Staples 2007 Annual Report Download - page 46

4APR200813231519
38.6%
10.1%
CEO CFO/COO
2007 Targeted Total Direct Compensation Mix*
President North American
Delivery/U.S. Retail
15.5%
12.6%
23.2%
Stock OptionsPerformance SharesBonusRestricted StockBase Salary
Pay at Risk 36.6%
16.8%
14.6%
10.1%
21.9%
Pay at Risk
38.4%
13.3%
15.3%
10.0%
23.0%
Pay at Risk
* Each of the compensation elements is expressed as a percentage of targeted total direct compensation, which is
comprised of year ending base salary, annual target bonus under our Executive Officer Incentive Plan, the value
of stock options at grant, and the value of restricted shares and performance shares at grant. The valuation
information is consistent with the information presented in the Summary Compensation Table included in this
proxy statement and the financial statements included in our Annual Report on Form 10-K for our 2007 fiscal
year.
Base Salary
The Compensation Committee generally sets base salaries for the named executive officers at approximately the
median (50th percentile) of comparable positions in our peer groups. Changes in base salary are typically considered
based on individual performance during our annual performance review process, as well as in the event of a
promotion or change in responsibilities. In March 2007, the Compensation Committee consulted with its independent
consultant and reviewed and approved Mr. Sargent’s recommendations for salary increases for the other named
executive officers. With the exception of a 4.0% salary increase for Mr. Parneros, the leader of Staples’ U.S. retail
business, the named executive officers received a salary increase that was generally in line with our budgeted merit
increases for all associates of 3.6% of base salary and reflected a lack of any other compelling factors that might
dictate treating the executives differently. The additional increase was given to Mr. Parneros to equalize his salary with
Mr. Doody, the leader of Staples’ North American delivery business, in recognition of their similar roles and
contributions as the leaders of our two largest business segments. The Compensation Committee decided, in executive
session, to raise Mr. Sargent’s salary by 3.6% after taking into account the fact that his base salary was slightly below
median relative to the 2006 proxy statement peer group data, the relationship between his salary and those approved
for the other named executive officers, and his demonstration of leadership during his tenure as our Chief Executive
Officer. As a result of the Compensation Committee’s action, Mr. Sargent’s base salary approximates the median of
base salaries for Chief Executive Officers in our peer groups. Mr. Sargent’s base salary is approximately 10% of his
total annual targeted direct compensation. In general, the Compensation Committee allocates a greater percentage of
Mr. Sargent’s total direct compensation to performance based and equity incentives because Mr. Sargent is uniquely
situated to influence our short and long term performance.
Performance Based Annual Cash Bonus
Under the terms of the Executive Officer Incentive Plan, each named executive officer has a target bonus award
for each plan year based on his salary grade level. Target bonus awards are at between 60% and 125% of the actual
base salary paid to the named executive officer during that plan year. The target bonus percentages are determined by
the Compensation Committee based upon an analysis of annual cash incentive opportunities for similar positions in
the peer group companies. The Compensation Committee generally selects target bonus percentages for the named
executive officers such that target total cash compensation approximates the median of comparable positions in our
peer groups.
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