Staples 2013 Annual Report Download - page 33

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Information Regarding Overhang and Dilution
In developing our share request for the 2014 Plan and analyzing the impact of utilizing equity on our stockholders, we
considered both our “burn rate” and our “overhang”, which we consider to be important metrics of how our equity compensation
program affects our stockholders.
Burn rate provides a measure of the potential dilutive impact of our annual equity award program. Our burn rate for fiscal
2013 was was 0.8% and has been steadily declining for the last three years. Following the ISS methodology, our three average
three year burn rate has been 2.8%, well below the ISS Retailing burn rate cap of 4.16%.
Overhang is a measure of potential dilution and is defined as the sum of (i) the total number of shares of Common Stock
underlying all equity awards outstanding and (ii) the total number of shares of Common Stock available for future award grants,
divided by: the sum of (a) the total number of shares of Common Stock underlying all equity awards outstanding, (b) the total
number of shares of Common Stock available for future award grants and (c) the basic weighted average shares of Common Stock
outstanding for the most recently completed fiscal year. Our overhang at February 1, 2014 was 7.8%. If the 15,000,000 shares
proposed to be authorized for grant under the 2014 Plan are included in the calculation, our overhang would be 9.7%.
We believe that our future success depends, in large part, upon our ability to maintain a competitive position in attracting,
retaining and motivating persons who are expected to make important contributions to the Company and by providing such persons
with equity ownership opportunities and performance-based incentives that are intended to align their interests with those of the
Company’s shareholders.
Description of the 2014 Plan
The 2014 Plan contains the following material terms that are designed to provide the Company with sufficient shares of
Common Stock to properly incent and retain its employees, advisors and directors, but also to align the plan with best practices.
In particular, and as described more fully below, the 2014 Plan:
• Provides for 15,000,000 shares of our Common stock authorized for issuance under the plan, plus shares rolled-
over from 2004 Plan;
• Allows shares used to satisfy statutory minimum tax withholding obligations on awards other than stock options
and stock appreciation rights (SARs) to be returned to the 2014 Plan for the grant of future awards;
• Provides that shares that we repurchase on the open market using proceeds from the exercise of awards will not
increase the number of shares available for issuance under the 2014 Plan;
• Requires that discretionary awards to our non-employee directors be granted and administered by a Committee
of the Board of Directors, all of the members of which are independent as defined under the NASDAQ Rules;
• Limits the number of shares of Common Stock with respect to which awards may be granted to each non-
employee director to 150,000 per fiscal year and to all non-employee directors to no more than 2,000,000 in the
aggregate over the life of the 2014 Plan;
• Broadly prohibits the repricing of options and SARs without stockholder approval;
• Requires that no dividends or dividend equivalents will be paid with respect to restricted stock, restricted stock
units, other stock-based awards and performance awards (referred to as “full-value awards”) unless and until
the underlying award vests; and
• For purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, (i) provides
that no more than 3,450,000 shares of Common Stock may be made subject to awards granted per participant
under the 2014 Plan per fiscal year; and (ii) establishes performance criteria upon which performance goals may
be based with respect to performance awards granted under the 2014 Plan.
The following is a brief description of the 2014 Plan. A copy of the 2014 Plan is attached as Appendix A to this proxy
statement.
Types of Awards
The 2014 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Code and
non-statutory stock options (together, “Options”), stock appreciation rights (“SARs”), restricted stock (“Restricted Stock”),
restricted stock units (“Restricted Stock Units”) and other stock-based awards (“Other Stock-Based Awards”), as described below
(collectively, “Awards”).