Staples 2007 Annual Report Download - page 23

The Equity Plan
The following summary is qualified in its entirety by reference to the Equity Plan, a copy of which is attached to the
electronic copy of this proxy statement filed with the SEC and may be accessed at www.proxyvote.com or the SEC’s Internet
Web site (www.sec.gov). In addition, a copy of the Equity Plan may be obtained from our Corporate Secretary.
Purpose
The purpose of the Equity Plan is to:
• attract, motivate and retain key employees and consultants capable of contributing to the successful
performance of Staples;
• provide an incentive through stock ownership for participants to achieve long-range performance goals and
create value for stockholders; and
• enable employees and consultants to participate in our long-term growth.
Types of Awards
The Equity Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the
Code, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights and other
stock-based awards. No more than 50% of the total number of shares of our common stock covered by the Equity
Plan may be issued pursuant to awards that are not options or stock appreciation rights. No more than 2,000,000
shares in the aggregate of our common stock available under the Equity Plan may be subject to awards made to
non-employee directors of Staples.
Incentive Stock Options and Non-statutory Stock Options. Option recipients receive the right to purchase a
specified number of shares of our common stock at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Options may not be granted at an exercise price less
than the fair market value of our common stock on the date of grant. Options may not be granted for a term in excess
of ten years. Outstanding options may not be amended to provide an exercise price per share which is lower than the
then current exercise price per share of such outstanding options. Our Board may not cancel any outstanding options
and grant in substitution for such options new options under the Equity Plan covering the same or a different number
of shares of our common stock and having an exercise price per share lower than the then current exercise price per
share of the cancelled options. Our Board, however, has the power to amend stock options to convert them into stock
appreciation rights and make other amendments to options, provided that the option recipient must consent to such
action unless our Board determines that the action would not materially and adversely affect the option recipient.
Restricted Stock and Restricted Stock Unit Awards. Restricted stock awards entitle recipients to acquire shares of
our common stock, subject to our right to repurchase all or part of such shares if the conditions specified in the
applicable award are not satisfied before the end of the applicable restriction period. Restricted stock unit awards
entitle the recipient to receive shares of our common stock to be delivered in the future subject to such terms and
conditions on the delivery of the shares as our Board may determine.
Restricted stock and restricted stock unit awards granted under the Equity Plan may vest on the basis of passage
of time, achievement of specified performance objectives or a combination of both time and performance. The
Compensation Committee may, at the time of grant, make a restricted stock or restricted stock unit award subject to
such performance objectives as to qualify it for deduction under Section 162(m) of the Code. The performance
objectives for each restricted stock or restricted stock unit award intended to so qualify for purposes of Section 162(m)
of the Code will be based on one or more of the following measures: sales, earnings per share, return on net assets,
return on equity and customer service levels. The Compensation Committee may determine that special one-time or
extraordinary gains or losses should or should not be included in determining whether such performance objectives
have been met. In addition, customer service target levels will be based on predetermined tests of customer service
levels such as scores on blind test shopping, customer comment card statistics, customer relations statistics and
delivery response levels. Currently, our tests of customer service levels consist of customer satisfaction surveys
conducted by a third party.
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