Office Depot 2011 Annual Report Download - page 64

compensation is awarded in variable pay. Variable pay is reviewed by the Compensation Committee on an
annual basis to ensure that the metrics selected provide appropriate rewards for the achievement of the goals and
priorities identified by the Board and the NEOs in the annual operating business plan as key to the company’s
stability and growth.
The Compensation Committee periodically monitors the company’s incentive plans throughout the year to ensure
that the incentive plans do not encourage undue risk taking and appropriately balance risk and reward consistent
with the company’s enterprise risk management efforts.
Pay-For-Performance
The Compensation Committee views the annual cash bonus plan and the long-term equity incentive plan as key
links between NEO compensation and the creation of shareholder value as each of these programs provide
meaningful rewards to the NEOs for satisfying performance targets the Compensation Committee has identified
as key drivers in the short-term and long-term success of the company.
Other Compensation
The company provides the NEOs with a set of core benefits (e.g., coverage for medical, dental, vision care,
prescription drugs, annual physical, basic life insurance, long-term disability coverage, and car allowance) plus
voluntary benefits that an NEO may select (e.g., supplemental life insurance). The company’s overall benefits
philosophy is to focus on the provision of these core benefits, with NEOs able to use their cash compensation to
obtain such other benefits as they individually determine to be appropriate. The company provides health and life
insurance benefits; but consistent with the Peer Group, does not provide substantial perquisites. The following
events related to the company’s benefits and perquisites for the NEOs took place in 2011:
Retirement Plans. In January 2011, the company restarted a matching contribution to the 401(k) plan for all
participants, including the NEOs, to motivate and retain employees. The matching contribution is equal to 50%
of employee deferrals on the first 4% of eligible earnings (up to plan limits). The matching contribution is below
market. The company continues to maintain three non-qualified deferred compensation plans which remain
frozen to new contributions. The company does not sponsor a pension plan.
Mr. Austrian’s Benefits and Perquisites. Mr. Austrian did not receive any of the core benefits and perquisites
during his service as Interim Chair and CEO; however, effective with his election to serve as the Chair and CEO
on May 23, 2011, he participates in all of the core benefits and perquisites provided to the NEOs other than the
car allowance program, which he voluntarily opted out of under his letter agreement (as described in the
“Summary of Executive Agreements and Potential Payments Upon Termination or Change in Control” section).
Executive Medical Plan. In October 2011, the Compensation Committee approved terminating coverage of the
executives, including the NEOs, under the executive medical plan effective January 1, 2012. The executive
medical plan provided enhanced medical, dental, vision, and pharmacy benefits to the executives. Due to rising
health care costs, the executive medical plan has significantly increased in cost in recent years. The
Compensation Committee determined that it was not prudent for the company to continue to provide benefits to
the executives under the executive medical plan. As of January 1, 2012, the executives are now eligible to
participate in the company’s medical, dental, vision, and pharmacy benefit programs available to the broad-based
full-time employees.
NEO Employment Arrangements
The company is party to various employment arrangements, including written offer letters, employment
agreements, change in control agreements, and retention agreements with certain of our NEOs, that provide for
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