Staples 2015 Annual Report Download - page 46

EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
42 STAPLES Notice of Annual Meeting of Stockholders
cover taxes triggered by a change in control, including taxes
payable under Sections 280G and 4999 of the U.S. Internal
Revenue Code.
In January 2015, Mr. Sargent voluntarily gave up the
Company’s long standing contractual obligation to reimburse
him for any excise tax due under Sections 280G and 4999 of
the U.S. Internal Revenue Code incurred in connection with
a termination without cause or resignation for good reason
following a change in control of Staples, which had been
entered into in 2006. Mr. Sargent was the only executive with
this benefit.
III COMPENSATION PROCESS
Pay Philosophy
It is the company’s philosophy that:
• Pay should be performance-based, so that excellent
results yield relatively high pay and poor results yield
relatively low pay
• Salaries and incentives should be referenced to median
peer group practices, but when making decisions about
compensation levels, the Committee relies upon its
judgment and not on rigid guidelines or formulas
The Committee’s Process
The Committee has established a number of processes to help ensure that our executive compensation program meets its
objectives and is consistent with the pay philosophy described above. These processes also helped to inform the design of the
2015 Compensation Program described above.
Independent Compensation Consultant
Our Committee charter authorizes the Committee to engage
independent legal and other advisors and consultants as it
deems necessary or appropriate to carry out its responsibilities
and prohibits the Committee’s compensation consultants from
serving as Staples’ regular advisors and consultants. In our
2015 fiscal year, the Committee continued to use Exequity
LLP as an independent advisor to advise on and assist the
Committee with executive compensation matters. Under the
terms of its written agreement, Exequity is responsible for,
among other matters:
• Reviewing total compensation strategy and pay levels for
executives
• Performing competitive analyses of outside board
member and CEO compensation
• Examining all aspects of executive compensation
programs to assess whether they support the business
strategy
• Preparing for and attending selected Committee and
Board meetings
• Supporting the Committee in staying current on the
latest legal, regulatory and other industry considerations
affecting executive compensation and benefit programs
• Providing general advice to the Committee with respect
to all compensation decisions pertaining to the CEO
and all compensation recommendations submitted by
management
During our 2015 fiscal year, the independent consultant
advised, and frequently made recommendations to, the
Committee on compensation matters for all officers and
directors; advised on, performed competitive analyses
and made recommendations on all matters pertaining to
compensation of our CEO; and met with the Committee in
executive session without the presence of management.
Consistent with the terms of the written agreement and the
Committee charter, Exequity has, with the knowledge and
consent of the Committee, provided input to management on
matters to be presented by management to the Committee.
Exequity has not performed services for Staples that were
unrelated to Committee matters. During 2015, with the
Committee’s approval, Exequity assisted management
by performing Section 280G calculations and providing
compensation data related to executive and non-executive
positions. Most of the data reviewed by the Committee is
generated by management and reviewed and advised upon
by the compensation consultant. The principal consultant
from Exequity attended each of the four Committee meetings
during our 2015 fiscal year. Exequity was paid $147,022 for
all services rendered during 2015. In September 2015, the
Committee performed a conflict of interest assessment with
respect to Exequity and no conflict of interest was identified.