Staples 2007 Annual Report Download - page 45

Principal Contributions to
Compensation Component Compensation Objectives Highlights
Retirement and other • Helps to attract and retain talented • Includes a limited company match, up to
benefits executives with benefits that are 4% of salary and bonus, to a
comparable to those offered by supplemental executive retirement plan.
companies in our peer groups and other • Rule of 65. If an executive officer is at
companies with whom we compete for least age 55 and the sum of his or her age
talent. and years of service equals or exceeds 65,
all restricted stock awards granted after
June 30, 2004 vest in full (but may not be
sold until the earlier of normal vesting or
retirement) and all stock option awards
granted after June 30, 2004 vest in full
upon the earlier of normal vesting or
retirement.
Executive perquisites • Consistent with our egalitarian culture, • We provide limited reimbursement for
we offer limited executive perquisites to tax, estate and financial planning
attract and retain talented executives. services.
Each of our named executive officers is assigned by management to a salary grade within the salary grade
structure established for all management positions across Staples, and these salary grade assignments are reviewed
and approved by the Compensation Committee. The salary grade structure provides, within each salary grade, a
specific salary range, an annual target cash incentive and a specific amount of long term equity awards. An individual’s
performance in combination with one’s position and responsibilities impact base salary within each grade and one’s
grade level. Positions at more senior levels have a greater portion of compensation ‘‘at risk’’ through our cash and
equity incentive programs. All elements of the salary grade structure for the named executive officers are reviewed
annually by the Compensation Committee. Our named executive officers are grouped into the three highest salary
grade levels based on their responsibilities within Staples, with the Chief Executive Officer at the highest grade level,
followed by the Chief Financial Officer and Chief Operating Officer and then the Presidents of North American
Delivery and U.S. Retail.
While the Compensation Committee independently evaluates each of the compensation components discussed in
the above table, it places greater emphasis on the sum of base salary, performance based annual cash bonuses and
long term equity incentives rather than any one component because of their combined greater potential to influence
our named executive officers’ performance. As described under ‘‘The Compensation Committee’s Processes —
Benchmarking,’’ in September of each year, the Compensation Committee evaluates the relative mix of pay
components for each of the named executive officers in comparison to the pay mix for comparable positions in the
peer group companies. The Compensation Committee believes, and our pay mix reflects, that a substantial portion of
the compensation for our named executive officers should be ‘‘at risk’’ and aligned with stockholders’ interests.
For each of our named executive officers, the below chart illustrates base salary, bonus earned under the
Executive Officer Incentive Plan and long term equity incentives as a percentage of targeted annual total direct
compensation for our 2007 fiscal year, with a focus on highlighting ‘‘at risk’’ compensation. The performance share
component of the long term equity incentives and the bonus earned under our Executive Officer Incentive Plan are
performance based plans and represent ‘‘at risk’’ compensation since minimum levels of performance must be
attained in order for any payout to occur. Similarly, the stock option component of our long term equity incentives is
performance based and ‘‘at risk’’ since the stock price at exercise must exceed the original fair market value grant
price in order to provide any value to the executive.
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