Staples 2015 Annual Report Download - page 69

SHAREHOLDER PROPOSALS
www.staplesannualmeeting.com STAPLES 65
SHAREHOLDER PROPOSAL REGARDING SPECIAL
SHAREHOLDER MEETINGS (ITEM 5 ON THE PROXY CARD)
The following shareholder 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 30, 2015).
Proposal 5 - Special Shareowner Meetings
Resolved, Shareowners ask our board to take the steps
necessary (unilaterally if possible) to amend our bylaws and
each appropriate governing document to give holders in the
aggregate of 15% of our outstanding common stock the power
to call a special shareowner meeting. This proposal does not
impact our board’s current power to call a special meeting.
Delaware law allows 10% of our shares to call a special
meeting. Special meetings allow shareowners to vote on
important matters, such as electing new directors that can
arise between annual meetings. Shareowner input on the
timing of shareowner meetings is especially important when
events unfold quickly and issues may become moot by the
next annual meeting. This is important because there could
be 15-months between annual meetings.
It may be possible to adopt this proposal by incorporating
brief text similar to this into our governing documents:
“Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be
called by the Chairman of the Board or the President, and
shall be called by the Chairman of the Board or President
or Secretary upon the order in writing of a majority of or by
resolution of the Board of Directors, or at the request in writing
of stockholders owning 15% of the entire capital stock of the
Corporation issued and outstanding and entitled to vote.”
Please vote to enhance shareholder value:
Special Shareowner Meetings - Proposal 5
Board’s Statement in Opposition
The Board unanimously recommends that you vote AGAINST
this proposal because:
• Our bylaws already provide our shareholders with the
right to call a special meeting at a level that was selected
following extensive shareholder engagement.
• Our existing special meeting rights reflect market
standards and are complemented by our other robust
governance practices that empower shareholders.
• The lower threshold contained in the proposal fails
to adequately protect shareholders against special
interests.
Our bylaws already provide our shareholders with the
right to call a special meeting at a level that was selected
following extensive shareholder engagement. Our
bylaws currently provide that shareholders holding in the
aggregate 25% or more of our outstanding stock can call
a special meeting. We amended our bylaws in 2009 to add
this provision after a majority of our shareholders approved
a proposal similar to the one above at the 2008 annual
meeting, and selected the 25% threshold after consultation
with numerous shareholders and careful consideration by
the Board. At our 2010 annual meeting, our shareholders
rejected a proposal brought by the same proponent to lower
the threshold to 10%. In our engagement with shareholders
since then, including our most recent engagements following
our 2015 Annual Meeting, our current 25% threshold has not
been raised as a concern. The proponent has offered no
explanation as to why he now believes a 15% threshold is in
the best interests of shareholders.
Our existing special meeting rights reflect market
standards and are complemented by our other robust
governance practices that empower shareholders. Our
current 25% ownership threshold is in line with the majority
of large public companies. According to published reports,
70% of S&P 500 companies with special meeting rights have
a threshold set at 25% or above. 39% of S&P 500 companies
do not permit their shareholders to call special meetings at all.
Our special meeting rights are complemented by other robust
governance practices, including:
• our 3%/3-year proxy access framework adopted by the
Board in 2015,
• the right for our shareholders to act by written consent,
• majority voting for every director on an annual basis, and
• our regular outreach to shareholders on governance
matters.
These practices provide several avenues of communication
for shareholders to express their interests or concerns, and
the Board has an extensive history of being responsive to
such concerns.
The lower threshold contained in the proposal
fails to adequately protect shareholders against
special interests. A special meeting of shareholders
is an extraordinary event that is both expensive and time-
consuming. Reducing the threshold to 15% would allow a
relatively small group of shareholders to call a meeting on a
matter that could be of interest only to that smaller group of
investors and of limited or no concern to the large majority of
shareholders. The current 25% threshold protects shareholder
interests by ensuring that special meeting matters (i) are
of concern to an appropriate number of shareholders, and
(ii) merit significant expenditure by the Company.
The Board continues to believe that the ownership threshold
in our current bylaws strikes the correct balance between the
interests of shareholders to raise important matters outside
the annual meeting process, and the costs and disruption
associated with holding special meetings.
OUR BOARD RECOMMENDS THAT YOU VOTE
AGAINST THIS PROPOSAL.