Staples 2015 Annual Report Download - page 66

62 STAPLES Notice of Annual Meeting of Stockholders
i SHAREHOLDER PROPOSALS
We have been advised that the following non-binding
shareholder proposals will be presented at the 2016 Annual
Meeting. The proposals will be voted on if the respective
proponent, or a qualified representative, is present at
the 2016 Annual Meeting and submits the proposal for a
vote. Our respective statements in opposition follow each
shareholder proposal.
FOR THE REASONS SET FORTH BELOW IN
OUR BOARD’S STATEMENTS IN OPPOSITION,
OUR BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST EACH OF THE SHAREHOLDER
PROPOSALS.
The text of the shareholder proposals and supporting
statements appear below as received by us, and we assume
no responsibility for their content or accuracy.
SHAREHOLDER PROPOSAL REGARDING
ACCELERATED VESTING OF EQUITY AWARDS
(ITEM 4 ON THE PROXY CARD)
The following shareholder proposal was submitted by The
Marco Consulting Group on behalf of the Marco Consulting
Group Trust I, 550 West Washington Blvd., Suite 900,
Chicago, Illinois 60661, beneficial owner of 30,629 shares of
our common stock (as of December 2, 2015).
RESOLVED: The shareholders ask the board of directors of
Staples, Inc. to adopt a policy that in the event of a change
in control (as defined under any applicable employment
agreement, equity incentive plan or other plan), there shall be
no acceleration of vesting of any equity award granted to any
senior executive officer, provided, however, that the board’s
Compensation Committee may provide in an applicable grant
or purchase agreement that any unvested award will vest on
a partial, pro rata basis up to the time of the senior executive
officer’s termination, with such qualifications for an award as
the Committee may determine.
For purposes of this Policy, “equity award” means an award
granted under an equity incentive plan as defined in Item 402
of the SEC’s Regulation S-K, which addresses elements of
executive compensation to be disclosed to shareholders.
This resolution shall be implemented so as not affect any
contractual rights in existence on the date this proposal is
adopted, and it shall apply only to equity awards made under
equity incentive plans or plan amendments that shareholders
approve after the date of the 2016 annual meeting.
Supporting Statement
Staples, Inc. (“Company”) allows senior executives to receive
an accelerated award of unearned equity under certain
conditions after a change of control of the Company. We do
not question that some form of severance payments may be
appropriate in that situation. We are concerned, however, that
current practices at the Company may permit windfall awards
that have nothing to do with an executive’s performance.
According to last year’s proxy statement, a termination
following a change-in-control could have accelerated the
vesting of more than $35 million worth of long-term equity to
Company’s five senior executives, with the Chairman and CEO
Ronald L. Sargent entitled to more than $17.5 million.
We are unpersuaded by the argument that executives
somehow “deserve” to receive unvested awards. To accelerate
the vesting of unearned equity on the theory that an executive
was denied the opportunity to earn those shares seems
inconsistent with a “pay for performance” philosophy worthy
of the name.
We do believe, however, that an affected executive should
be eligible to receive an accelerated vesting of equity awards
on a pro rata basis as of his or her termination date, with
the details of any pro rata award to be determined by the
Compensation Committee.
Other major corporations, including Apple, Chevron,
ExxonMobil, IBM, Intel, Microsoft, and Occidental Petroleum,
have limitations on accelerated vesting of unearned equity,
such as providing pro rata awards or simply forfeiting
unearned awards. Research from James Reda & Associates
found that over one third of the largest 200 companies now
pro rate, forfeit, or only partially vest performance shares upon
a change of control.
We urge you to vote FOR this proposal.