Staples 2014 Annual Report Download - page 42

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EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
38 STAPLES Notice of Annual Meeting of Stockholders
Component ฀฀ 2014 Benchmark/Metrics
Base Salary Fixed Median of peers
Annual Cash Award 100% Performance-based • 50% Earnings Per Share
• 25% Total Sales (Gross Margin Dollars in 2015)*
• 25% Beyond Office Supplies Sales Growth
Performance Share Award 100% Performance Based • 50% Return on Net Asset (RONA) %
• 50% Sales Growth %
• +/- 25% based on 3-year Relative Total
Shareholder Return (TSR)
Benefits Fixed Broad-based plans and limited executive perquisites
* Gross Margin Dollars is calculated as sales, net of direct product costs (including the impact of vendor rebates or other
promotional monies), reserves for returns and allowances, and charges/credits for obsolescence, shrink, and other
margin additives.
Both our annual cash award and our performance share awards are 100% tied to objective and rigorous financial goals. Our
adherence to 100% performance awards for both our annual and long-term programs causes a substantial percentage of
executive compensation to be variable and at-risk, which enhances the plan design and aligns executive compensation with
long-term shareholder value.
At Risk Compensation
Impact of Legacy Programs on the Summary
Compensation Table
In 2013 we overhauled our compensation program in direct
response to shareholder feedback. The compensation
changes have led to a substantially simplified executive
compensation structure that is highly performance based.
When these changes were implemented in March 2013, the
Committee also 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). This award was
made in recognition of the fact that the three-year cumulative
RONA goal under the outstanding 2012-2014 long term cash
award no longer represented the company’s priorities due to
the strategic reinvention plan. The 2013-2014 long-term cash
award incorporated Sales Growth % and RONA% goals that
were more reflective of the current strategy.
Award Description
2012 - 2014 Long-Term Cash Award Included a cumulative 3-year RONA target that spans the entire 3-year period. There was
no payout earned for this award.
2013 - 2014 Long-Term Cash Award A grant provided in March 2013 reflecting reinvention strategies, which split the incentive
program between RONA% and Sales Growth % targets.
These awards ended in 2014, and we do not intend to grant
new long-term cash awards this year, since they have been
replaced by 3-year performance shares.
Though these are legacy awards, our Summary Compensation
Table will be impacted by this transition. When we switched from
the cash and time-vesting equity mix to 100% performance
vesting equity in 2013, we were required to recognize the
fair value of the 3-year performance share award, at target,
up front at the grant date. Long-term cash awards, however,
are only disclosed in the year they are earned and only to the
extent earned. Likewise, the Summary Compensation Table
includes value for cash earned for 2014 under the legacy
2013-2014 Long-Term Cash Award.