Staples 2015 Annual Report Download - page 43

Download and view the complete annual report

Please find page 43 of the 2015 Staples annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 163

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
www.staplesannualmeeting.com STAPLES 39
Long Term Incentive Plan Awards
Performance Share Awards
Long-term incentive awards for our NEOs for 2015 were
granted solely as performance shares authorized under our
2014 Stock Incentive Plan. These long-term awards were
subject to a three-year performance period, with goals set
annually for each year of the performance periods. Setting
cumulative goals has been difficult as a practical matter, due to
our reinvention program to respond to rapid market evolution
and the changing needs of our customers, and more recently
the proposed Office Depot acquisition. The long-term business
and financial impact of these changes has been difficult to
predict. As a result, the Board through 2015 maintained its
practice of setting annual performance goals within our three-
year performance awards.
In addition, any award that is earned based on performance will
be increased or decreased by 25% based on the company’s
three-year total shareholder return relative to the returns
generated by the S&P 500 companies. As of January 31, 2016,
our total shareholder return over the 2013-2015 performance
period was at the 15th percentile of the S&P 500. Therefore,
any awards earned for the 2013-2015 long-term awards were
subject to a 25% reduction.
The Committee selected Return on Net Assets (RONA) %
and Sales Growth %, each weighted at 50%, as the 2015
performance metrics because these metrics are linked to
the execution of our reinvention strategy, described in the
“Executive Summary – Business Overview” section of this
CD&A, and are indicators of stockholder value enhancement.
The Committee, working with its independent compensation
consultant, set threshold performance levels required for
payout, and maximum targets that if fully achieved would
result in payouts at 200% of target. The method of calculation
and the fiscal 2015 target goals were as follows:
2015 Performance Share Plan - Goals & Metrics
RONA % Sales Growth %
Threshold 8.08% -6.20%
Target 9.16% 1.2%
Maximum 10.25% 7.00%
Actual Result 9.03% -2.22%
RONA % - RONA is calculated as net operating profit after
taxes (operating profit, add rent expense) as a percentage of
net assets (total assets, add interest bearing debt, add net
capitalized rent, add implied goodwill). The target goal of
9.16% was set in line with the Company’s financial budget,
and reflected an increase from the 2014 target goal of 8.90%.
Sales Growth % - Sales Growth is based on the sales figures
reported in our financial statements of 2015 as compared to
2014. The target goal was 1.2%. In 2014, the target goal for
Sales Growth % was 2.3%. The 2015 target goal for Sales
Growth % excluded the negative impact from the stronger U.S.
dollar on sales the company generates outside of the United
States, but it did not exclude the more pronounced negative
year-over-year impact in 2015 related to the company’s store
closure program in North America. This headwind was a
key driver of the modest reduction in targeted Sales Growth
% in 2015 versus 2014. The threshold for the sales growth
metric was negative as a result of declining industry trends in
categories like office supplies, ink, toner, paper and business
technology, as well as the negative impact to sales from the
company’s ongoing store closure program.
The tables below set forth for each NEO the target award for the three-year performance period 2013-2015, actual shares earned,
and the level of goal achievement for fiscal years 2013-2015.
Target
Value $ Target
Shares1Shares
Awarded Actual
Value $2Realized Value
as % of Target
Ronald L. Sargent $8,225,000 624,526 336,372 $3,262,808 39.7%
Christine T. Komola $1,549,800 117,677 63,382 $614,805 39.7%
Joseph G. Doody $2,169,100 164,701 88,710 $860,487 39.7%
Demos Parneros $2,169,100 164,701 88,710 $860,487 39.7%
John Wilson $1,518,475 115,299 62,101 $602,380 39.7%
1 Target shares calculated on share price of $13.17 on April 1, 2013 grant date, rounded up to the nearest full share
2 Value based on closing price of $9.70 of Staples stock on date of release (March 2, 2016)