Staples 2005 Annual Report Download - page 38

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22
(17) Reflects $81,016 and $215,341 for Executive Life Insurance premiums we paid in 2005 and 2004, respectively, and
$2,295 and $676 for Long Term Care Insurance premiums that we paid in 2005 and 2004, respectively. Also
reflects $45,561, $17,762 and $7,002 that we contributed on a matching basis pursuant to the terms of our
401(k) and Supplemental Executive Retirement Plans for 2005, 2004 and 2003, respectively. Also reflects the
actuarial equivalent of prior premiums paid under the Executive Split Dollar Plan of $6,512, and $5,397 for 2005
and 2003, respectively.
(18) Reflects an award of 37,500 shares of PARS to Mr. Doody in each year at a per share value of $21.72 for the 2005
grant and $19.7933 for the 2004 grant.
(19) Reflects $42,573, $42,716 and $41,977 for Executive Life Insurance premiums that we paid in 2005, 2004 and
2003, respectively. Also reflects $1,607 and $504 paid in 2005 and 2004, respectively, for Long Term Care
Insurance premiums. Also reflects $38,196, $16,866 and $11,052 that we contributed on a matching basis pursuant
to the terms of our 401(k) and Supplemental Executive Retirement Plans for 2005, 2004 and 2003, respectively.
Also reflects the actuarial equivalent of prior premiums paid under the discontinued Executive Split Dollar Plan
of $8,265 and $6,491 for 2005 and 2004, respectively.
(20) Reflects an award of 37,500 shares of PARS to Mr. Doody at a per share value of $17.3733 and an award of
45,000 shares of restricted stock at a per share value of $17.5466.
Equity Compensation Program
Key Associates
In the 2006 fiscal year, we will implement important changes to our equity program through which we have
offered stock options to key associates across the world. In most countries in which we operate, we will move from
offering these associates stock options to rewarding them with shares of restricted stock. At more senior levels, we will
offer a more balanced mix of stock options, restricted stock, and performance shares, as described below. We
anticipate that the economic value of the new awards will be comparable to the value of the awards received under
our prior equity program, while at the same time reducing our share usage. Overall, we believe that our new equity
program will continue to benefit our associates and better align their interests with those of our stockholders.
Executive Leadership Team
During the 2005 fiscal year, we awarded our executive leadership team an equity compensation package under
our existing equity compensation program consisting of stock options and performance accelerated restricted stock
(PARS). PARS shares have played an important role in reflecting our philosophy that a significant portion of
compensation should be directly related to the performance of Staples as a whole. PARS are restricted shares that may
not be sold or transferred by the executive, other than for limited estate planning purposes, until they vest. PARS shares
vest after five years subject to accelerated vesting in years two, three or four if we achieve certain compound annual
earnings per share growth. Our PARS issued in the 2005 fiscal year will vest in full in March 2010, subject to full
acceleration upon achievement of certain pre-determined earnings growth targets over the 2006 to 2008 fiscal years. Our
PARS issued in the 2004 fiscal year vested in full in March 2006 as a result of us achieving our earnings target for the
2005 fiscal year. Our PARS issued in the 2003 fiscal year vested in full in April 2005 as a result of us achieving our
earnings target for the 2004 fiscal year. Earnings growth targets for our PARS were determined by the Compensation
Committee each year. Once the PARS have vested, they become unrestricted shares and may be freely sold or
transferred. PARS are forfeited if the executive’s employment with us terminates prior to vesting except in extraordinary
circumstances which include, without limitation, death or disability of the executive, a merger, consolidation, sale,
reorganization or change in control of Staples, or any other nonrecurring significant event affecting us, the executive or
our PARS program.
In the 2006 fiscal year, we will be changing the mix of long-term incentives for our executive leadership team
going forward to reflect an even greater focus on pay for performance. The Compensation Committee has adopted a
new compensation plan providing our executive leadership team with a combination of stock options, time based
restricted stock and performance shares. Under the new plan, performance shares will constitute a significant portion
of all equity-based compensation granted to our executive leadership team, when taking into consideration the