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Forced out -- and furious

Staples founder Tom Stemberg was pushed -- and he is not a bit happy about it.

In March Framingham-based Staples revealed that Stemberg was resigning as chairman and from the board of the company he started nearly 20 years ago and helped grow into the world's largest office-supplies retailer. At the time Stemberg said ''the time is right for me to move on" and praised the leadership of his hand-picked successor, chief executive Ron Sargent, who assumed Stemberg's title as chairman.

But the founder's departure was anything but amicable. In an interview and in his resignation letter to the board, Stemberg makes it clear that he wanted to remain on the board but was forced out. Stemberg's ouster was engineered by two members of Staples' corporate governance committee -- former Toys ''R" Us chief executive Robert C. Nakasone and Rowland T. Moriarty, a former Harvard Business School associate professor -- according to two executives with knowledge of those discussions.

Stemberg, 56, was so angered by the move that he wrote Staples threatening to launch a proxy campaign urging shareholders to withhold their votes for the two directors, the executives said. This week Stemberg told the company he had changed his mind and was simply walking away.

That is a good thing. Staples is a company on a roll. It doesn't need some messy personal fight between the founder and the board. But the Stemberg affair has the feel of the well-intentioned corporate governance movement run amok.

Stemberg not only started a company but created an entire new retailing category when he opened the first Staples store in Brighton, bankrolled by venture money from Mitt Romney's Bain Capital. It ranks as one of the legendary start-ups in Massachusetts business history, today employing 65,000 worldwide. If you were a Staples shareholder, would you be in a hurry to dump a first-ballot Hall of Famer like Tom Stemberg?

In an interview, Stemberg, who stepped down as chief executive in 2002 after 16 years, says he has nothing but admiration for Sargent and the management team now running Staples. Yesterday the company reported first-quarter profit rose 27 percent, slightly better than expected, and sales were up 13 percent. The stock was up $1.02 to $21.56.

Stemberg said he is ''proud as a peacock" with how Staples' succession has gone. ''I agree with 99 percent of what they are doing, and they are doing it way better than I could have on my own," he said. Stemberg, now working at Highland Capital Partners, sees himself as anything but a founder who didn't know when to leave. ''I am very proud that I am one of the entrepreneurs who knew exactly when to say when," he said.

Not everyone agreed. In December, after a board meeting, Nakasone and Moriarty came to Stemberg and told him it was time to go. They told him it was good corporate governance, just the way things are done now. They wanted him to stop working for Staples when his current agreement expired. (He worked 75 days a year as nonexecutive chairman.) They also wanted him to give up the chairman's title and resign from the board when his term expired.

''Ron had no part in my departure from the board, and Ron was very surprised by it," Stemberg said of Sargent. ''That was one of the first things I asked: Is this something Ron wants? They said to me, 'We haven't talked to Ron.' " Stemberg says his well-publicized pending divorce had nothing to do with the change.

In his letter to the board, Stemberg makes clear he did not want to resign from the board.

Many other founders continue to serve on the boards of the companies they started even as they ''ratcheted down their activities," Stemberg said in his three-page letter to the directors sent the day before the March board meeting. Among those he named: Howard Schultz at Starbucks, Bill Gates at Microsoft, Jeffrey Brotman at Costco, Herb Kelleher at Southwest Airlines, and many more.

''I have thought about campaigning to keep my job," Stemberg wrote the board. ''After long deliberation, I have determined not to do so. . . . I could lose by winning on the transition issues. The end result of my winning might be a divided board, an outcome that would serve no one well."

Nakasone and Moriarty, both longtime directors named while Stemberg was chief executive, did not return my calls. ''As a matter of policy they don't take calls or do interviews," says Staples spokesman Paul Capelli. No one else at Staples, including Sargent, would comment either. ''I guess we're going to read your column in the morning," said Capelli.

Staples has some powerful board members, among them: Home Depot cofounder Arthur Blank, former US Senator George Mitchell, and Sara Lee chief executive Brenda Barnes. Nakasone, on the other hand, was pushed out as chief executive of Toys ''R" Us in 1999 just 18 months after taking over. Last year he resigned as a director of Tenet Healthcare Corp. after nine months on the board. He said he quit over a range of policies, including executive compensation; other directors said he was asked to leave because he was disruptive and wasted the board's time. Moriarty taught at Harvard Business School for a decade but left without tenure. He is chief executive of Cubex Corp., a marketing consulting firm.

Stemberg has dropped plans for a proxy fight. But in a letter to the company this week, he suggested he will be watching.

''After lengthy discussions with my advisers and others, I have elected not to pursue a withhold vote campaign on any director nominee during the 2005 proxy season," Stemberg wrote. ''It is my profound hope that the board of directors will address the issues raised in my prior letters. I am sure you agree that the Staples board should be as uniformly strong and qualified as its management team.

''I plan to monitor its progress and hope it acts appropriately," Stemberg wrote.

Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.

Staples founder Tom Stemberg
Staples founder Tom Stemberg
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