Staples 2006 Annual Report Download - page 48

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32
and general industry group. Following his promotion to Vice Chairman in January 2006, however, our Chief
Financial Officer’s total cash compensation was at or above market median for our peer groups and general
industry group.
•Our Chief Operating Officer’s total direct compensation was between the 42th and 72nd percentiles across our
peer groups and general industry group. Total cash compensation was below the 25th percentile across our peer
groups and general industry group.
To ensure that our relative performance is taken into account, the Committee also compared total cash
compensation and total equity value delivered for our Chief Executive Officer and our Chief Financial Officer over
the most recent three year period relative to the comparative performance of our peer groups on earnings per share,
three year average return to shareholders and three year compounded return on invested capital. Equity value
delivered is the in-the-money value of stock options, proxy value of restricted stock and long-term incentive payouts
over the three year period, regardless of vesting. The Committee reviewed the 2003-2005 performance results relative
to our peer groups and found that:
•Staples’ compounded annual growth rate in earnings per share was at the 44th and 66th percentile of our core
retail peer group and expanded retail peer group, respectively.
•Staples’ three year average return to shareholders was at the 68th and 81st percentile of our core retail peer
group and expanded retail peer group, respectively.
•Staples’ three year return on invested capital was at the 69th and 75th percentile of our core retail peer group
and expanded retail peer group, respectively.
Based on such review, the Committee determined that the aggregate of total cash compensation and equity value
delivered for our Chief Executive Officer and Chief Financial Officer during such three year period was appropriate
in relation to our performance, in that:
•Our Chief Executive Officer’s cash compensation approximated market median and total equity value
delivered was above the 75th percentile of our peer groups.
•Our Chief Financial Officer’s cash compensation approximated market median and total equity value delivered
was above the 90th percentile of our peer groups.
Tally Sheets
The Committee reviews all components of compensation for our Chief Executive Officer and the other named
executive officers, including salary, bonus, current value of all stock options and restricted shares outstanding, the
dollar value and cost to us of all perquisites and benefits and the actual projected payout obligations under our
Supplemental Executive Retirement Plan and under potential retirement, termination, severance, and change-in-
control scenarios. A tally sheet detailing the above components and scenarios with their respective dollar amounts was
prepared by management for each of our named executive officers and reviewed by the Committee in March 2007.
Based on this review, the Committee found the total compensation for each of our named executive officers under
these various scenarios to be reasonable.
Performance Evaluation
The Nominating and Corporate Governance Committee coordinates the annual performance evaluation of our
Chief Executive Officer with the full Board. The evaluation is based on objective criteria, including the performance
of the business, accomplishment of reported goals and long-term strategic objectives and the development of
management. The evaluation is used by the Compensation Committee in determining our Chief Executive Officer’s
compensation.