Staples 2004 Annual Report Download - page 30

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Shareholder Proposal
RESOLVED: Shareholders request that our Board adopt a policy that any 2005 or later poison pill be redeemed or
put to a shareholder vote within 4-months after it is adopted by our Board. And formalize this as corporate
governance policy or bylaw consistent with the governing documents of our company.
I believe that there is a material difference between a shareholder vote within 4-months in contrast to any greater
delay in a shareholder vote. For instance a 5- to 12-month delay in a shareholder vote could guarantee that a poison
pill stays effective through an entire proxy contest. This can result in us as shareholders losing a profitable offer for
our stock.
Even if a special election would be needed, the cost would be almost trivial in comparison to the potential loss of a
valuable offer.
John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, Calif. 90278 submitted this proposal.
Pills Entrench Current Management
‘‘Poison pills... prevent shareholders, and the overall market, from exercising their right to discipline management by
turning it out. They entrench the current management, even when it’s doing a poor job. They water down
shareholders’ votes and deprive them of a meaningful voice in corporate affairs.’’
‘‘Take on the Street’’ by Arthur Levitt, SEC Chairman, 1993-2001
Progress Begins with a First Step
I believe the reason to take the above RESOLVED step is reinforced by our directors’ vulnerability when compared to
best practices in corporate governance. For instance in 2004 it was reported (and concerns are inserted):
• The Corporate Library, an independent investment research firm in Portland, Maine, rated our company:
‘‘D’’ in Board Composition
‘‘D’’ in Accounting
• Our key Audit Committee met only 4-times in a full year — commitment concern.
• Our Audit Committee Chairman had 14 years director tenure — independence concern.
• Our Nomination Committee Chairman had 18 years director tenure — independence concern.
• Shareholders were only allowed to vote on individual directors once in 3-years — accountability concern.
• A 67% super majority shareholder vote requirement — entrenchment concern.
• We had no Independent Chairman — independence concern.
• There were 3 insiders on our board when many companies have only one insider — independence concern.
• Our full Board met only 4-times in a full year — commitment concern.
• Seven directors were allowed to hold from 4 to 8 director seats each — over-extension concern.
• CEO pay of $17 Million
(If CEO pay is excessive — concern that our board is weak in its oversight of our CEO.)
• Six directors were active CEOs — concern that CEOs tend to give fellow-CEOs big paychecks.
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