Staples 2014 Annual Report Download - page 12

8 STAPLES Notice of Annual Meeting of Stockholders
i CORPORATE GOVERNANCE
HIGHLIGHTS
We are committed to leading corporate governance practices
that are in the best interests of our business and all of our
shareholders. For example, we have:
• Developed a successful shareholder outreach program.
• Demonstrated a consistent track record of listening and
responding thoughtfully to feedback.
• Pro-actively adopted many important governance
initiatives, such as majority voting, an enhanced political
contributions policy, a compensation recoupment
policy and our commitments to ethics, community, the
environment and diversity and inclusion.
Shareholder Outreach Program
We have conducted a formal corporate governance
outreach program for many years. We solicit feedback from
our institutional investors regularly, including from asset
managers, public and labor union pension funds and allied
organizations and social responsibility investors. We seek
to hear perspectives on various governance matters, our
executive compensation program, sustainability and other
matters. Consistent with prior practice, during the last year,
we engaged in constructive dialogues with shareholders
representing more than 40% of our shares. This year, two of
our directors participated in the outreach program and heard
directly from some of our shareholders. We share the feedback
we receive with our Nominating and Corporate Governance
Committee and Compensation Committee, as well as with the
entire Board.
Recent Corporate Governance Enhancements
In response to feedback from our shareholders, our Board
made the following corporate governance enhancements over
the last year:
Independent Chair Policy – We adopted a policy to require
that we have an independent Chair of the Board, whenever
possible. The policy is prospective, and begins to apply when
Ronald L. Sargent, our current Chairman and CEO, retires
or no longer serves as Chairman of the Board. The policy
does not apply if the appointment violates any contractual
obligation, if no independent member of the Board is available
or willing to serve as Chair, or if the appointment would
be inconsistent with the Board’s fiduciary obligations. In
accordance with its fiduciary duties, the Board will periodically
make a determination as to the appropriateness of its policies
in connection with the recruitment and succession of the
Chairman and CEO.
Management Supported Proxy Access at 3%/3 years
– We worked closely with our shareholders in developing a
proxy access framework that would be responsive but also
protect the interests of all shareholders. We have committed
to providing a management-supported proxy access bylaw
amendment at the 2016 Annual Meeting of Shareholders. Our
version of proxy access would:
• Permit shareholders (not to exceed a group of 25)
holding at least three percent of our outstanding shares
continuously for three years to nominate up to 20 percent
of the directors serving if the size of the board is 10 or
more directors or 25 percent of the directors if the size of
the board is 9 or fewer directors;
• Include various other provisions consistent with, or
mirroring, the SEC-adopted proxy access rule, including
with regard to disclosure of conflicts of interest or control
intent and the eligibility of loaned shares for purposes of
satisfying the continuous ownership requirement; and
• Limit nominations by an individual shareholder or group
(i) whose formerly-nominated candidate has been serving
on the board for less than two consecutive terms or
(ii) whose candidate failed to garner a minimum of 15% of
the votes within the previous two years.
Executive Compensation – We replaced the total company
sales metric with gross margin dollars for our 2015 annual
cash incentive awards to place greater emphasis on driving
profitability. In addition, our CEO elected to eliminate a tax-
gross up provision in his existing severance agreement
and elected not to accept his 2.5 percent base salary
raise for 2014, which the Board had previously approved.
Going forward we intend to rely solely on three-year, 100%
performance-based awards for our long-term incentives, a
change set previously by the Compensation Committee of
our Board. These performance shares include a 3-year TSR
modifier on long-term performance, linking pay outcomes
more closely to share price performance. For more information
about shareholder outreach with respect to compensation
matters and our response to the 2014 say-on-pay vote, see
the “CD&A” section of this proxy statement.