Staples 2012 Annual Report Download - page 35

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26
Review of 2012 Executive Compensation and 2012 Committee Actions
Our pay mix emphasizes "at risk" performance-based compensation.
2012 Compensation. The chart below highlights the extent to which 2012 total pay opportunity is "at risk" performance-
based compensation. The percentage of each element at target is shown, as well as the "at risk" portion of total direct compensation.
* The long term cash component of the long term incentive portfolio and the annual cash bonus awards 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, we view the stock option component of our
long term equity incentives as 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.
CEO pay decreased substantially in 2012.
Total CEO compensation for 2012 as reported in our summary compensation table decreased 27% from 2011. This
decrease is due to lower payouts on performance-based compensation, including no payout for 2012 under the annual and long
term cash plans, and reduced option awards. The alignment between pay and performance in 2012 is attributable to our emphasis
on “at risk” pay. Moreover, due to underperformance in 2012, payments in connection with the 2012 annual cash bonus, amounts
that could have been earned under our 2010-2012 and 2011-2013 long term cash awards and the number of shares that could have
been earned under the 2010 Special Performance and Retention Share awards, together which could have totaled $4,772,242 for
target performance, resulted in zero payout based on 2012 actual results.
CEO pay has been aligned with long term performance.
On a three year basis (2009-2011), CEO pay has been aligned with performance.
The following table that was reviewed by the Committee reflects, relative to our peer group, the alignment between our
CEO's base salary, total cash compensation, TDC, and the Company's performance as measured by total shareholder return, earnings
per share growth and return on invested capital over the 2009-2011 period. When the Committee performed the review in December
2012, complete proxy based compensation data was only available through 2011, so the Committee's analysis was limited through
such period. In reviewing each of the compensation components, the Committee placed greatest emphasis on sustained performance
and on realizable TDC over the three year period, as opposed to the annual TDC reported in our summary compensation table
because the compensation program is designed to promote long term sustained performance and realizable TDC reflects the real
value of the equity awards and increases and decreases as the share price changes. The percentiles in the tables show, relative to
our peer group, the CEO's position with respect to each compensation element and Staples' position with respect to each performance
measure.