UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): January 25, 2021

THE ODP CORPORATION

(Exact Name of Registrant as Specified in its Charter)

(561) 438-4800

(Registrant’s Telephone Number, Including Area Code)

Former Name or Former Address, If Changed Since Last Report: N/A

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

On January 25, 2021, the Compensation & Talent Committee (the “Committee”) of the Board of Directors (the “Board”) of The ODP Corporation (the “Company”) approved the payout under the Company’s 2020 Corporate Incentive Plan (“Annual Bonus Plan”). The Company’s Annual Bonus Plan is a cash annual incentive plan designed to compensate the Company’s 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. 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. When designing the Annual Bonus Plan in February 2020, the 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 2020, the categories of excludable items included: merger-related expenses; impacts of unplanned acquisitions and divestitures; 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 Committee.

At the meeting, the Committee reviewed the preliminary corporate performance results for the 2020 performance measures that the Committee established in February 2020 for adjusted EBITDA and Net Sales under the Annual Bonus Plan. The adverse impact of the COVID-19 pandemic to Net Sales and adjusted EBITDA resulted in the Company’s performance coming in below target performance for the Net Sales and adjusted EBITDA metrics and would have resulted in funding of the Annual Bonus Plan at 35% of the target payout level for all employees, which include the named executive officers. As described in the Annual Bonus Plan, the Committee has the authority to make adjustments to ensure that compensation appropriately reflects operating performance that is reasonably within management’s control.

During the meeting, the Committee approved adjustments to the Annual Bonus Plan to exclude from Net Sales and adjusted EBITDA the estimated negative impact that COVID-19 had on the Company’s 2020 operations based on estimated lost sales and estimated EBITDA shortfall. In contemplating these potential adjustments, the Committee also carefully assessed the Company’s 2020 financial performance and strategic achievements, all of which were accomplished as the Company worked to minimize the impact of COVID-19 on its 2020 operations. These included:

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In light of these considerations, at the January 25, 2021 meeting, the Committee determined to fund the Annual Bonus Plan at 74.4% of target for all eligible participants, which includes approximately 2,200 employees and the named executive officers, and recommended to the independent directors of the Board the same payout for the Chief Executive Officer. The Committee’s recommendation for the CEO was approved at a meeting held on the same day. While the overall payout remains significantly below target, the Committee believes this funding level appropriately reflects the unique impact of the pandemic and the critical efforts made by all participants in responding to unprecedented disruption.

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SIGNATURE

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

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