Staples 2013 Annual Report Download - page 42

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As a consequence of its review, the Committee made the following changes to our 2013 executive compensation
program:
Objective Action
Support our growth strategy
• Annual cash bonus plan performance metrics:
50% earnings per share (EPS)
50% sales
- 25% total company sales
- 25% sales beyond office supplies growth
• For purposes of calculating beyond office supplies, “office supplies” is defined as paper, ink,
toner and core office products (writing, folders, paperclips, etc.).
Emphasize long term
stockholder value creation
• Long term awards are 100% in the form of performance shares
• Performance share metrics:
50% return on net asset percentage (RONA%)
50% sales growth
• Three year performance period, with goals set annually for each year
• Award earned may be increased or decreased by 25% based on the company's cumulative
total shareholder return (TSR) over three year performance period relative to the S&P 500
Enhance pay for performance
alignment • Eliminated annual grants of time-based restricted stock awards and stock options
Simplify the program • Long term incentive program now comprised solely of performance shares (rather than a mix
of long term cash incentive, stock options and time-based restricted stock)
Compensation for executives in 2013 reflects these changes to the program. In addition, the Committee granted a one-
time 2013-2014 performance-based long term cash award to certain officers of the company, including the NEOs other than
Mr. Wilson, in recognition that the three year cumulative RONA goal under the outstanding 2012-2014 long term cash award
was highly unlikely to be achieved as the original award no longer represented the company’s priorities due to the strategic
reinvention plan. The 2013-2014 long term cash award incorporates performance goals that are more reflective of our current
strategy. Also, in March 2014, the Committee approved a 2013 Reinvention Cash Award for all bonus-eligible associates,
including the NEOs, in an amount equal to 16% of each associate’s 2013 target annual cash bonus award. The award was
approved in recognition of additional responsibilities and workloads, as well as progress against our strategic plan in 2013.
The Committee also recognized the need to address retention of key talent and to continue to motivate associates in light of the
fact that we did not pay any bonus under the Executive Officer Incentive Plan or Key Management Bonus Plan in 2013 and
2012.
As a result of the changes to the compensation program in 2013, an average of 84% of total target compensation
(excluding the Reinvention Cash Award) for the NEOs was “at risk” based on performance results, and 100% of long term
incentive compensation was contingent on results.
Stockholder Feedback and Say-on-Pay Results
The company conducted its fifth annual corporate governance outreach program during the fall of 2013 and solicited
input from various shareholders and advisory groups. Shareholders overwhelmingly supported the changes made to our program,
which incorporated much of the feedback we had previously received. Shareholders endorsed our say-on-pay advisory proposal
at last year’s annual meeting with a 98% approval vote.
Review of 2013 Pay for Performance
2013 CEO Compensation and Long Term Performance
Total CEO compensation for 2013 as reported in our Summary Compensation Table was $10,767,880, including the
grant date fair value of the performance shares (76% of total 2013 compensation), which are earned over the fiscal 2013-2015
period and paid only if the performance goals are achieved at the end of the period. In addition, total CEO compensation