Staples 2014 Annual Report Download - page 53

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
www.staplesannualmeeting.com STAPLES 49
IV OTHER MATTERS
Termination Scenarios
The Committee regularly reviews all compensation
components for our NEOs, including salary, bonus, current
vested and unvested long term incentive compensation, the
current value of owned shares, and cost to us of all perquisites
and benefits. In addition, the Committee periodically examines
similar information for other senior executives. The Committee
also reviews the projected payout obligations under potential
retirement, termination, severance, and change-in-control
scenarios to fully understand the financial impact of each of
these scenarios to Staples and to the executives.
Documentation detailing the above components and
scenarios with their respective dollar amounts was prepared
by management for each of our NEOs and reviewed by the
Committee in March 2014. This information was prepared
based on compensation data as of the end of fiscal year
2013 and assumed that the various scenarios occurred at
the end of fiscal year 2013. Similar termination scenario
information with respect to our 2014 fiscal year is presented
under the heading “Potential Payments upon Termination or
Change-in-Control.” Based on this review, the Committee
found the total compensation for each of our NEOs under
these various scenarios to be reasonable. Many factors were
considered, including, but not limited to, the contributions of
the executive to Staples, the financial performance of Staples,
the marketplace, the particular contemplated scenario and
the guidance provided by the independent compensation
consultant.
Input from Management
Certain officers within our Human Resources department
regularly attend Committee meetings to provide information
and recommendations regarding our executive compensation
program, including the Executive Vice President of Human
Resources and Vice President of Compensation and Benefits.
Among other things, these officers present our CEO’s
recommendations regarding any change in the base salary,
bonus, equity compensation, goals related to performance-
based cash or equity compensation and other benefits of
other senior executives. These officers also compile other
relevant data at the request of the Committee. The CEO’s
recommendations are based in part on the results of annual
performance reviews of the other executives. The Committee
is not bound by such recommendations but generally takes
them into consideration before making final determinations
about the compensation of such executives other than our
CEO. The CEO, at the discretion of the Committee, may be
invited to attend all or part of any Committee meeting to discuss
compensation matters pertaining to the other executives, and
in fiscal 2014, he attended all four Committee meetings. When
discussing compensation matters pertaining to our CEO, the
Committee generally meets in executive sessions with its
independent compensation consultant without any member of
management present.
Administration of Incentive Plan
The Board and the Committee, through delegated powers, have
broad discretion in administering the cash and stock incentive
plans. This discretion includes the authority to grant awards,
determine target awards, and select performance objectives
and goals, along with the ability to adopt, amend and repeal
such administrative rules, guidelines and practices as deemed
advisable. In addition, the Committee has broad discretion to
modify awards and determine goal attainment and the payment
of awards under each plan. The Committee may determine
to what extent, if any, specific items are to be counted in the
relevant financial measures for any particular business and
whether special one-time or extraordinary gains and/or losses
and/or extraordinary events should or should not be included
or considered in the calculation of goals. The Committee can
decrease but not increase incentive awards for NEOs.
The Board has delegated authority to the Chairman and CEO
to grant stock options and restricted stock units and, in his
capacity as Chairman, restricted stock to non-executive
employees out of an annual pool of 600,000 shares. The
annual pool is designed to be used between quarterly
Committee meetings to facilitate making new hire and
retention grants and to reward special accomplishments and
achievements of associates. Awards from the annual pool are
granted on the earlier of the first business day of the month
that follows appropriate approval or two business days after
the Committee’s ratification of the award. Awards from this
pool cannot be granted to executive officers.
Risk Assessment
In December 2014, the Committee conducted its annual risk
assessment of our executive officer compensation programs.
The evaluation included an analysis of the appropriateness
of our peer group, compensation mix, performance metrics,
performance goals and payout curves, payment timing
and adjustments, equity incentives, stock ownership
guidelines/trading policies, performance appraisal process
and leadership/culture. In addition, the Committee reviewed
the major compensation plans with regard to risk mitigators
attributable to each of the programs. The risk mitigators
included the balanced mix of cash and equity incentives,
the mix and quality of the performance metrics, the stock
ownership guidelines and an aggressive recoupment policy.
The Committee also considered and reviewed the input
from participants in the Company’s corporate governance
outreach program. Based on its evaluation and recognizing
that all compensation programs are inherently risk laden,
the Committee determined that the level of risk within
our compensation programs was appropriate and did
not encourage excessive risk taking by our executives.
Accordingly, the Committee concluded that our compensation
programs are not reasonably likely to have a material adverse
effect on the Company.