Staples 2015 Annual Report Download - page 50

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
46 STAPLES Notice of Annual Meeting of Stockholders
Administration of Incentive Plan
The Board and the Committee, through delegated powers,
have broad discretion in administering the cash and stock
incentive plans under which new awards may be made. 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 our current plans. 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 November 2015, 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 a broad 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.
Stock Ownership
Within five years of becoming an officer of the Company, our
senior executives must attain minimum ownership of Staples
common stock equal in value to no less than a defined
multiple of their salary. The applicable multiples for Company
officers are:
• CEO: 5x Salary
• CFO: 4x Salary
• Presidents: 3x Salary
• Other Executive Officers: 1 - 2x Salary
As of January 31, 2016, all senior executives had achieved
the minimum ownership except for Ms. Komola, who became
our CFO in February 2012 and Mr. Wilson, who joined the
company in 2012. Both are within their phase-in period.
Recoupment Policy
Our annual cash bonus plans, long term incentive plans
and agreements and severance arrangements provide for
forfeiture and recovery of undeserved cash, equity and
severance compensation from any associate that engages
in certain particularly harmful or unethical behaviors such
as intentional deceitful acts resulting in improper personal
benefit or injury to the company, fraud or willful misconduct
that significantly contributes to a material financial
restatement, violation of the Code of Ethics and breach of
key associate agreements.
Hedging and Pledging Company Securities
Hedging. Our Insider Trading Policy prohibits, among many
other actions, our associates and directors from entering into
derivative transactions such as puts, calls, or hedges with
our stock.
Pledging. Our Insider Trading Policy prohibits the use of
Staples’ securities as collateral in margin accounts. However,
in limited circumstances, pledging of Staples’ securities
for bona fide loans which may require such securities as
collateral may be allowed, provided such pledge is cleared
with the General Counsel. In the past five years, the General
Counsel has not cleared, or been asked to clear, any pledge
of Staples’ securities.