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Staples limits stock gain
April 3, 2001: 10:35 a.m. ET

Directors won't profit from exchange of Internet stock, but other holders will
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NEW YORK (CNNfn) - Staples Inc. said Tuesday members of its board of directors will not realize a windfall profit when it folds its Internet unit back into the company.

The announcement was meant to answer critics of the plan, announced after Staples abandoned its intentions for an initial public offering of the unit. But the deal still will yield a profit for owners of its closely held tracking stock for the Internet unit, despite the collapse in stock prices of other money-losing e-commerce companies in the last year.

graphicThe company still is proposing to exchange 0.4396 share of Staples stock for each share of the Internet tracking stock, which originally was purchased by its shareholders for $3.25 a share in November 1999. Shares of Staples (SPLS: Research, Estimates) closed Monday at $14.56, and based on that price each Internet share is worth $6.40, or a profit of 97 percent. Shares of Staples lost 9 cents to $14.47 Tuesday morning.

The company reaffirmed that plan Tuesday, but said its 13 board members, including CEO Thomas Stemberg and Ronald Sargent, president and chief operating officer, resold the shares to Staples at the original price.

"The reputation, integrity and credibility of our company and its board of directors is of paramount importance to us, and in order to avoid even the appearance of a conflict of interest, the board has decided unanimously to forgo any personal gain that such a conversion would mean for directors," the company said.

The conversion proposal still needs the approval of Staples shareholders at its annual meeting later this spring. graphic