Staples 2015 Annual Report Download - page 41

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
www.staplesannualmeeting.com STAPLES 37
II 2015 COMPENSATION PROGRAM
Overview
The Committee’s compensation decisions in 2015 were
intended to drive the highest level of executive team engagement
to lead the organization through its strategic reinvention,
and to attract and retain world-class executive talent while
we continued to pursue the Office Depot acquisition. In the
course of its review, the Committee considered the complexity
of the business, input on current market practices from the
Committee’s independent compensation consultant and
management, the highly competitive environment for talent
and prior years’ Say-on-Pay votes.
• Staples’ compensation philosophy is to target market
median for base salary, annual cash incentive and long-
term incentive opportunities.
• Both annual and long-term incentives for our NEOs for
2015 were 100% performance based, with base salary as
the only fixed element of total pay.
• For our CEO, 89% of total target pay was performance
based.
Pay Elements
The table below summarizes the core elements of our 2015 compensation program for our NEOs.
Base Salary + Annual Cash Incentive Awards + Performance Shares
Principal Contributions to
Compensation Objectives Attracts, retains and rewards talented executives with
annual salary that reflects
the executive’s performance,
skill set and value in the
marketplace
• Focuses executives on
annual financial and
operating results
• Links compensation to
strategic plan
• Enables total cash
compensation to remain
competitive within the
marketplace for executive
talent
• Rewards achievement
of long-term business
objectives and stockholder
value creation
• Propels engagement in
long-term strategic vision,
with upside for superior
performance
• Retains successful and
tenured management team
Performance Metrics • EPS, Gross Margin Dollars
and Beyond Office Supplies
Sales Growth
• RONA %, Sales Growth %
Base Salary
Base salaries are reviewed and established annually, upon
promotion, or following a change in job responsibilities, based
on market data, internal pay equity and each executive’s level
of responsibility, experience, expertise and performance.
The Committee did not consider a salary increase for
Mr. Sargent in 2015, because Mr. Sargent confirmed that he
would decline any salary increase, as he had done in 2014.
Mr. Sargent’s salary has not increased since 2013.
In March 2015, the Committee approved:
• A 2.5% increase for the Vice Chairman (Mr. Doody) and
President NAS&O (Mr. Parneros), respectively.
• A 5% salary increase for the President Staples Europe
(Mr. Wilson). Base salary relative to peer group remained
at the 25th percentile.
• A 7.7% salary increase for the Chief Financial Officer
(Ms. Komola). Following this increase, Ms. Komola’s
salary and total target cash compensation remained
below the 10th percentile of the peer group.
In November 2015:
• Management recommended and the Committee
approved to further increase Ms. Komola’s salary by
15.4%, effective in two equal tranches in December
2015 and May 2016, to be more appropriately positioned
compared to peer group CFOs.
In March 2016, our senior officers (including the NEOs) elected
not to receive any base salary increase. The Committee
agreed and also decided that Ms. Komola would not receive
the second tranche of the increase previously approved in
November 2015.
Annual Cash Incentive Plan
The NEOs are eligible to earn cash awards under the Amended and Restated Executive Officer Incentive Plan (EOIP) based on
Company performance. Target awards for the annual cash incentive are granted as a percentage of base salary. For 2015, the
percentage was 150% for Mr. Sargent, and 85% for each of the other NEOs.