Staples 2007 Annual Report Download - page 42

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4APR200813231663
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Summary
The Compensation Committee of our Board of Directors, which is comprised entirely of independent directors,
oversees our executive compensation program and determines all compensation for our Chief Executive Officer,
Chief Financial Officer and three other most highly compensated executive officers, whom we refer to collectively as
the ‘‘named executive officers.’’
Our executive compensation program is designed to meet three principal objectives:
• Attract, retain and reward executive officers who contribute to our long term success;
• Align compensation with short and long term business objectives; and
• Motivate and reward high levels of individual and team performance.
These objectives collectively seek to link compensation to overall company performance, which helps to ensure that
the interests of our executives are aligned with the interests of our stockholders. We believe that Staples has
successfully achieved these objectives as demonstrated by the fact that the average tenure at Staples of our named
executive officers is 13 years and by the below table showing how Staples’ compounded annual growth rate in total
stockholder return (share price increase plus annual dividends) has exceeded market performance over the past five
years.
16.7%
12.1% 12.0%
0%
5%
10%
15%
20%
Staples S+P Retail Index S+P 500 Index
CAGR %
Total Return to Shareholders (2003 - 2007)
Compounded Annual Growth Rate
The Compensation Committee’s decisions regarding executive compensation during our 2007 fiscal year were
based on achieving the above objectives, with an emphasis on:
• our initiatives to increase long term stockholder value by increasing earnings per share, return on net assets,
customer service and sales;
• the nature and scope of the named executive officers’ responsibilities, taking into account considerations of pay
equity among the named executive officers;
• the competitive market for executive talent; and
• success in creating a culture of integrity and compliance with applicable law and our Code of Ethics.
In terms of setting compensation for our 2007 fiscal year, the Compensation Committee set the goals for the
February 2007 three year performance share awards in December 2006, established salary levels and the goals for the
Executive Officer Incentive Plan in March 2007 and approved the annual equity awards in June 2007. As discussed
further under ‘‘2007 Retention Award to CEO,’’ the Board, based upon the recommendation of the Compensation
Committee, approved a retention award to our Chief Executive Officer in March 2007. With respect to these
decisions, the Compensation Committee used several analytic tools and considered multiple viewpoints, including
those of an independent compensation consultant, to ensure that its decisions were informed and equitable and that
our executive compensation program achieved its objectives.
32