Staples 2003 Annual Report Download - page 29

As of February 1, 2003, approximately 4,652 associates were eligible to participate in the International Purchase Plan.
The purchase of shares under the International Purchase Plan is discretionary, and we cannot determine the number of shares
to be purchased in the future by any particular person or group.
Supplemental Executive Retirement Plan
In August 1997, the Board of Directors adopted the Supplemental Executive Retirement Plan (as amended and restated,
the “SERP”) to complement our 401(k) Plan. The SERP permits key executives to save for their retirement beyond what
they would have been permitted to save under the 401(k) Plan.
Investment elections for the SERP are substantially similar to the investment elections available under the 401(k) Plan.
We match 25% of the first 6% of pay that eligible associates contribute to the combined 401(k) Plan and the SERP. We
may also make an additional discretionary matching contribution to the SERP based on an associate’s contributions to the
401(k) Plan and the SERP. Our matching contributions are made in the form of Staples common stock and vest ratably based
on length of service so that they vest on an annual basis over five years, with all future matching contributions after five
years of service being 100% vested upon grant. All distributions to the SERP participants are paid in cash.
While the number of shares of Staples common stock that we may issue under the SERP is not limited, as of February 1,
2003, we had issued for matching purposes under the SERP since its adoption in 1997 approximately 158,379 shares of
Staples common stock, out of a total of 225,000 shares of Staples common stock that have been registered for issuance under
the SERP on a Registration Statement on Form S-8.
The SERP is administered by the Committee on Employee Benefit Plans. This committee has the general authority
to control and manage the operation and administration of the SERP, and the committee’s powers and duties include the
ability to adopt the rules and regulations necessary for the performance of its duties under the SERP, to decide all questions
arising under the SERP, and to amend, suspend or terminate the SERP at any time.
As of February 1, 2003, approximately 415 associates were eligible to participate in the SERP.
Employment, Termination of Employment and Change-in-Control Agreements with Senior Executives
We have entered into Severance Benefit Agreements (the “Severance Agreements”) with each of Messrs. Anderson,
Mahoney, Sargent and Vassalluzzo. Under the Severance Agreements, following termination of employment by us without
cause (or “constructive discharge” as provided in the Severance Agreements), Mr. Sargent would be entitled to continuation
of salary and other benefits for 18 months and Messrs. Anderson, Mahoney and Vassalluzzo would be entitled to continuation
of salary and other benefits for 12 months. Each executive named above would receive such benefits for an additional period
of six months if such termination occurred within two years following a “change in control” of Staples (as defined in the
Severance Agreements). A change in control of Staples would also result in a partial acceleration of the exercisability of
outstanding options held by the executives named above (and all of our associates), and a discharge without cause (or
resignation for good reason) within one year after a change in control results in the acceleration in full of all options and
PARS held by the executives (and all of our associates). In the event Mr. Mahoney is terminated without cause within one
year after a change of control, we have guaranteed him that the sum of all severance payments to be paid to him plus the
total gain realized and realizable upon the sale and/or exercise of his PARS and/or options would equal at least $2,000,000.
Effective as of February 3, 2002, we entered into an employment agreement with Mr. Stemberg, pursuant to which
Mr. Stemberg has agreed to remain with us on a full-time basis as an executive officer with the title of Chairman for an
initial period of up to two years, and thereafter will assume, for an additional two-year period, a part-time position as Non-
Executive Chairman. Under the agreement, we will: (1) pay Mr. Stemberg an annual salary and bonus, and grant stock
incentive awards, at a level equal to that paid to the Chief Executive Officer during the first two years and at a level equal
to 75% of that paid to the Chief Executive Officer during the following two years, and (2) during years five and six, pay
Mr. Stemberg an annual amount equal to his base salary at the end of the first four years and the average of the three most
recent annual bonuses paid to him. We have also granted to Mr. Stemberg an incentive award consisting of 300,000 shares
of restricted common stock, which will vest upon the earlier of January 31, 2004 or the occurrence of a change in control.
All incentive stock awards granted during the term of the agreement will vest by the earlier of a change in control (as defined
in the agreement) or the end of fiscal year 2005. Mr. Stemberg is not permitted to compete with us until February 1, 2008.
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