Staples 2003 Annual Report Download - page 25

Performance Accelerated Restricted Stock (“PARS”) Awards
In order to maintain our high risk-high reward philosophy, the Compensation Committee adopted, as part of the Amended
and Restated 1992 Equity Incentive Plan, a PARS plan (the “Plan”) for certain key executives. Under the Plan, shares of Staples
common stock are granted to executives in consideration for services. The shares are “restricted” in that they may not be sold
or transferred by the executive until they “vest.” Our PARS issued in fiscal 2002 will vest on February 1, 2007 subject to
acceleration upon achievement of certain pre-determined EPS growth targets over the 2003 to 2005 fiscal years. Our PARS issued
in fiscal 2001 vest in May 2003 as a result of our having exceeded such PARS’ target EPS for fiscal 2002. Our PARS that were
issued in fiscal 2000 will vest on February 1, 2005 subject to acceleration upon achievement of a certain pre-determined earnings
per share growth target for fiscal year 2003. EPS growth targets are determined by the Compensation Committee each year for
grants under the Plan. Once the PARS have vested, they become “unrestricted” and may be freely sold or transferred. The PARS
are forfeited if the executive’s employment with us terminates prior to vesting except in extraordinary circumstances which include,
without limitation, death or disability of the executive; a merger, consolidation, sale, reorganization or change in control of the
Company; or any other nonrecurring significant event affecting us, the executive or the Plan.
Option Grants
The following table sets forth certain information concerning grants of stock options during the fiscal year ended
February 1, 2003 for each of the Senior Executives.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Grant
Date Value
Name
Number of
Securities
Underlying
Options
Granted (1)
Percent of
Total Options
Granted to
Employees in
Fiscal Year
Exercise
Price per
Share (2)
Expiration
Date
Grant Date
Present Value (3)
Ronald L. Sargent ............. 25,000
350,000
0.26%
3.60%
$20.19
$15.94
3/01/2012
8/01/2012
$ 227,461
$2,405,963
Thomas G. Stemberg .......... 350,000 3.60% $15.94 8/01/2012 $1,867,840
Joseph S. Vassalluzzo .......... 100,000 1.03% $15.94 8/01/2012 $ 687,418
Basil L. Anderson ............. 9,000
120,000
0.09%
1.23%
$20.00
$15.94
3/04/2012
8/01/2012
$ 81,206
$ 824,902
John J. Mahoney ............... 100,000 1.03% $15.94 8/01/2012 $ 687,418
(1) Each of the options granted vests over a four-year period as follows: 25% of such shares will vest one year after the
date of grant and the remaining 75% of such shares will vest in equal monthly installments (2.083% per month) over
the following 36 months, provided that the optionee continues to be employed by us on such dates. The exercisability
of the options are accelerated under certain circumstances. See “Employment Contracts, Termination of Employment
and Change-in-Control Agreements with Senior Executives.”
(2) The exercise price is equal to the fair market value per share of Staples common stock on the date of grant.
(3) The estimated present values at grant date have been calculated using a Black-Scholes option pricing model, based
upon the following assumptions: a five-year expected life of option (as a result of the terms of Mr. Stemberg’s
employment agreement with us, we used a three-year expected life to value Mr. Stemberg’s options); a dividend yield
of 0.0%; expected volatility of 45%; and risk-free interest rates of 4.287% (for the grant expiring on March 1, 2012),
3.02% (for the grant expiring on August 1, 2012) and 4.32% (for the grant expiring on March 4, 2012), representing
the interest rate on a U.S. Government zero-coupon bond on the date of grant, with a maturity corresponding to the
expected life of the option.
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