DEFA14A: ODP Corp. Details Employee LTI Post-Atlas Acquisition

The ODP Corporation outlines the conversion and vesting of employee Long-Term Incentive awards following its announced acquisition by Atlas.

Summary

• An email was sent to certain employees of The ODP Corporation on September 29, 2025, detailing the treatment of Long-Term Incentive (LTI) awards under the merger agreement with Atlas.
• Unvested Time-Based Restricted Stock Units (RSUs) will convert into a cash-denominated award equal to the number of unvested RSUs multiplied by $28.00.
• The cash awards for RSUs will be distributed according to the original vesting schedule, requiring continued employment through each vesting date.
• Accelerated vesting for remaining unvested RSU cash awards will occur if an employee is involuntarily terminated without cause within 24 months after the merger closes.
• All outstanding Performance-Based Restricted Stock Units (PSUs) will be converted into cash at closing.
• TSR-Based PSUs will convert to cash based on the target number of shares, the actual performance multiplier through closing, and $28.00.
• EPS-PSUs will convert to cash based on the target number of shares multiplied by $28.00.
• Cash payments for PSU awards will be made as soon as practicable after the merger closes, while RSU cash payments follow their original vesting schedule.
• All cash payments are subject to applicable tax withholding.
• Associates are not required to take any action for the conversion of their awards, as it will be handled centrally by the Executive Compensation Team.
• Merger-related changes to Fidelity Brokerage account visibility will be communicated at a future date.

Sentiment

Score: 7

Explanation: The filing provides clear and detailed information regarding employee LTI awards post-acquisition, which is positive for employee clarity and morale. However, it also extensively lists numerous risks associated with the merger's completion, which introduces a degree of uncertainty.

Positives

• Provides clear and structured communication to employees regarding the treatment of their LTI awards post-acquisition, reducing uncertainty.
• Unvested RSUs and PSUs will be converted into cash, providing a defined value for these awards at $28.00 per share (for RSUs and EPS-PSUs, and as a multiplier for TSR-PSUs).
• Includes a provision for accelerated vesting of RSU cash awards for employees involuntarily terminated without cause within 24 months post-merger, offering a safety net.
• Employees are not required to take any action for the conversion process, simplifying the transition.

Negatives

• Cash awards for RSUs generally still require continued employment through the original vesting dates, which could be a disincentive for some employees if they wish to leave prior to full vesting.
• Cash payments are subject to applicable tax withholding, and employees are advised to consult individual tax advisors, indicating potential tax complexities.
• Merger-related changes to Fidelity account visibility will be communicated at a future date, which may cause temporary uncertainty for employees regarding their equity holdings.

Risks

• The completion of the proposed transaction on the anticipated terms and timing is not guaranteed.
• Satisfaction of other conditions to the completion of the proposed transaction, including obtaining required shareholder and regulatory approvals, may not occur.
• The Company's stock price may fluctuate during the pendency of the proposed transaction and could decline if the transaction is not completed.
• Potential litigation relating to the proposed transaction could be instituted against the Company or its directors, managers, or officers.
• Disruptions from the proposed transaction may harm the Company's business, including current plans and operations.
• The ability of the Company to retain and hire key personnel may be impacted.
• Management's time and attention may be diverted from ordinary course business operations to completion and integration matters.
• Potential adverse reactions or changes to business relationships may result from the announcement or completion of the proposed transaction.
• Legislative, regulatory, and economic developments could affect the transaction.
• Potential business uncertainty, including changes to existing business relationships, may occur during the pendency of the proposed transaction.
• Certain restrictions during the pendency of the proposed transaction may impact the Company's ability to pursue business opportunities or strategic transactions.
• Unpredictability and severity of catastrophic events, such as acts of terrorism, war, or global pandemics, could affect the Company.
• The proposed transaction may be more expensive to complete than anticipated, including due to unexpected factors or events.
• Unexpected costs, liabilities, or delays may be associated with the transaction.
• Competitors' response to the transaction could be adverse.
• The occurrence of any event, change, or other circumstance could give rise to the termination of the proposed transaction, potentially requiring the Company to pay a termination fee.
• Other risks are set forth in the Company's Annual Report on Form 10-K for the year ended December 28, 2024, and subsequent SEC filings.

Future Outlook

The filing primarily details the treatment of employee Long-Term Incentive awards following the announced acquisition by Atlas. It includes a comprehensive list of forward-looking statements and associated risks related to the completion of the proposed transaction, shareholder and regulatory approvals, potential litigation, business disruptions, and the ability to retain key personnel. It does not provide a general business outlook or financial guidance beyond the merger context.

Management Comments

• "This update is being provided to you for information purposes only and shall not serve as an amendment or modification of any of your equity awards."
• "Any information contained in this update is qualified in its entirety by the terms of the merger agreement... and the terms of your equity awards."
• "Associates do not need to take any action to convert their awards. All changes will be handled centrally by the Executive Compensation Team."

Industry Context

This announcement is specific to The ODP Corporation's internal employee compensation structure in the context of its pending acquisition by Atlas. It does not provide broader insights into industry trends or competitive landscape beyond the direct impact of the merger on the company's operations and employee incentives.

Legal Proceedings

• Potential litigation relating to the proposed transaction that could be instituted against the Company or its directors, managers, or officers.

Stakeholder Impact

• **Employees:** Provides clarity on the treatment of their Long-Term Incentive awards, including conversion to cash and accelerated vesting provisions under specific termination scenarios, which can impact retention and morale.
• **Shareholders:** Informs about the ongoing merger process and associated risks, particularly regarding the completion of the transaction and potential litigation, which could affect investment value.

Next Steps

• Cash payments for PSU awards will be made as soon as practicable after the close of the merger.
• Cash payments for RSU awards will be made in accordance with their original vesting schedules.
• Merger-related changes to Fidelity Brokerage accounts will be communicated separately at a future date.
• The ODP Corporation plans to file one or more proxy statements or other documents with the SEC in connection with the proposed acquisition.
• Required shareholder and regulatory approvals for the proposed transaction must be obtained.

Key Dates

Keywords

The ODP Corporation, Atlas acquisition, merger, Long-Term Incentive, LTI, Restricted Stock Units, RSUs, Performance Stock Units, PSUs, employee compensation, equity awards, corporate acquisition, SEC filing, DEFA14A