Staples 2014 Annual Report Download - page 74

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SHAREHOLDER PROPOSALS
70 STAPLES Notice of Annual Meeting of Stockholders
SHAREHOLDER PROPOSAL REGARDING
INDEPENDENT BOARD CHAIRMAN
(ITEM 6 ON THE PROXY CARD)
The following stockholder proposal was submitted by John
Chevedden, 2215 Nelson Ave., No. 205 Redondo Beach,
California 90278, beneficial owner of no fewer than 300 shares
of our common stock (as of December 31, 2014).
Resolved: The shareholders request the Board of Directors
to adopt as policy, and amend the bylaws as necessary,
to require the Chair of the Board of Directors, whenever
possible, to be an independent member of the Board. The
Board would have the discretion to phase in this policy for
the next CEO transition, implemented so it did not violate any
existing agreement. If the Board determines that a Chair who
was independent when selected is no longer independent, the
Board shall select a new Chair who satisfies the requirements
of the policy within a reasonable amount of time. Compliance
with this policy is waived if no independent director is available
and willing to serve as Chair.
When our CEO is our board chairman, this arrangement can
hinder our board’s ability to monitor our CEO’s performance.
Many companies already have an independent Chairman. An
independent Chairman is the prevailing practice in the United
Kingdom and many international markets. This proposal topic
won 50%-plus support at 5 major U.S. companies in 2013
including 73%-support at Netflix.
This topic is particularly important for Staples because we
had long-tenured directors on our board, which is supposed
to serve a checks and balances role in regard to our
Chairman/CEO Ronald Sargent. Long-tenure of 10 to 15-years
detracts from the independent oversight role of a director. The
worst example of this is our Lead Director, Robert Nakasone,
with 28-years long tenure.
Staples had 4 directors who each had 17 to 28-years
long-tenure. Plus Paul Walsh (24-years tenure) chaired our
executive pay committee. Basil Anderson (17-years) was
an inside-related director who was on our audit committee.
Rowland Moriarty (28-years) and Robert Nakasone (28-years)
controlled 50% of the votes on our Nomination committee.
Plus Basil Anderson and Rowland Moriarty were both
potentially over-extended with director duties at 4 public
companies each.
Ronald Sargent was given $10 million in 2013 Total Summary
Pay. There was a 46% shareholder vote against Staples
executive pay in 2014. GMI Ratings, an independent
investment research firm, said Staples had not disclosed
specific, quantifiable performance objectives for our CEO.
Unvested equity awards partially or fully accelerate upon CEO
termination. Staples pays long-term incentives to executives
without requiring the company to perform above the median
of its peer group. Our CEO’s annual incentive pay did not rise
or fall in line with annual financial performance.
Please vote to protect shareholder value:
Independent Board Chairman - Proposal 6