Staples 2015 Annual Report Download - page 42

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
38 STAPLES Notice of Annual Meeting of Stockholders
Financial Performance Metrics
In March 2015, the Committee selected three performance
metrics for the 2015 annual cash incentive awards: EPS (50%),
Gross Margin Dollars (25%) and Beyond Office Supplies Sales
Growth (25%). The Committee set threshold requirements
for payment of awards, and a maximum payout of 200% of
target payout. The Committee, working with its independent
compensation consultant, employed statistical modeling and
exercised judgment to assess the degree of difficulty of hitting
various levels of performance to ensure the goals were robust
yet attainable in the context of our business environment and
progress to date on the reinvention strategy.
Each performance objective was assigned an associated
threshold achievement level below which no portion of the
bonus attributable to that measurement was to be paid.
Additionally, target and maximum levels are set with increased
payouts for better than expected performance.
No portion of any bonus is payable in the event the company fails to achieve the threshold EPS.
2015 Annual Cash Incentive Plan - Goals & Metrics
Target
Value $ Actual Value $ Realized Value as % of Target
Ronald L. Sargent $1,873,812 $010%1
Christine T. Komola $549,426 $181,860 33.1%
Joseph G. Doody $590,095 $195,321 33.1%
Demos Parneros $607,450 $201,066 33.1%
John Wilson $589,248 $195,041 33.1%
Earnings
Per Share Total Gross Margin $ ($M) Beyond Office Supplies Sales Growth ($M)
Actual Results $0.894 $8,024.7 ($19.2)
Threshold $0.88 $7,728.1 $140
Target Goal $0.98 $8,328.6 $300
Maximum $1.13 $8,728.1 $700
Weighting 50% 25% 25%
Achievement % 35.2% 62.0% 0%
1 Mr. Sargent was eligible to receive an annual cash incentive payment of $620,232 but, prior to determination of payout by the Committee, elected
to forego any annual cash incentive payment for 2015.
Earnings per Share (EPS) - Earnings per share is calculated
based on figures reported in our financial statements, adjusted
to remove certain non-recurring or non-cash charges. EPS is
a funding mechanism for our annual cash incentive program
and minimum performance must be attained for any payment
to be earned. EPS generally is deemed to be a measure of
financial success and its maximization is a prime indicator of
operational health. The target goal was $0.98 per share, in line
with the Company’s 2015 financial budget. While this reflected
a three percent reduction in the EPS target from 2014, the
primary driver of this reduction was the negative impact
from the stronger U.S. dollar on the earnings the company
generates outside of the United States, which we believe
is out of management’s control and should not influence
management’s pay opportunity. In addition, the gap between
threshold and target goals was set at $0.10, more rigorous
than the gap of $0.15 in 2014, making it more difficult for our
NEOs to achieve any payout under the 2015 Annual Cash
Incentive Plan.
Gross Margin Dollars - Gross Margin Dollars is calculated
as sales, net of direct product costs (including the impact
of vendor rebates or other promotional monies), reserves
for returns and allowances, and charges/credits for
obsolescence, shrink, and other margin additives. The target
goal was $8,328.6 million, in line with the Company’s 2015
financial budget. Gross Margin Dollars was a new metric in
2015 intended to introduce a profitability focus into the annual
cash incentive plan.
Beyond Office Supplies Sales (BO$$) Growth - Beyond
Office Supplies Sales Growth is calculated as sales in categories
other than traditional office supplies as compared to fiscal
2014. Beyond Office Supplies Sales Growth encouraged our
objectives of expanding our product assortment, accelerating
growth online and generally growing sales beyond our core
categories. The target goal was $300 million, reflecting a 50%
increase from the 2014 target.