Staples 2012 Annual Report Download - page 43

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34
the Company's international affairs and operations. In consideration of providing these services through August 3, 2013, he is
entitled to $1,000 a month. While serving in this role, he will not be eligible for any other cash or new equity incentives, and his
existing equity awards will remain outstanding.
The Committee's Processes
The Committee has established a number of processes to help ensure that our executive compensation program meets its
objectives and is consistent with the pay philosophy described at the beginning of this CD&A.
Independent Compensation Consultant
Our Committee charter authorizes the Committee to engage independent legal and other advisors and consultants as it
deems necessary or appropriate to carry out its responsibilities and prohibits the Committee's compensation consultants from
serving as Staples' regular advisors and consultants. Accordingly, in our 2012 fiscal year, the Committee continued to use, pursuant
to a written agreement, Exequity LLP as an independent advisor to advise on and assist the Committee with executive compensation
matters. Under the terms of Exequity's agreement, Exequity is responsible for, among other matters:
Reviewing total compensation strategy and pay levels for executives.
Performing competitive analyses of outside board member compensation.
Examining all aspects of executive compensation programs to ensure that they support the business strategy.
Preparing for and attending selected Committee and Board meetings.
Supporting the Committee in staying current on the latest legal, regulatory and other industry considerations
affecting executive compensation and benefit programs.
Providing general counsel and advice to the Committee with respect to all compensation decisions pertaining to
the CEO and all compensation recommendations submitted by management.
During our 2012 fiscal year, the independent consultant advised, and frequently made recommendations to, the Committee
on compensation matters for all officers and directors, advised on and made recommendations on all matters pertaining to
compensation of our CEO, and met with the Committee in executive session without the presence of management. Consistent
with the terms of the written agreement and the Committee charter, Exequity has, with the knowledge and consent of the Committee,
provided advice and expertise to management on matters to be presented by management to the Committee. Exequity has not
performed services for Staples that were unrelated to Committee related matters. During 2012, Exequity assisted management by
performing Section 280G calculations, which were provided to the Committee, and providing experience based executive market
data related to executive and non-executive positions. Most of the data reviewed by the Committee is generated by management
and reviewed and advised upon by the compensation consultant. The principal consultant from Exequity attended four of the five
Committee meetings during our 2012 fiscal year. Exequity was paid $60,993 for services rendered during 2012. In March 2013,
the Committee performed a conflicts of interest assessment with respect to Exequity and no conflict of interest was identified.
Benchmarking
In March 2012, the Committee set compensation for the NEOs based on its December 2011 review of 2008-2010
compensation, its assessment of our 2011 performance, and general consideration of the totality of the data, advice, and information
provided by management and Exequity.
In December 2012, the Committee evaluated the competitiveness of our NEOs' compensation relative to marketplace
norms and practices by analyzing current proxy statement data from our peer group. During the course of this analysis, the
Committee focused on whether Staples' pay practices were aligned with performance. This analysis was intended to inform the
Committee as to whether any changes to the executive compensation program were needed.
The Committee evaluated, relative to the 2011 and three year (2009-2011, CEO, CFO and Chief Operating Officer
("COO") only) proxy statement data for the peer group, the competitiveness of base salary, total cash compensation (base salary
plus annual cash bonus), and TDC, with a focus on total cash compensation and TDC. The Committee then analyzed its findings
in relation to Company performance as measured by one year and three year TSR, EPS, revenue growth, free cash flow, and ROIC.
TDC was reviewed in two ways. First, to provide a view of the "realizable TDC" in 2011, the value of TDC was analyzed,
at the date the data was analyzed (October 31, 2012, when our stock price was $11.52), taking the sum of the base salary, annual
cash bonus paid, "in the money" value of annual stock option grants, and the value of restricted stock awards or other long term
incentives. Second, to provide the value of the "as reported" overall TDC at grant, the value of TDC was analyzed by taking the