Staples 2007 Annual Report Download - page 57

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Tax and Accounting Implications
Under Section 162(m) of the Internal Revenue Code, certain executive compensation in excess of $1 million paid
to our Chief Executive Officer and our other officers whose compensation is required to be disclosed to our
stockholders under the Securities Exchange Act of 1934 by reason of being among our four most highly compensated
officers is not deductible for federal income tax purposes unless the executive compensation is awarded under a
performance based plan approved by stockholders. To maintain flexibility in compensating executive officers in a
manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy that all
compensation must be deductible. The Compensation Committee intends, to the extent practicable, to preserve
deductibility under the Internal Revenue Code of compensation paid to our executive officers while maintaining
compensation programs that support attraction and retention of key executives.
Cash bonuses paid under the Executive Officer Incentive Plan for our 2003 through 2007 fiscal years, which was
approved by stockholders at our 2003 Annual Meeting, stock options awarded under our stock option plans, which
were also approved by stockholders, and the performance share awards granted in 2007 are performance based and
are potentially deductible for us. Tenure-based restricted stock does not qualify for the performance based exception
to Section 162(m), but the Compensation Committee believes that the retention benefit derived outweighs any tax
benefit to us.
The compensation that we pay to the named executive officers is expensed in our financial statements as required
by U.S. generally accepted accounting principles. As one of many factors, the Compensation Committee considers the
financial statement impact in determining the amount of, and allocation among the elements of, compensation.
Beginning with our 2006 fiscal year, we began accounting for stock-based compensation under our Amended and
Restated 2004 Stock Incentive Plan and all predecessor plans in accordance with the requirements of FASB Statement
No. 123(R).
Compensation Committee Report
The Compensation Committee of Staples’ Board of Directors has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on this review and
discussion, recommended to the Board that the Compensation Discussion and Analysis be included in this proxy
statement.
Compensation Committee
Martin Trust, Chairperson
Arthur M. Blank
Mary Elizabeth Burton
Carol Meyrowitz
47