Staples 2012 Annual Report Download - page 69

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STOCKHOLDER PROPOSAL REQUIRING COMPANY TO HAVE AN INDEPENDENT BOARD CHAIRMAN
(Item 5 on the Proxy Card)
The following stockholder proposal was submitted by John R. Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach,
California 90278, beneficial owner of at least 200 shares of our common stock (as of December 19, 2012).
Proposal 5 - Independent Board Chairman
RESOLVED: Shareholders request that our board of directors adopt a policy that, whenever possible, the chairman of our board
of directors shall be an independent director. An independent director is a director who has not previously served as an executive
officer of our Company. This policy should be implemented so as not to violate any contractual obligations in effect when this
resolution is adopted. The policy should also specify how to select a new independent chairman if a current chairman ceases to
be independent between annual shareholder meetings. To foster flexibility, this proposal gives the option of being phased in and
implemented when our next CEO is chosen.
When our CEO is our board chairman, this arrangement can hinder our board's ability to monitor our CEO's performance. Many
companies already have an independent Chairman. An independent Chairman is the prevailing practice in the United Kingdom
and many international markets. This proposal topic won 50%-plus support at three major U.S. companies in 2012 including 55%-
support at Sempra Energy.
This proposal should also be evaluated in the context of our Company's overall corporate governance as reported in 2012:
GMI/The Corporate Library, an independent investment research firm, had rated our company "D" continuously since 2009 with
"High Governance Risk." Also "High Concern" for director qualifications and "Concern" in Executive Pay – $9 million for our
CEO Ronald Sargent. Plus our high level of executive pay received only 46% support from our shares outstanding.
The only equity pay given to our highest paid executives consisted of stock options and restricted stock, both of which simply
vest over time with no job performance requirements. Our CEO received a mega-grant of 860,000 options (after receiving 645,000
options the year before) valued at $3.4 million. Equity pay given as a long-term incentive should include job performance
requirements and market-priced stock options could pay off due to a rising market alone, regardless of an executive's performance.
Also, our highest paid executives participated in a long-term cash incentive plan, which did nothing to link executive job
performance with long-term shareholder value. Moreover, the cash plan incorporated the same annual goals used to determine
annual awards, which meant that executives were being paid twice for the same goal.
Six of our directors had 11 to 26 years long-tenure including our Lead Director, Arthur Blank. These long-tenured directors also
controlled 67% of our executive pay committee (no surprise) and 67% of our nomination committee. Director independence erodes
after 10-years. GMI said long-tenure could hinder director ability to provide effective oversight. A more independent perspective
would be a priceless asset for our board of directors. Basil Anderson and Rowland Moriarty topped off their undesirable long-
tenure with their work on the boards of a total of 4 large companies each – overextension concern. Long-tenured Paul Walsh was
our leader in obtaining negative votes.
Please vote to protect shareholder value:
Independent Board Chairman - Proposal 5
BOARD'S STATEMENT IN OPPOSITION
The Board unanimously recommends that you vote AGAINST this proposal for the following reasons:
 An arbitrary policy that mandates an Independent Chairman is not in the best interest of the Company.
 Our independent Board and Lead Director provide proper and effective oversight of management.
 A combined CEO/Chairman does not hinder our Board's ability to monitor CEO performance.
An arbitrary policy that mandates an Independent Chairman is not in the best interest of the Company. Stockholders
are best served if the Board retains flexibility to decide what leadership structure works best for the Board and the Company based
on the facts and circumstances existing from time to time. Under our by-laws and our Corporate Governance Guidelines (the
“Guidelines”), every year the Board carefully considers, based on a number of factors, how it should structure its Board leadership.
Currently, the Board believes our Chief Executive Officer (“CEO”) should serve as Chairman of the Board because he is the
director most familiar with the Company's day-to-day operations. The combined role of Chairman and CEO allows for a single,