Staples 2007 Annual Report Download - page 50

In December 2006, the Compensation Committee approved the three year (2007-2009) performance target for
the February 2007 performance share awards. Shares of our common stock covered by the performance share awards
are only issued after the conclusion of the performance period if the applicable performance objective is met for the
three year period. For our 2006 and 2007 fiscal years, the payout of shares at the end of the performance period is
based on the actual cumulative return on net asset dollars compared to the goal established by the Compensation
Committee at the beginning of our fiscal year. The Compensation Committee chose this measure, in part, since it
considered it to be a strong measure of long term wealth creation for the business. In addition, there was a continuing
desire for a singular focus in the early implementation of the performance share plan.
Potential share payouts range from zero for below threshold performance up to twice the target award for
achievement of the maximum goal set by the Compensation Committee. The Compensation Committee believed that
the specific performance objective for the 2007-2009 performance share awards was aggressive, in that it could only be
attained with sustained substantial effort and excellent performance over the three year period. Specifically, the
performance goal was in line with our 2007 financial plan and 2008-2009 long range plan and provided for a payout
only upon achievement of 94% of the target return on net asset dollars goal.
In March 2008, the Compensation Committee evaluated the value of unvested equity held by senior officers,
including the likelihood and timing of payout under the fiscal year 2006 and 2007 performance share awards, the
impact of these awards on the overall compensation package for the impacted senior officers, and Staples’ overall
performance. Based on such review, the Committee granted, for retentive purposes, each of the individuals a
restricted stock award. Messrs. Sargent, Mahoney, Miles, Doody and Parneros received restricted stock awards for
117,600 shares, 64,400 shares, 64,400 shares, 47,200 shares and 47,200 shares, respectively, with 50% of each award
vesting on February 2, 2009 and 50% vesting on February 1, 2010.
2007 Retention Award to CEO
In March 2007, we awarded a retention grant to our Chief Executive Officer under our Amended and Restated
2004 Stock Incentive Plan. The terms and conditions of Mr. Sargent’s grant, including the applicable performance
objectives described below, were determined by the Compensation Committee and approved by our Board of
Directors. The retention grant consists of 375,000 shares of restricted stock and 375,000 shares underlying a
performance share award.
The restricted shares under Mr. Sargent’s retention grant will vest in full at the end of our 2011 fiscal year if
Mr. Sargent has continuously worked for us through such date. The restricted shares will vest in full before such date
upon Mr. Sargent’s death, disability or termination without cause or if, following a change-in-control of Staples,
Mr. Sargent is not offered employment by the surviving corporation under certain conditions or Mr. Sargent is
terminated without cause or resigns for good reason within one year of such change-in-control.
The shares underlying Mr. Sargent’s performance share award will be issued only if we achieve certain five year
cumulative sales and return on net asset dollars goals at the end of our 2011 fiscal year. Both a minimum sales and a
minimum return on net asset dollars goal for the five year period must be met, and a percentage of the total award,
ranging from 50% to 100%, will be awarded based upon our sales and return on net asset dollars exceeding such
minimum goals. The Compensation Committee and our Board believe that the performance necessary to vest 75% of
the performance share award is challenging, in that it reflects an aggressive level of growth and return that, if
achieved, will fulfill our long range plans and can be achieved only with substantial effort, and the performance
necessary to vest 100% of the performance share award is highly challenging and, if met, would represent a substantial
and aggressive return on investment for our stockholders during such five year period. In order to receive any shares
underlying the performance share award, Mr. Sargent must have continuously worked for us through the end of our
2011 fiscal year unless he is terminated before such date due to his death or disability or, following a change-in-control
of Staples, Mr. Sargent does not continue his employment with the surviving corporation or is terminated without
cause or resigns for good reason within one year of such change-in-control.
Mr. Sargent’s retention grant reflects our executive compensation program’s goal of linking compensation to
overall company performance and is consistent with our historic practice of using long term equity incentives to
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