Staples Inc. was blocked from buying back $122 million in shares of its Internet unit from some executives after a Delaware judge decided the company didn't give shareholders enough information to vote on the transaction.
Delaware Chancery Court Judge Leo Strine Jr. postponed a planned June 11 vote on the $7-a-share action until the company discloses how it valued Staples.com shares. Executives had paid $3.25 a share in 1999.
Staples originally wanted the buyback to compensate all directors and executives after the company canceled a $250-million initial public sale of Staples.com stock. Faced with claims of favoritism, Staples said in April that board members would accept $3.25 per share for their Internet unit stock.
Those who still stand to benefit from the buyback--if approved by shareholders--include executives who don't serve on the board and venture-capital firms that also own shares in the company's Internet unit.
Some Staples common stockholders condemned the proposal as a get-rich plan for directors.
Company officials said they saw Strine's ruling as a partial victory because he didn't prohibit the transaction altogether. The vote is expected by mid-August.
Staples shares fell 5 cents to $14.30 on Nasdaq.