Staples 2007 Annual Report Download - page 20

The proposed amendment to our Second Restated Certificate of Incorporation must be approved by the
affirmative vote of two-thirds of the shares of our common stock issued, outstanding and entitled to vote. If our
stockholders approve this proposal, the charter amendment will become effective once it is filed with the Delaware
Secretary of State, which we intend to do promptly after stockholder approval is obtained.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AMENDMENT
TO OUR CERTIFICATE OF INCORPORATION DELETING ARTICLE XII TO REMOVE SUPERMAJORITY
VOTING PROVISIONS.
PROPOSAL 3 — APPROVAL OF EXECUTIVE OFFICER INCENTIVE PLAN
In March 2008, the Compensation Committee of our Board of Directors adopted, subject to approval of our
stockholders, the Executive Officer Incentive Plan for fiscal years 2008 through 2012 (the ‘‘Incentive Plan’’). The
Incentive Plan, which is similar to executive bonus plans that we have adopted in prior years, provides for the payment
of annual cash bonus awards to our executive officers based on our performance or the performance of our business
units measured against specific performance objectives established for that fiscal year. Our Board believes that the
Incentive Plan is in the best interests of Staples and our stockholders because it will focus our executive officers on
annual financial and operating results, align the interests of our executive officers with those of our stockholders, and
help us to attract and retain talented executive officers.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), certain executive
compensation in excess of $1 million per year paid to some of our executive officers is generally not deductible for
federal income tax purposes unless such compensation is paid under a performance-based plan that is approved by
our stockholders and satisfies certain other criteria. Our Board is submitting the Incentive Plan for stockholder
approval in order to avail itself of the performance-based compensation exception to the provisions of Section 162(m)
of the Code.
Summary of the Incentive Plan
Set forth below is a summary of the principal terms of the Incentive Plan. This summary is qualified in all respects
by reference to the full text of the Incentive Plan, which is set forth in Appendix A to this proxy statement.
Term of Plan
The Incentive Plan will cover five fiscal years, beginning with our 2008 fiscal year and ending with our 2012 fiscal
year. We refer to each such fiscal year as a ‘‘Plan Year.’’
Administration
The Incentive Plan will be administered by the Compensation Committee of our Board of Directors. The
Compensation Committee will have broad authority to determine target bonuses, select performance objectives, adopt
rules and regulations relating to the Incentive Plan, and make decisions and interpretations regarding the provisions
of the Incentive Plan.
Eligibility
Each of our executive officers, within the meaning of the rules and regulations promulgated by the Securities and
Exchange Commission, will be eligible to participate in the Incentive Plan. We currently have seven executive officers.
An executive officer whose employment terminates before the end of a Plan Year, other than as a result of permanent
disability, death or retirement, will not be eligible to receive a bonus award under the Incentive Plan for that Plan
Year.
Determination of Bonus Awards
Each executive officer will have a target bonus award (a ‘‘Target Award’’) for each Plan Year. Target Awards will
be expressed as a percentage of the actual base salary paid to the executive officer during that Plan Year. The
percentages will be determined by the Compensation Committee based upon the executive officer’s job level and
responsibilities and may vary for different officers and business units.
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