Staples 2007 Annual Report Download - page 35

general, communications relating to corporate governance and corporate strategy are more likely to be forwarded
than communications relating to ordinary business affairs, personal grievances and matters as to which we tend to
receive repetitive or duplicative communications. In addition, as provided by our Corporate Governance Guidelines,
if a meeting is held between a major stockholder (including institutional investors) and a representative of the
independent directors, the Lead Director will serve, subject to availability, as such representative of the independent
directors.
Stockholders who wish to send communications on any topic to our Board should address such communications
to The Board of Directors, c/o Corporate Secretary, Staples, Inc., 500 Staples Drive, Framingham, Massachusetts
01702.
Director Compensation
The Compensation Committee is responsible for reviewing and making recommendations to our Board with
respect to the compensation paid to our non-employee directors (‘‘Outside Directors’’). Our Outside Directors are
predominantly compensated through stock option and restricted stock awards reflecting the Compensation
Committee’s philosophy that director pay should be aligned with the interests of our stockholders.
During our 2007 fiscal year, our Outside Directors were compensated as follows. Each Outside Director joining
our Board was granted options to purchase 22,500 shares of our common stock. For each regularly scheduled meeting
day attended, each Outside Director was granted options to purchase 4,500 shares of our common stock (subject to an
annual limit of 22,500 shares) and 600 restricted shares of our common stock (subject to an annual limit of 3,000
shares). Within two business days after our Board’s regularly scheduled meeting in December 2007, the Lead Director
was granted an additional 1,500 restricted shares of our common stock and each chairperson of the Audit Committee,
Compensation Committee, Nominating and Corporate Governance Committee, and Finance Committee was granted
an additional 1,200 restricted shares of our common stock. The stock option grants have an exercise price equal to the
fair market value of our common stock on the date of grant and vest ratably on an annual basis over four years. The
restricted stock grants cliff vest at the end of three years. Upon a change-in-control of Staples, all outstanding
unvested stock options and restricted stock would fully vest. Each Outside Director also received a quarterly payment
of $12,500 and was reimbursed for reasonable expenses incurred in attending meetings of our Board. The chairperson
of the Audit Committee received an additional quarterly payment of $3,750.
It is the Compensation Committee’s goal to maintain a level of Outside Director compensation above the median
of companies both within our peer groups as well as similarly-sized companies in general industry. Actual
compensation is substantially greater than the median because of the performance of our common stock, which
represents a large portion of our Outside Director compensation. Each year, generally at its June meeting, the
Compensation Committee reviews an extensive analysis of marketplace practices for outside director pay conducted
by management and reviewed by the Compensation Committee’s independent advisor. In 2007, this analysis included
data from peer company proxy filings, data from Equilar, Inc., an independent provider of executive and board
compensation analyses, and published outside director pay studies, including a study conducted by Exequity, the
Compensation Committee’s independent advisor during most of our 2007 fiscal year. Based on the results of its 2007
annual review, the Compensation Committee recommended, and the Board approved, changes to our Outside
Director compensation program. These changes reflect certain market and corporate governance trends applicable to
director compensation, including the prevalence of restricted stock awards over stock option awards, the imposition of
holding requirements and larger cash retainers. Consistent with recent changes to our equity program for associates,
the revised Outside Director compensation program also adopts a value-based approach to equity grants in which a
fixed value, rather than a fixed number, of shares are awarded to our Outside Directors. The change to a value-based
approach for our overall equity program was made for a variety of reasons, including market trends and the
anticipated growing expense of a fixed share program.
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