Staples 2014 Annual Report Download - page 52

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
48 STAPLES Notice of Annual Meeting of Stockholders
In December 2014, the Committee reflected on the company’s
performance in relation to Mr. Sargent’s earned compensation.
The Committee examined Staple’s total shareholder return,
earnings per share growth, return on invested capital and
revenue growth, and compared them to the results generated
by our peer companies. When the Committee performed
its review in December 2014, complete fiscal year pay and
performance data for the peer group was available only
through 2013, so the Committee limited its analysis to the
years 2011-2013.
Percentile vs. Peer Group – Three Year
CEO Position Base Salary Target Cash
Total Target
Compensation
Ronald L. Sargent Chairman & CEO 34th 35th 45th
Realized Total Compensation — In considering the
appropriateness of our CEO’s pay, the Committee examined
realized total direct compensation, or “TDC,” over the performance
period and not the total compensation reported in our Summary
Compensation Table. Realized TDC includes base salary, annual
bonus earned, cash long-term incentives earned, gain realized on
the exercise of Stock Options, and the value of Stock Awards that
vested during the applicable measurement period. Our executive
compensation program is designed to promote long-term
sustained performance, and the Committee believes that realized
TDC is a better reflection of the appropriateness of individual
earnings than is the total reported in the Summary Compensation
Table because realized TDC incorporates changes in equity
award value (reflecting increases and decreases in share price)
over the performance cycle, and, therefore, takes into account
value commensurate with investor returns.
Realized total compensation over the 2011-2013 period was
well below the peer group median. In fact, for each element of
compensation, realized pay was the lowest among the peer
group companies and aligned with our performance over the
three year period.
Target Compensation — The Committee observed that our
CEO’s average target compensation was below the median
(45th percentile) of the peer group as indicated in the chart
above. Over the 2011-2013 period, target cash compensation
was reflective of overall performance with total shareholder
return, earnings per share and revenues in approximately the
lower quartile and return on invested capital in the top quartile
over the three year period.
• Mr. Sargent’s average target compensation over the most
recent 3-year period rested within a competitive range
(+/-15%) of the peer group medians
Other NEO Compensation
The Committee also examined the relationship between
pay and performance insofar as it related to the NEOs other
than the CEO. In the absence of realized TDC information
across the peer community, the Committee considered
the relationship between performance generated and each
incumbent’s target compensation. The tables below display
how our CFO and business unit Presidents’ base salary, target
cash compensation, and total target compensation compared
to total shareholder return, EPS growth, revenue growth, and
return on invested capital in 2013.
Percentile vs. Peer Group – One Year
NEO Position Base Salary Target Cash
Total Target
Compensation
Christine T. Komola 1CFO and EVP 5th 9th 4th
Joseph G. Doody President NAC 25th 27th 33rd
Demos Parneros President NAS&O 25th 27th 33rd
John Wilson President Europe 25th 27th 33rd
1 Based on compensation changes in 2014, Ms. Komola’s total compensation now approximates 40th percentile of the peer group.
Performance Metric Percentile vs. Peer Group
Total Shareholder Return 7th
Revenue Growth 15th
EPS Growth 24th
Return on Invested Capital 52nd
Analysis & Conclusions
The Committee reviewed the compensation levels of our NEOs
in December 2014 and determined that overall compensation
was appropriate in view of the Company’s relative and absolute
performance and the significant changes we had made to our
compensation program in the prior year. The Committee’s
determination reflected its assessment of the three-year
realized TDC for the CEO and 2013 compensation for the
other NEOs all of which were significantly below median.
The Committee concluded that, on balance, our three-year
performance and corresponding compensation for the period
were aligned and were below the median of the peer group
for the CEO. The one year target total compensation for all
the other NEOs was well below the median of the peer group.
Accordingly, the Committee decided that no further action was
required at this time.