the tools and resources they need to focus on their passion of starting, growing and running their business.

The COVID-19 pandemic (including multiple variants throughout the year) continued to have an adverse impact on our business during 2021. Maintaining the health and wellness of our employees and customers was our #1 priority throughout the year and we closely monitored and followed CDC guidance to reduce risk. Many of our enterprise customers delayed plans to return to the workplace, causing reduced office supply consumption in our Contract channel. Our Retail division, which experienced peak demands in the latter half of 2020 due to the shift to remote work, continued to show strong demand in supporting customers remote/hybrid needs and the needs of education customers during the more robust back-to-school season as more schools re-opened and teachers and students returned to the classroom. Despite the continued challenging market backdrop, we continued to deliver solid results and execute upon our plan to drive shareholder value. Some key highlights include:

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Our fiscal year 2021 results reflect the focus, contribution and dedication of our leadership team and employees in successfully navigating a challenging year and driving progress on our transformation into a leading, integrated B2B distribution platform.

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Key 2021 Compensation Actions

The primary elements of our total direct compensation program for the NEOs and a summary of the actions taken by the C&T Committee during fiscal year 2021 are set forth below.

Shareholder Feedback on Executive Compensation Programs

For fiscal year 2021, we received 74.6% shareholder support on our Say-on-Pay advisory vote, which represented a decline from previous years. This outcome was disappointing to us and we increased our shareholder engagement efforts in fiscal year 2021, directly engaging with shareholders to seek feedback and to better understand their perspectives on our executive compensation program and the concerns contributing to our lower levels of support for the say on pay

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proposal. Our outreach to the investment community included our top 20 investors who collectively represent approximately 70% of our outstanding common stock. We also received requests to engage with key shareholders outside of our top 20.

In 2021, representation from our management team, including David Bleisch (EVP, Chief Legal & Administrative Officer and Corporate Secretary), met directly with a number of key shareholders including Brandywine Global Investment Management (a subsidiary of Franklin Management), Neuberger Berman, and Green Century. We had robust conversations regarding executive compensation practices, corporate governance, and ESG matters. A direct response from feedback in those meetings was introducing a new metric in our Annual Bonus Plan tied to our ESG efforts, and ensuring our associates and management were incentivized on our key ESG initiatives for 2021. We expect to maintain this focus on critical ESG matters in our executive compensation programs going forward.

Management also holds regular conference calls and participates in in-person meetings with investors following our quarterly earnings release as another way to gather feedback and respond to questions about specific matters of importance, such as executive compensation design. Regarding executive compensation, in general, shareholders provided positive feedback about our overall program.

We believe our executive compensation program is tailored to our business strategies, aligned with our pay-for-performance philosophy and market views on best practices, and designed to create long-term value for our stakeholders and shareholders.

Compensation Philosophy

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Key Compensation Elements

The various elements of compensation we pay to our NEOs is intended to reflect our compensation philosophy and: (i) provide an appropriate level of financial certainty through fixed compensation, (ii) ensure that at least 60% of equity compensation is performance-based, and (iii) create a balance of short-term and long-term incentives. The key elements of the Company’s fiscal year 2021 executive compensation program can be summarized as follows:

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Compensation Best Practices

The C&T Committee is guided by the following best practices in determining the compensation structure for our executives:

Performance Based Compensation

The C&T Committee annually reviews the total mix of compensation for our NEOs, which includes a significant portion of variable performance-based incentives that are linked to the attainment of critical performance targets and changes in shareholder value. The C&T Committee believes that each of these elements provides a meaningful reward opportunity to the NEOs, focuses our leadership team on the key drivers of success for the near- and long-term, and therefore supports our short-term and long-term strategic objectives and links realized pay directly to performance.

With respect to our CEO’s compensation, 89% of Mr. Smith’s target compensation was “at risk” in 2021 based on operating performance, relative TSR, and/or changes in stock price. Target compensation for our other NEOs in 2021 was 74% “at risk.”

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PRIMARY ELEMENTS OF TOTAL DIRECT COMPENSATION

Base Salary

The C&T Committee (members listed on page 27) performed its annual review of executive compensation considering external market data, as well as scope of role, individual performance, and internal equity and approved the following salaries:

Messrs. Scaglione and Leeper’s salary increases were awarded to remain market competitive and in recognition of the key roles each will play in the transformation of our business.

2021 Annual Bonus Plan

The Annual Bonus Plan is a cash annual incentive plan designed to compensate our executives and employees based on achievement of annual corporate performance goals. The Annual Bonus Plan includes threshold, target and maximum payouts tied to adjusted EBITDA and Net Sales goals. In 2021, a non-Financial strategic Environmental, Social and Corporate Governance goal was incorporated into the annual bonus plan in response to shareholder feedback and to emphasize the importance of ESG initiatives in driving stakeholder value and holding management accountable for results. The weighting of the EBITDA and Net Sales metrics were both reduced by 10% (from 50% each to 40% each) from the prior year to account for the new ESG metric weighting of 20%. Failure to meet threshold results in zero funding based on the originally approved goals, whereas attainment of target performance goals results in target payout and maximum payout is capped at 200% of target to align with market-competitive practice among the Company’s peer group and to enable upside opportunity for performance above target and the challenging nature of the goals.

The 2021 financial targets were approved by the BOD in early 2021 and assumed a return to normalization in some areas of our business, including a recovery in BSD due to companies returning back to the office, and expected degradation in our retail business due to secular declines and the planned closing of 116 stores as part of our strategic objective of optimizing our retail footprint. This resulted in our 2021 Financial Targets being set slightly lower than prior year. As COVID-19 continued to impact the country throughout the entirety of 2021, companies delayed plans to return to the office, which had a negative impact on our BSD business. Alternatively, our retail business benefited from the delayed return to the office plans and exceeded expectations more than enough to offset the shortfall on the BSD business, resulting in total company performance that exceeded our plan targets for EBITDA. In addition, goals were adjusted, in accordance with the terms of our Annual Bonus Plan, due to CompuCom moving to discontinued operations for the second half of 2021 in preparation for the sale, which closed at the end of 2021.

When designing the Annual Bonus Plan in February of 2021, the C&T Committee established categories of significant, unplanned and unusual items that would be excluded from adjusted EBITDA and Net Sales. The pre-determined adjustments were intended to ensure that measured performance reflected the degree of management excellence in results and was not distorted upward or downward by factors outside management’s control. The adjustment categories set forth in the Annual Bonus Plan thereby foster “line of sight” between controllable performance and payouts, protect against artificial inflation or deflation in payouts, and assure fairness to both shareholders and management, and continued alignment of their interests. For 2021, the categories of excludable items included: merger-related expenses; impacts of unplanned acquisitions and divestitures; any costs related to a strategic review of a segment for sale or joint ventures; legal and associated costs related to evaluating external transactions, including but not limited to tender offers and potential joint ventures; costs related to simplifying legal structures; impacts of change in classification from discontinued operations to continuing operations (and vice versa); restructuring charges; impairment charges related to goodwill, other intangible assets, and long-lived assets (non-cash); unplanned legal expenses related to attorney fees, judgments and settlements; and unplanned costs and benefits related to real estate strategy, including, but not limited to lease terminations or facility closure obligations; and other unplanned and unusual adjustments approved by the C&T Committee.

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The table below summarizes the metrics for the 2021 Annual Bonus Plan.

Non-Financial Strategic ESG Metric

Based on our shareholder outreach, we heard from investors that they wanted to see our executive compensation tied to progress on key non-financial strategic ESG goals. As a result, the C&T Committee approved the inclusion of certain ESG initiatives to make up 20% of the Annual Bonus Plan for 2021. The table below summarizes the ESG Initiatives and the strategic measures that were assessed by the C&T Committee at the end of fiscal year 2021 to determine the achievement of these initiatives.

As described in the Annual Bonus Plan, the C&T Committee has the authority to make adjustments to ensure that compensation appropriately reflects operating performance that is reasonably within management’s control. CompuCom was placed into discontinued operations for the third and fourth quarters of 2021. The 2021 Annual Bonus Plan Results table below summarizes the final performance of the 2021 Annual Bonus Plan, excluding the target and actual Q3/Q4 2021 performance for CompuCom.

For purposes of determining the level of achievement for each of the bonus metrics under the Annual Bonus Plan, the C&T Committee reviewed the applicable financial metrics, as derived from our 2021 audited financial statements approved by the Audit Committee. For fiscal year 2021, the C&T Committee certified achievement of the Adjusted EBITDA and Net Sales performance results as reflected in the following table.

The C&T Committee determined that each of the Non-Financial ESG goals were exceeded. In particular, the company increased diversion of waste by more than 3 times the amount necessary to achieve the 50% goal; reaching a 63% diversion rate as of November 2021 (Environmental), achieved all of its milestones in launching, supporting, and expanding Elevate Together in 2021 (Social), and has adopted relevant disclosure standards promulgated by the SASB for Multiline and Specialty Retailers & Distributors and will issue the Corporate Sustainability Report with disclosure aligned to these standards by July, 2022 (Governance). The C&T Committee certified achievement of the Non-Financial ESG metric at 145%.

In reviewing the Adjusted EBITDA, Net Sales and Non-Financial ESG performance results for purposes of determining final payouts, the C&T Committee authorized bonuses to our NEO’s under the 2021 Annual Bonus Plan to be paid out at 142.3% of target.

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2021 Annual Bonus Plan Results

The threshold, target and maximum payout for each NEO are disclosed in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column of the Grants of Plan-Based Awards table below. The actual dollar amounts earned by our NEOs in fiscal year 2021, pursuant to the Annual Bonus Plan, are disclosed in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below.

2021 Long-Term Incentive Program

The purpose of our long-term incentive program is to further align the long-term interests of management with those of our shareholders and help retain our key talent. These objectives must be balanced such that successful, high-achieving employees remain motivated and committed even in periods of temporary market downturns or volatility in our performance as well as the periods where we have strategic transactions that create uncertainty. In support of these objectives, the 2021 LTIP award includes both time and performance-based components to promote long-term retention and achievement of key operating objectives:

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Our 2021 Long-Term Incentive Program (“2021 LTIP”) is similar in structure to our 2020 LTIP and provides that 60% of the long-term incentive awards to our NEOs are performance-based. The performance is measured on absolute FCF and TSR relative to our executive compensation peer group over a 3-year performance period.

The C&T Committee set the following thresholds, targets, and maximum parameters for each of the applicable metrics selected under the 2021 LTIP:

When considering the attainment level reached for payout of the FCF awards under the 2020 LTIP, the C&T Committee, when designing the 2021 LTIP, determined the categories of significant, unplanned and unusual items that would be excluded from FCF, whether the resulting impact was positive or negative, because they distort our operating performance. This practice ensures that our executives will not be unduly influenced in their day-to-day decision-making

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because they would neither benefit, nor be penalized, as a result of certain unexpected and uncontrollable events or strategic initiatives that may positively or negatively affect the performance metric in the long-term. For fiscal year 2021, the categories of excludable items are the same categories used for adjusting EBITDA under the 2021 Annual Bonus Plan, as described above.

The C&T Committee approved the following awards to be granted to the NEOs under the 2021 LTIP:

The annual equity grants for 2021 were approved by the C&T Committee in April 2021 after our earnings were released for the 2020 fiscal year end. The C&T Committee granted equity under the shareholder approved 2021 Long-Term Equity Incentive Plan. New hire grants (if applicable) made during the year are granted on the later of the first business day of employment or on the business day following the grant approval by the C&T Committee.

2020 LTIP

The 2020 LTIP awards include awards based on the total FCF for the three cumulative fiscal years beginning on December 29, 2019 and ending on December 31, 2022, and awards based on TSR for the Company relative to the peer group for the performance period beginning on March 10, 2020 and ending on March 10, 2023. These performance periods are not yet complete, so no results are available with respect to these 2020 LTIP awards. Further information on the 2020 LTIP design and awards is included in our Proxy Statement filed with the SEC on March 12, 2021.

2019 LTIP Results

The 2019 LTIP awards include awards (50% weighting) based on the total FCF for the three cumulative fiscal years beginning on December 30, 2018 and ending on December 25, 2021, and awards (50% weighting) based on TSR for the Company relative to the peer group for the performance period beginning on March 15, 2019 and ending on March 15, 2022.

For 2019 LTIP awards tied to FCF, the C&T Committee determined that the achievement of $1.055 billion was attained, resulting in a 160% achievement under the 2019 LTIP.

For 2019 awards tied to TSR, the C&T Committee received external certification from AON for TSR results compared to the predetermined peer group which showed a TSR of 38.57%, resulting in a relative ranking at the 40^th percentile. In March 2022, the C&T Committee certified the relative payout at 75% achievement under the 2019 LTIP.

Further information on the 2019 LTIP plan design is included in our Proxy Statement filed with the SEC on March 26, 2020. The following table shows the metrics set for the three-year performance period for the 2019 LTIP awards.

The following table shows the target and results for the three-year performance period:

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Transition agreement with Mr. Bleisch

On September 24, 2021, N. David Bleisch, Executive Vice President, Chief Legal & Administrative Officer and Corporate Secretary of informed the Company of his intention to leave the Company. In order to postpone Mr. Bleisch’s termination and therefore ensure a smooth transition of his leadership responsibilities, including those related to restructuring efforts and corporate transactions, the Company entered into an Executive Transition Agreement (the “Transition Agreement”) with Mr. Bleisch on September 28, 2021. Special consideration was placed on the fact that the Company was involved in multiple, complex restructuring efforts and corporate transactions that required Mr. Bleisch’s extensive knowledge and experience with the Company. This agreement required that Mr. Bleisch remain in his current role until April 30, 2022 and continue to lead ongoing initiatives and assist with the transition of his responsibilities to his successor.

The material terms of the Transition Agreement are summarized in the section headed “Executive Agreements—Agreements with N. David Bleisch, Executive Vice President, Chief Legal & Administrative Officer.”

EXECUTIVE COMPENSATION PROCESS AND GOVERNANCE

Executive Compensation Oversight Responsibilities

The table below summarizes the key oversight responsibilities for executive compensation.

Peer Companies

The C&T Committee believes benchmarking is a useful method to gauge both the compensation level and compensation mix for executives within competitive job markets that are relevant to the Company. The C&T Committee reviews total direct compensation compared to levels at peer companies that we believe are reflective of our business. Data is gathered from the proxy statements of our peer group (as defined below) as well as industry surveys for benchmarking purposes in review and analysis of base salaries, bonuses, long-term incentives, and benefits/perquisites to establish our executive compensation program.

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The peer group was developed based on the following criteria:

Companies selected for the peer group were required to have a significant number of the characteristics described above, but not necessarily all of them. Judgment was used to ensure that the median revenue of the group remained reasonable and to create a balanced mix of retailers, distributors, and service companies.

While we strive for year-over-year continuity for our peer group, the peer group data is generally reviewed annually, based on input from FW Cook, to determine if modifications to the peer group or the criteria used to determine the peer group are necessary to ensure a representative peer group. At its meeting on July 29, 2021, the C&T Committee reviewed FW Cook’s recommendation to remove HD Supply, Inc. from the current peer group as it was acquired by Home Depot in December 2020. The C&T Committee approved the revised peer group and recommended the peer group to the Board, which also approved it. The revised peer group is comprised of 17 companies with representation from seven retailers, eight B2B distributors and two B2B services company. The B2B/Retail mix is 59% B2B and 41% Retail. As of December 31, 2021, the Company ranked at the 32^nd percentile in terms of revenue, the 23^rd percentile in operating margin, and the 26^th percentile in market capitalization.

The companies listed below represent the revised peer group:

Performance awards that use relative TSR as a performance criterion will continue to use the peer group that was approved at the time of the grant of the awards, with adjustments to the peer group only as specified in the applicable award agreement.

In addition to the peer group compensation information, the C&T Committee generally considers the following in making executive compensation decisions:

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When making compensation decisions, the C&T Committee not only considers each element of compensation individually (i.e. base salary, short-term incentives, and long-term incentives), but also considers the target total direct compensation and mix of compensation paid to the NEOs. The C&T Committee also considers strategic business decisions when developing and approving the compensation program.

OTHER COMPENSATION AND GOVERNANCE MATTERS

Employment and Change-in-Control Agreements

The C&T Committee believes that employment letter agreements and change in control arrangements are necessary to attract and retain qualified executives. Our letter agreements with our NEOs generally set forth the terms of the officer’s employment with the Company and also provide for severance benefits if the officer is involuntarily terminated without cause or, in some cases, if the officer voluntarily terminates the officer’s employment for good reason, and such termination is not in connection with a change in control (“CIC”). The retention of key management is essential to and in our and our shareholders’ best interests. The C&T Committee believes reasonable severance benefits help ensure the continued dedication and efforts of management without undue concern for or distraction by their personal, financial and employment security.

Similarly, the C&T Committee believes that CIC agreements effectively motivate executives to remain engaged and strive to create shareholder value in the event the Company becomes an acquisition target or is targeting another company for acquisition, despite the risk of job loss or the loss of equity vesting opportunity. In addition, these severance and CIC arrangements are necessary to attract and retain qualified executives who may have other job alternatives that may appear to them to be less risky absent these arrangements, and these arrangements are particularly important to the Company given the high levels of competition for executive talent in the retail sector.

We have an Executive Change in Control Severance Plan (the “CIC Plan”) pursuant to which we will provide certain severance pay and other benefits to key executives, including the NEOs, who are viewed by us as critical to the continued leadership of the Company in the event of a CIC. The use of a planned approach provides many benefits when compared to entering into individual change in control agreements with each NEO. In most instances, this method ensures consistent terms and provisions and allows us flexibility to amend or change our practices in response to market trends and best practices. The CIC Plan includes features considered to be best practices, including a double-trigger for CIC benefits.

Our letter agreements and the CIC Plan generally require the NEO to sign a release of claims and to abide by certain confidentiality, non-solicitation, non-compete and related restrictive covenants as a condition of receiving severance payments.

For a detailed description of our CIC Plan and our letter agreements with our NEOs, please see the section entitled “Summary of Executive Agreements and Potential Payments upon Termination or Change in Control” beginning on page 62.

Executive Perquisites

We provide the NEOs with core benefits that are generally available to our other full-time employees (e.g., coverage for medical, dental, vision care, prescription drugs, annual physical, and basic life insurance and long-term disability coverage), plus voluntary benefits that a NEO may select (e.g., supplemental life insurance).

In addition, we have a matching contribution to the 401(k) Plan for all participants, including the NEOs, which is equal to 50% of employee deferrals on the first 6% of eligible earnings (up to plan limits). The C&T Committee believes it is important to offer a benefit of this nature to further motivate and retain employees.

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Consistent with the peer group and the current trend in executive compensation, we limit the perquisites provided to our NEOs. Car allowances, financial planning services, and executive physicals are available to our NEOs. Other perquisites are offered when needed for the attraction and retention of executive talent and to allow NEOs to efficiently handle the responsibilities of their position.

Management’s Stock Ownership Policy

The C&T Committee believes that the NEOs should maintain a meaningful equity interest in the Company through the ownership of stock. This ensures that the executive will pursue the long-term interests of shareholders since they are shareholders themselves. As such, the following stock ownership guidelines are in place for our NEOs still employed by the Company:

Our stock ownership guidelines are reviewed annually and are robust and continue to reflect current corporate governance trends. We require that all NEOs satisfy the ownership requirement by holding Company stock equal to a multiple of base salary rather than as a fixed number of shares. This requires NEOs to hold more shares in the event that our stock price decreases. Our CEO and NEOs are only permitted to sell stock before meeting the ownership requirements if they retain 50% of the net shares (after shares are disposed of to pay for taxes and acquisition), which is aligned with peer group practice.

The type of equity considered for purposes of determining compliance with the stock ownership guidelines is equity that is earned or vested, which is defined as the following:

The current guidelines are considered competitive according to the market data provided by FW Cook. The C&T Committee annually reviews each NEO’s progress toward meeting the ownership guidelines.

Clawback and Forfeiture Provisions

The Board adopted a policy for recoupment of incentive compensation (the “clawback policy”). The clawback policy provides that if we restate our reported financial results for any period beginning after January 1, 2010, the Board will review the bonus and other awards made to executive officers based on financial results during the period subject to the restatement. To the extent practicable and in the best interests of shareholders, the Board may seek to recover or cancel any such awards that were based on having met or exceeded performance targets that would not have been met or exceeded under the restated financial results.

Hedging and Pledging Prohibition

The Board adopted an anti-hedging policy that prohibits hedging transactions with respect to Company securities and derivatives by our Directors, executive officers and all other employees. Furthermore, the Board adopted an anti-pledging policy that prohibits our Directors and executive officers from using Company stock as collateral for any borrowing.

Effect of Tax and Accounting Considerations on Compensation Design

Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), historically limited the deductibility by the Company of compensation paid to certain executive officers that did not qualify as “performance-based” to more than $1,000,000 paid in any one year. As a result of the U.S federal tax law reforms adopted in December 2017, the