Staples 2006 Annual Report Download - page 45

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29
In March 2007, after the end of our 2006 fiscal year, we awarded a retention grant to our Chief Executive Officer
under our Amended and Restated 2004 Stock Incentive Plan. The terms and conditions of Mr. Sargent’s grant,
including the applicable performance objectives described below, were determined by the Compensation Committee
and approved by our Board of Directors. The retention grant consists of 375,000 shares of restricted stock and 375,000
shares underlying a performance share award.
The restricted shares under Mr. Sargent’s retention grant will vest in full at the end of our 2011 fiscal year if
Mr. Sargent has continuously worked for us through such date. The restricted shares will vest in full before such date
upon Mr. Sargent’s death, disability or termination without cause or if, following a change-in-control of Staples,
Mr. Sargent is not offered employment by the surviving corporation under certain conditions or Mr. Sargent is
terminated without cause or resigns for good reason within one year of such change-in-control.
The shares underlying Mr. Sargent’s performance share award will be issued only if we achieve certain five year
cumulative sales and return on net asset goals at the end of our 2011 fiscal year. Both a minimum sales and a
minimum return on net asset goal for the five year period must be met, and a percentage of the total award, ranging
from 50% to 100%, will be awarded based upon our sales and return on net assets exceeding such minimum goals.
The Compensation Committee and our Board believe that the performance necessary to vest 75% of the performance
share award is challenging, in that it reflects an aggressive level of growth and return that, if achieved, will fulfill our
long-range plans and can be achieved only with substantial effort, and the performance necessary to vest 100% of the
performance share award is highly challenging and, if met, would represent a substantial and aggressive return on
investment for our stockholders during such five year period. In order to receive any shares underlying the
performance share award, Mr. Sargent must have continuously worked for us through the end of our 2011 fiscal year
unless he is terminated before such date due to his death or disability or, following a change-in-control of Staples,
Mr. Sargent does not continue his employment with the surviving corporation or is terminated without cause or
resigns for good reason within one year of such change-in-control.
Mr. Sargent’s retention grant reflects our executive compensation program’s goal of linking compensation to
overall company performance and is consistent with our historic practice of using long-term equity incentives to
reward the achievement of long-term business objectives and to help us retain a successful and tenured management
team. In deciding to award this retention grant to Mr. Sargent, our Board considered the following additional factors:
•During Mr. Sargent’s term as Chief Executive Officer, our stock has experienced a compounded annual growth
rate of 17.8% over the past five years and 15.1% over the past three years.
•Mr. Sargent has displayed exceptional leadership during his tenure at Staples and has been instrumental to our
extraordinary success.
•The market for executive talent continues to tighten and become more competitive, significantly increasing the
risk that executives of Mr. Sargent’s caliber will be actively recruited by other companies, including our direct
competitors, private equity investors and other leading organizations across the retail sector.
•Companies within general industry have made comparable grants to retain their high-performing Chief
Executive Officers.
Retirement and Other Benefits
The Staples Executive Benefits Program is designed to supplement our compensation strategy to attract and
retain the most talented executives in the business. It offers choice and is tax effective, innovative and industry
competitive. It offers immediate financial security for executives and their families and allows for the ability to build a
solid and secure financial future protecting them post-retirement. Our benefits program offerings also are
representative of those that often are made available to executives at other companies in our peer groups, and thereby
contribute to our ability to attract and retain the highest caliber executive talent.