Staples 2007 Annual Report Download - page 49

4APR200813370570
US Retail
Maximum
Target
Threshold
Based on the actual performance under the 2007 Executive Officer Incentive Plan, the payment
for Mr. Parneros was $106,744.
EPS
30% Weight
RONA
30% Weight
Sales
20% Weight
Customer Service
20% Weight
below
threshold below threshold
Long Term Equity Incentives
Our long term equity incentives reward the achievement of long term business objectives that benefit our
stockholders and help us retain a successful and tenured management team. Our executive compensation program
has, to a great extent, historically relied on equity components to meet its objectives, and we have a long history of
granting broad based equity awards each year, with over 7,500 associates participating in our equity awards program.
With respect to the named executive officers, the Compensation Committee relied upon a portfolio approach in
2007 that included a mix of stock options (50% of target equity value), three year performance share awards (30% of
target equity value) and tenure-based restricted stock (20% of target equity value). The Compensation Committee
established this mix of awards in fiscal 2006 when the three year performance share awards and tenure-based
restricted stock were first introduced. Prior to 2006, long term equity incentives were comprised of stock options and
performance accelerated restricted stock, with the latter not considered to be performance based under
Section 162(m) of the Internal Revenue Code. Beginning with the 2007 annual equity awards to all associates,
including the named executive officers, the Compensation Committee changed its equity grant practice from awarding
a fixed number of shares to a fixed value of shares to each associate based on salary grade level. This change was made
for a variety of reasons, including market trends and the anticipated growing expense of a fixed shared program. The
value of equity awards for 2007 was based on the value of the fiscal 2006 annual equity grant at the time of grant in
2006.
In the Compensation Committee’s view at the time of grant in 2007, the chosen mix of long term equity awards
struck the right balance in providing performance based incentives that were aligned with stockholder interests and
assisted in retaining our talented senior executive team. The overall long term equity package was structured to
deliver a total compensation opportunity that is both in line with total company performance and consistent with the
mix that is typically extended to executives within our peer groups and general industry. The Compensation
Committee believed that by replicating the market’s blend of equity award opportunities, we would be well positioned
to attract and retain the best available executive talent. In 2007, our overall long term equity incentive package at
target comprised 73% to 77% of total direct compensation for our named executive officers, and if Staples exceeded
the performance share targets, total compensation could reach or exceed the 90th percentile of comparable peer group
positions.
Both the stock options and tenure-based restricted stock were granted to our named executive officers in July
2007. In June 2007, the Compensation Committee reviewed and approved the specific awards to be issued and
selected a grant date of July 2, 2007. These stock options were granted at the closing price on the date of grant and
vest ratably over a four-year period. Tenure-based restricted stock vests 50% on the second anniversary of the grant
date and 50% on the third anniversary of the grant date. Historically, annual grants of stock options and tenure-based
restricted stock awards are awarded around the mid-point of our fiscal year (after our prior year performance
appraisal and bonus award processes have been completed) to serve as an additional recognition event that may drive
current year and future performance. We do not have a program, plan or practice of timing the grant of stock options
in coordination with the release of material non-public information.
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