Staples 2006 Annual Report Download - page 47

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31
The Compensation Committee’s Processes
The Compensation Committee oversees our executive compensation program. The Committee is comprised
entirely of independent directors as determined in accordance with its charter, our Corporate Governance Guidelines
and applicable NASDAQ Stock Market rules. The Committee operates under a written charter adopted by our
Board, a copy of which is available at www.staples.com in the Corporate Governance section of the About Staples
webpage.
The Compensation Committee has established a number of processes to help ensure that our executive
compensation program meets the objectives described at the beginning of this Compensation Discussion and Analysis.
Independent Compensation Consultant
During our 2006 fiscal year, the Committee retained Hewitt Associates LLC as an independent advisor reporting
to the Committee on executive compensation matters. Hewitt Associates performed services under a written
agreement with the Committee. During our 2006 fiscal year, Hewitt Associates provided independent advice and
made recommendations on all matters pertaining to compensation of our Chief Executive Officer and advised the
Committee on compensation matters for other officers and non-officers as requested by management or the
Committee. While Hewitt Associates has acted primarily as advisor to the Committee, they also have provided, with
the knowledge and consent of the Compensation Committee, advice and expertise to management on matters to be
presented by management to the Compensation Committee. During 2006, Hewitt assisted management by providing
salary survey and other market data related to executive and non-executive positions. A representative from Hewitt
Associates attended all Compensation Committee meetings during our 2006 fiscal year.
Benchmarking
The Committee reviews executive compensation relative to marketplace norms and practices each year. The
Committee evaluates the competitiveness of our total direct compensation relative to a core peer group of eight retail
companies and an expanded peer group that includes five additional retailers. In addition, the Committee considers
data from a general industry group comprised of between 70 and 79 companies with annual revenues between $15 and
$30 billion. The core and expanded peer groups are comprised of the following companies:
Core Retail Peer Group Expanded Retail Peer Group
Best Buy Co., Inc. Core Retail Peer Group plus:
Circuit City Stores, Inc. Autozone, Inc.
The Gap, Inc. Costco Wholesale Corporation
The Home Depot, Inc. Kohl’s Corporation
Lowe’s Companies, Inc. Limited Brands, Inc.
Office Depot, Inc. Target Corporation
OfficeMax Incorporated
The TJX Companies, Inc.
Throughout this Compensation Discussion and Analysis, we refer to the core retail peer group and expanded retail
peer group described above collectively as our “peer groups.”
For our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, the Committee compares
each element of compensation to publicly available data of our peer groups and general industry for executives with
comparable positions and responsibilities for the most recent fiscal year. In 2006, based on a review of 2005 fiscal year
proxy data, the Committee determined that:
•Our Chief Executive Officer’s total direct compensation was between the 55th and 68th percentiles across our
peer groups and general industry group. Total cash compensation approximated the market median for our
peer groups and was at the 36th percentile of our general industry group.
•Our Chief Financial Officer’s total direct compensation was between the 65th and 74th percentiles across our
peer groups and general industry group. Total cash compensation was below median across our peer groups