Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than
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Preliminary Proxy
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Confidential, for Use of the
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Definitive Proxy
Statement |
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Definitive Additional
Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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Staples, Inc. |
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(Name of Registrant as
Specified In Its Charter) |
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(Name
of Person(s) Filing Proxy Statement, if other than the
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Table of Contents
❯ |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
Framingham, Massachusetts
April 13, 2015
Dear Shareholders,
The Annual Meeting of Shareholders of
Staples, Inc. will be held at the Umstead Hotel, 100 Woodland Pond Drive, Cary,
North Carolina, on June 1, 2015 at 4:00 p.m., local time, to consider and act
upon the following matters:
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(1) |
To elect eleven members of the
Board of Directors to hold office until the 2016 Annual Meeting of
Shareholders or until their respective successors have been elected or
appointed. |
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(2) |
To approve an amendment to the
2012 Employee Stock Purchase Plan increasing the number of shares of
common stock authorized for issuance under the plan from 15,000,000 to
27,000,000 shares. |
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(3) |
To approve, on an advisory basis,
named executive officer compensation. |
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(4) |
To ratify the selection by the
Audit Committee of Ernst & Young LLP as Staples independent
registered public accounting firm for the current fiscal
year. |
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(5) |
To act on two shareholder
proposals, if properly presented. |
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(6) |
To transact such other business
as may properly come before the meeting or any adjournment or postponement
thereof. |
Shareholders of record at the close of
business on April 6, 2015 will be entitled to notice of and to vote at the
meeting or any adjournment or postponement thereof.
By order of the Board of
Directors
Michael T. Williams
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS
For the Annual Meeting of
Shareholders on June 1, 2015
This proxy statement and our 2014
Annual Report are available for viewing, printing and downloading
at
www.proxyvote.com.
You may request a copy of the
materials relating to our annual meeting, including the proxy statement, form
of
proxy card for our 2015 Annual Meeting and the 2014 Annual Report,
at www.proxyvote.com, or by
sending
an email to our Investor Relations department at
investor@staples.com or by
calling (800) 468-7751.
www.staplesannualmeeting.com
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1 |
Table of Contents
YOUR VOTE IS VERY
IMPORTANT
All shareholders are cordially invited
to attend the 2015 Annual Meeting in person.
A government-issued
photo identification such as a drivers license, state-issued ID card or
passport, will be required to attend in person. Please note that if you are a beneficial owner, you
will also need to bring a copy of a brokerage statement reflecting your stock
ownership in Staples as of the record date to be allowed into the meeting.
Voting Matters
Item |
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Board Recommendation |
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Further Information (page) |
(1) |
To elect eleven
members of the Board of Directors to hold office until the 2016 Annual
Meeting of Shareholders or until their respective successors have been
elected or appointed. |
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FOR each director nominee |
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19 |
(2) |
To approve an amendment to the 2012 Employee
Stock Purchase Plan increasing the number of shares of common stock
authorized for issuance under the plan from 15,000,000 to 27,000,000
shares. |
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FOR |
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29 |
(3) |
To approve, on an advisory basis, named
executive officer compensation. |
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FOR |
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65 |
(4) |
To ratify the selection by the Audit Committee
of Ernst & Young LLP as Staples independent registered public
accounting firm for the current fiscal year. |
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FOR |
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66 |
(5) |
Shareholder proposal regarding Senior Executive Severance Agreements. |
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AGAINST |
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68 |
(6) |
Shareholder proposal regarding Independent Board Chairman. |
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AGAINST |
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70 |
Meeting Information
Date
June 1, 2015 |
Time
4:00 p.m., local time |
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Location
Umstead Hotel 100
Woodland Pond Drive, Cary, North Carolina |
Admission
See page 2 for
details |
How To Vote
Advance Voting
Methods |
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Internet |
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www.proxyvote.com |
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Toll-free
Telephone |
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Mail |
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1-800-690-6903 |
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Follow instructions on your
voting form |
Our Annual Meeting Website
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Staples 2015 Annual Meeting materials
are available in one place at www.staplesannualmeeting.com. There,
you can download electronic copies of our 2014 Annual Report and Proxy
Statement, and use the link to
vote.
Scan this QR code with your mobile device to access our 2015 Annual Meeting website.
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2 |
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Notice of Annual Meeting of
Stockholders |
Table of Contents
❯ |
PROXY STATEMENT
SUMMARY |
This summary highlights certain
information that is covered elsewhere in this Proxy Statement. You are
encouraged to read our complete Proxy Statement before voting.
DIRECTOR NOMINEE HIGHLIGHTS
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Staples
Committee Assignments |
Name, Primary
Occupation |
Age |
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Independent |
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Director since |
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Other Public Company
Boards |
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A |
N& CG |
C |
F |
E |
Basil
Anderson CEO, Anderson Investments |
70 |
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YES |
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1997 |
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3 |
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Drew
Faust President, Harvard
University |
67 |
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YES |
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2012 |
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Paul-Henri
Ferrand Vice President, Google,
Inc. |
51 |
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YES |
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2015 nominee |
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Kunal S. Kamlani Former President and COO, Prestige Cruise Holdings |
42 |
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YES |
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2015 nominee |
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1 |
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Carol
Meyrowitz CEO, The TJX Companies,
Inc. |
61 |
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YES |
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2007 |
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1 |
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Rowland T.
Moriarty Chairman of the Board, CRA
International, Inc. |
68 |
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YES |
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1986 |
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3 |
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Ronald L.
Sargent Chairman and CEO, Staples,
Inc. |
59 |
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NO |
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1999 |
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2 |
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Robert
Sulentic President and CEO, CBRE,
Inc. |
58 |
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YES |
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2007 |
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1 |
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Raul
Vazquez Director and CEO, Oportun |
43 |
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YES |
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2013 |
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Vijay
Vishwanath Partner, Bain &
Company |
55 |
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YES |
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2007 |
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Paul F.
Walsh Operating Partner, Calera
Capital |
65 |
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YES |
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1990 |
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A:
Audit |
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N&CG: Nominating
& Corporate Governance |
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C: Compensation |
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F: Finance |
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E: Executive |
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: Member |
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: Chair |
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Developing an Effective
Board |
The Staples Board of Directors (the Board) has strong governance practices and is dedicated to continuous improvement. We seek to achieve an effective balance of relevant skills, experience, qualifications and personal qualities in Board composition. Our priority is to bring areas of expertise together in the Staples boardroom for the benefit of Staples and the creation of sustainable long-term shareholder value. We seek to ensure that the Board and its committees are high-functioning, including through regular and rigorous Board and committee evaluations.
Relevant Skills
Our
Board nominees bring together extensive experience in e-commerce/marketing international
operations, M&A / integrations, retail, strategy and other areas. See page
19 for an overview of the Boards experience as a whole, and individual
director biographies beginning on page 20, to learn more about our
nominees respective skills and qualifications. |
Director Tenure
Balance
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Experience
Our Board nominees have broad leadership
experience serving in senior roles in corporations, academia and on public
and private boards. |
Personal
Qualities
Our Board nominees
exhibit high integrity, self-awareness, respect, independence of mind, and
have the capacity to function effectively in challenging
situations. |
Board Independence
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Diversity
Our Board nominees bring diversity in its broadest sense
not merely diversity of background and culture, but also diversity of
age, gender, ethnicity and outlook to offer and understand multiple
perspectives. |
www.staplesannualmeeting.com
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3 |
Table of Contents
PROXY STATEMENT SUMMARY
BOARD AND CORPORATE GOVERNANCE
DEVELOPMENTS
The Staples Board is committed to highly effective corporate governance that is responsive to shareholders, and on seeing to it that the Company delivers on its strategy.
For many years, Staples has operated a
formal shareholder outreach program to listen to investor perspectives on
corporate governance, our executive compensation program, sustainability and
other matters. Annually, we solicit feedback from institutional investors
including asset managers, public and labor union pension funds, and social responsibility
investors.
Selected Investor Feedback
We appreciate Staples commitment
to engaging with CalPERS, their responsiveness to investor priorities. Staples
is joining a growing list of companies committed to excellence in corporate
governance. We applaud their leadership.
Anne Simpson, Senior Portfolio Manager and Director of
Global Governance at CalPERS
Staples has taken an important step
for shareowner rights and I applaud the company for being responsive to
investors.
Comptroller Scott M. Stringer, Investment
Advisor, Custodian and a Trustee of The NYC Funds
Timeline of Selected Corporate
Governance Events
2015 |
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March > |
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Management Supported Proxy Access
at 3%/3 years we worked closely with our shareholders to develop a proxy
access framework that would be responsive but also protect the interests
of all shareholders. We have committed to providing a management-supported
proxy access bylaw amendment at the 2016 Annual Meeting of
Shareholders.
Executive Compensation we
replaced the total company sales metric with gross margin dollars for our
2015 annual cash incentive awards to place greater emphasis on driving
profitability. |
January > |
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Independent Chair Policy we
adopted a policy to require that we have an independent Chair of the
Board, whenever possible. The policy is prospective, and applies
when Ronald L. Sargent, our current Chairman and CEO, retires or no longer
serves as Chairman of the Board. |
2014 >
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We engaged in constructive
dialogues over the course of the year with shareholders representing more than 40% of our shares, with
direct involvement from two of our directors.
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2013 > |
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Restructured our executive
compensation program in response to shareholder feedback on compensation
and to strengthen alignment with reinvention strategy. |
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✓ |
Eliminated time-based restricted stock and options |
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✓ |
Changed long-term program to be
delivered entirely in the form of performance shares, with achievement
based on 50% return on net asset percentage and 50% on sales growth. The
program also included a three-year relative Total Shareholder Return (TSR) modifier |
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✓ |
Changed annual performance
metrics |
2012
> |
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Shareholder right to act by
written consent implemented
Refined compensation program, including changes in benchmarking and reduced dilution from stock plans,
in direct response to shareholder feedback
Enhanced transparency on
political contributions and government activities |
2009
> |
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Shareholder right to call special
meetings implemented |
2008 >
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Adopted a majority vote standard for the election of directors with a plurality carve-out for contested
elections
Eliminated supermajority vote
requirement for mergers and other matters from company charter |
2007
> |
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Declassified board to establish
annual elections going forward |
1998
> |
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Lead Independent Director
Staples is one of the early adopters of the
role |
Further corporate governance features
are highlighted on page 8 of this proxy statement.
4 |
|
Notice of Annual Meeting of
Stockholders |
Table of Contents
PROXY STATEMENT SUMMARY
CORPORATE RESPONSIBILITY
HIGHLIGHTS
Staples is committed to making a positive impact on society, associates and the
planet. Were dedicated to bringing awareness to and effecting meaningful change in the areas of Community & Giving,
Environment, Ethics and Diversity & Inclusion. For more information, see the Corporate Responsibility section of
www.staples.com.
Environment |
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Community &
Giving |
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● Aligning our efforts with global
sustainability strategy and 2020 performance goals to benefit the
environment, our customers and our business
● Offering customers more than 12,000
eco-responsible products, and providing diverse recycling and other
environmental services
● Improving operational environmental
footprint by maximizing energy efficiency and renewable energy use, and
eliminating waste |
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● Enabling associates globally to direct
funds to organizations they care about through the 2 Million & Change
grant program
● Providing educational support in times of
disaster through Staples Emergency Education Fund with Save the
Children
● Supporting associate participation in
community volunteer activities
● Inspiring customers to donate through
cause marketing and disaster relief campaigns |
Ethics |
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Diversity &
Inclusion |
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● Supporting our culture of high integrity
by continually promoting our Code of Ethics and Ethics
Program
● Encouraging associates to speak up and
raise questions and concerns through our global ethics helpline and other
available options |
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● Focusing on building a diverse,
high-performing workforce that reflects all segments of our
society
● Emphasizing a culture that empowers
associates and encourages collaboration, flexibility and
fairness
● Leveraging Associate Resource Groups to
promote our Employer of Choice strategy, create awareness and increase
business value |
EXECUTIVE
COMPENSATION
Staples is engaged in a strategic
reinvention designed to position the company to generate long-term sales and
earnings growth. The Compensation Committee of the Board sets rigorous financial
metrics tied directly to the success of our strategy and the creation of
long-term shareholder value.
For more information about the
reinvention strategy and 2014 highlights, see Performance Overview in the
CD&A section of this proxy statement.
With changes to our executive
compensation program over the last several years, both our long-term and
short-term incentive plans now are fully performance based. Going forward, we
intend to rely solely on three-year, 100% performance based awards for our
long-term equity program. Staples is among only 11% of S&P 500 companies
that grant 100% of long-term equity awards in the form of performance shares,
according to Equilar.
Our highly performance-based, long-term and equity-focused compensation program is illustrated below with respect to our CEO's target opportunity.
Our Board values the opportunity to
engage directly with our shareholders. In 2015, we completed an intensive
shareholder engagement and solicited feedback on our executive compensation
program. See Shareholder Feedback, Board Response and 2015 Changes in the
CD&A section of this proxy statement for more information.
www.staplesannualmeeting.com
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5 |
Table of Contents
❯ TABLE OF CONTENTS
6 |
|
Notice of Annual Meeting of
Stockholders |
Table of Contents
STAPLES, INC.
500 Staples
Drive
Framingham, Massachusetts
01702
PROXY STATEMENT
For
the Annual Meeting of Shareholders on June 1, 2015
This proxy statement is furnished in
connection with the solicitation of proxies by the Board of Directors (Board)
of Staples, Inc. (we, us, Staples or the Company) for use at the Annual
Meeting of Shareholders (2015 Annual Meeting or the Annual Meeting) to be
held on June 1, 2015 beginning at 4:00 p.m., local time, at the Umstead Hotel,
100 Woodland Pond Drive, Cary, North Carolina and at any adjournment or
postponement of that meeting. On or about April 20, 2015, we are mailing these proxy
materials together with an annual report, consisting of our Annual Report on
Form 10-K for the fiscal year ended January 31, 2015 (the 2014 fiscal year)
and other information required by the rules of the Securities and Exchange
Commission (the 2014 Annual Report).
www.staplesannualmeeting.com
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Table of Contents
HIGHLIGHTS
We are committed to leading corporate
governance practices that are in the best interests of our business and all of
our shareholders. For example, we have:
● |
Developed a successful shareholder outreach
program. |
● |
Demonstrated a consistent track record of listening and
responding thoughtfully to feedback. |
● |
Pro-actively adopted many important governance initiatives,
such as majority voting, an enhanced political contributions policy, a
compensation recoupment policy and our commitments to ethics, community, the
environment and diversity and inclusion. |
Shareholder Outreach Program |
We have conducted
a formal corporate governance outreach program for many years. We solicit
feedback from our institutional investors regularly, including from asset
managers, public and labor union pension funds and allied organizations and
social responsibility investors. We seek to hear perspectives on various
governance matters, our executive compensation program, sustainability and other
matters. Consistent with prior practice, during
the last year, we engaged in constructive dialogues with shareholders
representing more than 40% of our shares. This year, two of our directors
participated in the outreach program and heard directly from some of our shareholders.
We share the feedback we receive with our Nominating and Corporate Governance
Committee and Compensation Committee, as well as with the entire Board.
Recent Corporate Governance
Enhancements
In response to feedback from our
shareholders, our Board made the following corporate governance enhancements
over the last year:
Independent Chair
Policy We adopted a policy to require that
we have an independent Chair of the Board, whenever possible. The policy is
prospective, and begins to apply when Ronald L. Sargent, our current Chairman
and CEO, retires or no longer serves as Chairman of the Board. The policy does
not apply if the appointment violates any contractual obligation, if no
independent member of the Board is available or willing to serve as Chair, or if
the appointment would be inconsistent with the Boards fiduciary obligations. In
accordance with its fiduciary duties, the Board will periodically make a
determination as to the appropriateness of its policies in connection with the
recruitment and succession of the Chairman and CEO.
Management Supported Proxy Access at
3%/3 years
We worked closely with our shareholders in developing a proxy access framework
that would be responsive but also protect the interests of all shareholders. We
have committed to providing a management-supported proxy access bylaw amendment
at the 2016 Annual Meeting of Shareholders. Our version of proxy access
would:
● |
Permit shareholders (not to exceed a
group of 25) holding at least three percent of our outstanding shares continuously for
three years to nominate up to 20 percent of the directors serving if the
size of the board is 10 or more directors or 25 percent of the directors
if the size of the board is 9 or fewer
directors; |
● |
Include various other provisions
consistent with, or mirroring, the SEC-adopted proxy access rule,
including with regard to disclosure of conflicts of interest or control
intent and the eligibility of loaned shares for purposes of satisfying the
continuous ownership requirement; and |
● |
Limit nominations by an individual
shareholder or group (i) whose formerly-nominated candidate has been
serving on the board for less than two consecutive terms or (ii) whose
candidate failed to garner a minimum of 15% of the votes within the
previous two years. |
Executive Compensation We replaced the total company sales metric with gross
margin dollars for our 2015 annual cash incentive awards to place greater
emphasis on driving profitability. In addition, our CEO elected to eliminate a
tax-gross up provision in his existing severance agreement and elected not to
accept his 2.5 percent base salary raise for 2014, which the Board had previously approved. Going forward we intend to rely solely on three-year,
100% performance-based awards for our long-term incentives, a change set
previously by the Compensation Committee of our Board. These performance shares
include a 3-year TSR modifier on long-term performance, linking pay outcomes
more closely to share price performance. For more information about shareholder
outreach with respect to compensation matters and our response to the 2014
say-on-pay vote, see the CD&A section of this proxy
statement.
8 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
CORPORATE GOVERNANCE
You can learn more about our current corporate governance program and review our
Corporate Governance Guidelines (Guidelines), committee charters, Corporate Political Contributions and
Government Activity Policy Statement, Code of Ethics and other significant policies at
http://investor.staples.com/phoenix.zhtml?c=96244&p=irol-govhighlights. The information at such website and the
other websites mentioned in this proxy statement is not incorporated by reference herein. We also recognize that corporate
governance is not static, and we continue to evaluate our policies and practices to meet ongoing developments in this area.
Some highlights of our corporate governance policies and practices are set
forth below.
Shareholder
Rights |
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● |
Annual election of
directors |
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● |
Majority voting in
uncontested director elections |
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● |
No rights plan without
shareholder approval |
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● |
No supermajority voting
requirements for mergers and other matters |
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● |
Shareholders can call
special meetings (25% ownership threshold) |
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● |
Shareholders can act by
majority written consent |
Board Features
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● |
All independent directors
(other than CEO) |
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● |
Diverse board |
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● |
Strong Independent Lead
Director role |
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● |
Annual CEO evaluation by
independent directors |
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● |
Robust annual succession
planning process |
Other Features |
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● |
Transparent reporting of
political contributions and lobbying and trade association
activities |
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● |
Recognized leader in
sustainability matters |
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● |
Responsible ethical
sourcing program with third party audits |
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● |
Chief Culture
Officer |
DIRECTOR INDEPENDENCE
Our Board of Directors, in consultation
with our Nominating and Corporate Governance Committee, determines which of our
directors are independent. Our Guidelines provide that directors are
independent if they (1) meet the definition of independent director under
the NASDAQ listing standards and (2) in our Boards judgment, do not have a
relationship with Staples that would interfere with the exercise of independent
judgment in carrying out their responsibilities. Our Nominating and Corporate
Governance Committee periodically reviews the independence standards in our
Guidelines and recommends changes as appropriate.
In accordance with our Guidelines, our
Board has determined that all of our directors and nominees are independent except Mr.
Sargent, who is our CEO. In determining independence, our Board considered all
the available relevant facts and circumstances, including the
following:
● |
Neither we nor any subsidiary has
employed or otherwise compensated the independent directors other than for
service on our Board and its committees during the past three
years. |
● |
We have not employed or otherwise
compensated any family members (within the meaning of the NASDAQ listing
standards) of the independent directors during the past three
years. |
● |
None of the independent directors or
their family members is a partner of our independent registered public
accounting firm or was a partner or employee of such firm who worked on
our audit during the past three years. |
● |
None of our executive officers is on
the compensation committee of the board of directors of a company that has
employed any of the independent directors or their family members during
the past three years. |
● |
No family relationships exist
between any of our directors or executive
officers. |
● |
During the past three years, none of
our directors or executive officers has had a material direct or indirect
business relationship with us or engaged in a related party transaction
as described below. |
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
Our written Code of Ethics sets forth the
general principle that our directors, executive officers and other associates
should avoid any situation that could be perceived as a conflict of interest,
regardless of the dollar amount involved. This principle is also reflected in
our written Guidelines and the written materials that we use to educate
associates about conflicts of interest. For example, under the Guidelines, if an
actual or potential conflict of interest develops
for any reason, including, without limitation, because of a change in business
operations of the Company or because of a directors circumstances,
www.staplesannualmeeting.com |
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9 |
Table of Contents
the director
should immediately report the matter to our General Counsel, who should then
report the matter to the Nominating and Corporate Governance Committee for
review and determination. In the event there is a significant conflict, the director should resign or the
conflict must be resolved. Additionally, under the Guidelines, any director who
wishes to join the board of directors of another company must provide written
notice to the chairperson of the Nominating and Corporate Governance Committee.
The chair of the Nominating and Corporate Governance Committee, after
consultation with our General Counsel, will then respond to the director with a
resolution. We also ask each of our executive officers and directors to fill out
questionnaires every year to help enable us to identify if a potential conflict
of interest exists. Our Code of Ethics, Guidelines and the charters for all the
committees of our Board are available at www.staples.com in the Corporate
Governance section of the Investor Information webpage.
The Nominating and Corporate Governance
Committee is responsible for reviewing, approving or ratifying any related party
transactions. We define related party transactions as transactions with a
value of more than $120,000 and in which (i) Staples and any of our directors,
director nominees, executive officers, 5% shareholders and their immediate
family members are participants, and (ii) such participants have a direct or
indirect material interest. In the course of reviewing whether or not the
participants should be deemed to have a direct or indirect material interest,
the Nominating and Corporate Governance Committee reviews the presence of
standard prices, rates, or terms consistent with arms-length dealings with
unrelated third parties; the materiality of the transaction to each party; the
reasons for entering into the transaction; the potential effect of the
transaction on the status of an independent director; and any other factors the
Nominating and Corporate Governance Committee
deems relevant. If a transaction is deemed to be a related party transaction,
the procedures for approval or ratification of such a transaction are the same
as for actual or potential conflicts of interests involving directors and are
set forth in the Guidelines.
For fiscal year 2014:
● |
We had no related-party
transactions. |
● |
There were no transactions that
affected our directors independence. |
● |
There were no violations or
waivers of our Code of Ethics with respect to our directors or executive
officers. |
In an effort to provide greater
transparency to our shareholders, we provide the following additional
information about sales of office supply products or related services, such as
copying, branding of promotional products or technology services, to companies
or organizations affiliated with our directors and our executive officers. All
transactions reported with director-affiliated companies were in the ordinary
course of business, without involvement of the director and on arms length
business terms. Below is a list of companies and institutions with which our
independent directors who are being considered for election were affiliated in
fiscal year 2014 and for which we received greater than $120,000 for providing our
supplies or services.
● Bain & Company
● Becton Dickinson &
Company
● CBRE Group, Inc.
● Cottage Health Systems,
Inc. |
● CRA International,
Inc.
● Harvard University
● Hasbro, Inc.
● Joslin Diabetes
Center |
● Hormel Foods
Corporation
● Progreso Financiero
(Oportun)
● Sears Holdings Corporation
● TJX Companies,
Inc. |
The amounts received by us in fiscal
year 2014 for the sale of office supplies and related services to these
companies range from approximately $150,000 to approximately $18 million and the
median amount received from such sales was approximately $457,000. In each case,
the amount was immaterial to both Staples and the company purchasing the goods
and services. The largest amount of approximately $18 million represents 0.053%
of our revenues based on sales for fiscal year ended January 31, 2015 of
approximately $23.1 billion. The largest amount includes $15 million of
purchases under a global corporate service agreement that benefited and provided
for purchases by third parties.
In addition, in 2014 we also paid approximately $730,000 for employee background
check services from a privately held company for which one of our directors serves as chairman of the board of directors and
approximately $710,000 for fleet services to WEX Inc., a company for which one of our directors also serves as a director.
We also paid approximately $13 million for customized delivery boxes to a privately held company for which one of our
directors serves as a director, approximately $490,000 to Sears Holdings Corporation for rental payments and approximately
$62 million to Google, Inc. for marketing, IT services and products that we purchase for re-sale.
In all instances, whether we provided
the products/services or received the services, no director or executive officer
had a direct or indirect material interest in the transaction. The Nominating
and Corporate Governance Committee determined that none of these transactions
were related party transactions and that such transactions would not interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director.
BOARD
LEADERSHIP STRUCTURE
Our Board of Directors determines its
leadership structure annually based on a recommendation of the Nominating and
Corporate Governance Committee. In January 2015, we adopted a policy to require
that we have an independent Chair of the Board, whenever possible. The policy is
prospective, and begins to apply when Ronald L. Sargent, our current Chairman
and CEO, retires or no longer serves as Chairman of the Board. For this year,
the Board determined that it was appropriate that
Mr. Sargent, our CEO, should remain as Chairman of the Board. Our current
Independent Lead Director Robert Nakasone will be retiring at the end of his
term at the 2015 Annual Meeting. The Board intends for
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Robert E. Sulentic to
serve as Independent Lead Director, upon Mr. Nakasones retirement. The Board
believes that its current leadership structure assures the appropriate level of
management oversight and independence, and that Mr. Sulentics appointment as
Independent Lead Director will counterbalance any potential concern arising from
having our CEO serve as the Boards Chairman.
Our Independent Lead Director has the
following responsibilities:
● |
Authority to call meetings of
Independent Directors. |
● |
Presides at all meetings of the
Board at which the Chair is not present, including executive sessions of
the independent directors. |
● |
Assures that meetings with the
independent directors are held in executive sessions, typically after
every Board meeting, but in all circumstances at least twice a
year. |
● |
Provides leadership to the Board
if circumstances arise in which the role of the Chair may be, or may be
perceived to be, in conflict with the interests of Staples and its
shareholders with regard to a particular matter. |
● |
Facilitates communications and
serves as a liaison between independent directors and the
Chair. |
● |
Works with the Chair in the
preparation of the agenda for each board meeting and pre-approves the
schedules, agendas and information provided to the Board for each
meeting. |
● |
Coordinates the annual performance
review of the CEO. |
● |
Ensures availability for
consultation and direct communication, if requested by a major
shareholder. |
● |
Authority to retain independent
advisors on behalf of the Board. |
● |
Assists the Nominating and
Corporate Governance Committee in identifying any individual performance
or contribution issues. |
● |
Otherwise consults with the Chair
of the Board on matters relating to corporate governance and Board
performance. |
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MEETINGS
AND COMMITTEES OF OUR BOARD
Our Board of Directors held a total of
nine meetings during our 2014 fiscal year. The number of meetings held by each
of the committees of our Board during our 2014 fiscal year is set forth below
under the description of each committee. During our 2014 fiscal year, all of the
directors attended at least 75% of the aggregate number of Board meetings and
meetings of committees on which they served. Our Guidelines provide that
directors are encouraged to attend the Annual Meeting, and all of our eleven
directors attended last years annual meeting.
Our Board has five standing committees:
the Audit Committee, the Compensation Committee, the Nominating and Corporate
Governance Committee, the Finance Committee and the Executive Committee. The
Chair of each committee, as a matter of regular practice and to the extent
possible, reviews committee meeting materials with management in advance of each
Board committee meeting. Each of our standing Board committees operates under a
written charter adopted by our Board, a copy of which is available
at www.staples.com in the Corporate Governance section of the Investor
Information webpage.
Audit
Committee
Robert E. Sulentic* Chairperson |
The engagement of our
Audit Committee is critical to managing the evolving risk profile and
regulatory environment in which we operate. |
Other Committee
Members Basil L. Anderson Justin
King
Meetings in
2014 3 in person, 8
telephonic |
Introduction
The
Audit Committee meets independently with our independent registered public
accounting firm, management and our internal auditors. The members of the
Audit Committee are independent directors, as defined by its charter and
the rules of the SEC and NASDAQ Stock Market.
Key Objective
The
Audit Committee assists our Board in overseeing our accounting and
financial reporting processes, the integrity of our financial statements,
our compliance with legal and regulatory requirements, our independent
registered public accounting firms qualifications and independence, and
the performance of audits by our internal audit team and our independent
registered public accounting firm.
Further Areas of Responsibility
✓ Oversees our internal controls,
including our disclosure controls and procedures and internal control over
financial reporting, on behalf of the Board.
✓ Assists the Board in its oversight
of our policies and practices with respect to risk assessment and risk
oversight, including discussing with management risk exposures and the
steps that have been taken to monitor and control such
exposures.
✓ Establishes escalation and
oversight procedures for the treatment of complaints regarding accounting,
internal accounting controls or auditing matters, including procedures for
confidential and anonymous submission by our associates of concerns
regarding questionable accounting, internal accounting controls or
auditing matters.
✓ Monitors the function of our ethics
program, including compliance with our Code of Ethics.
✓ Prepares the Audit Committee Report
required under the rules of the SEC.
2014 Highlights
The 2014 Report of the Audit Committee of the Board of Directors is included in the Ratification
of Selection of Independent Registered Public Accounting Firm section of this proxy statement. In
2014, in connection with its quarterly earnings and internal controls review, the Audit Committee
focused on strategic reinvention priorities and the related estimates, charges and guidance. As part
of the enterprise risk management (ERM) process, significant attention was given to the Company’s information security profile.
The Committee, with the assistance of third party experts, conducted a review of security practices and strategy, and the retail marketing information security environment. The
Audit Committee was integrally involved in overseeing the response to the data security incident
announced in 2014. The Audit Committee provides oversight to management with respect to
network security enhancements and other projects underway by the Global Technology team. |
* Audit committee financial expert under the rules of the
SEC |
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Compensation Committee
Paul F. Walsh Chairperson |
Our executive
compensation policies are designed to be tightly linked to performance and
the creation of long-term value for our shareholders. We have a track
record of soliciting and responding to investor feedback as evidenced by
changes to our compensation program in recent years. |
Other Committee
Members Carol Meyrowitz Raul Vazquez
Meetings in
2014 2 in person, 2
telephonic |
Introduction
The
members of the Compensation Committee are independent directors, as
defined by its charter and the rules of the SEC and NASDAQ Stock Market.
For more information about the responsibilities of our Compensation
Committee, see the CD&A section of this proxy statement.
Key Objective
The
Compensation Committees responsibilities include recommending to the
Board our compensation philosophy and policies for senior management and
aligning our compensation with business objectives, individual performance
and the interests of our shareholders. The Compensation Committee sets the
compensation levels of executive officers, including our CEO, establishes
and administers our equity and cash incentive plans and authorizes awards
under such incentive plans.
Further Areas of Responsibility
✓ Establishes and oversees the
administration of our employee stock purchase plans, retirement plans and
other employee benefit plans (other than ERISA-governed broad-based
benefit plans where administration is otherwise provided in the governing
plan document).
✓ Oversees risks associated with the
companys compensation policies and practices and evaluates the
compensation program to help ensure that it does not encourage excessive
risk-taking.
✓ Reviews and makes recommendations
with respect to non-management Board compensation.
✓ Administers our clawback
policy.
✓ Prepares the Compensation Committee
Report required under the rules of the SEC.
2014 Highlights
The 2014
Compensation Committee Report is included in the Compensation Committee
Report section of this proxy statement. In addition, in 2014, the
Compensation Committee conducted its annual pay for performance alignment
analysis, peer benchmarking and risk assessment. The Compensation
Committee dedicated a significant amount of time to understanding the
results of the 2014 say-on-pay shareholder vote and considering feedback
received as part of the shareholder outreach program. The compensation
program was designed so that there are rigorous financial metrics tying
the compensation program directly to the success of our reinvention
program and the creation of long-term shareholder value. In 2014, the
Compensation Committee also recommended a new stock incentive plan (which was approved by shareholders at the 2014 Annual Meeting) and
evaluated retention and recruiting risks at various levels of the
organization. |
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Nominating and Corporate Governance Committee
Vijay Vishwanath Chairperson |
Our top priority is to
align the skills and experience of our directors and our Board leadership
structure to support our strategic reinvention and the best interests of
shareholders over the long-term. |
Other Committee
Members Drew G. Faust Rowland T.
Moriarty Robert C. Nakasone
Meetings in 2014 3 in
person, 3 telephonic |
Introduction
The
members of the Nominating and Corporate Governance Committee are
independent directors, as defined by its charter and the rules of the
NASDAQ Stock Market.
Key Objective
The
Nominating and Corporate Governance Committees responsibilities include
providing recommendations to our Board regarding leadership structure,
nominees for director, membership on our Board committees, and succession
matters for our CEO. An additional function of the Nominating and
Corporate Governance Committee is to develop and recommend to our Board
our Corporate Governance Guidelines and to assist our Board in complying
with them.
Further Areas of Responsibility
✓ Oversees the self-evaluation of our
Board and committees to assess whether they are functioning
effectively.
✓ Coordinates the formal evaluation
of our Chairman, the CEO and other officers deemed appropriate by the
Corporate Governance Guidelines.
✓ Reviews and resolves conflict of
interest situations and related party transactions.
✓ Oversees our political
contributions and recommends to our Board any proposed revisions to our
Corporate Political Contributions Policy Statement.
2014 Highlights
The
Nominating and Corporate Governance Committee spent significant time in
2014 on director recruitment. With the help of an executive recruiting
firm, the Nominating and Corporate Governance Committee met on several
occasions to discuss the qualifications, feedback, references and other
items regarding potential director candidates. The Nominating and
Corporate Governance Committee also focused heavily on investor feedback
and developing responsive strategies to benefit all of the shareholders,
including adopting the Independent Chair Policy and committing to a proxy
access bylaw amendment. |
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Finance Committee
Rowland T. Moriarty Chairperson |
Our prudent approach to
managing our capital structure has enabled us to accelerate our
reinvention strategy with the proposed acquisition of Office Depot and put
us in a stronger position to create long-term value for our
shareholders. |
Other Committee
Members Basil L. Anderson Paul F.
Walsh
Meetings in
2014 2 in person, 1 telephonic |
Introduction
The
members of the Finance Committee are independent directors, as defined by
its charter and the rules of the NASDAQ Stock Market.
Key Objective
The
Finance Committees responsibilities include being available, as needed,
to evaluate and consult with and advise our management and our Board with
respect to capital structure and capital policies, events and actions that
could impact capital structure, payment of dividends, share repurchases,
borrowing practices, debt or equity financings, credit arrangements,
investments, mergers, acquisitions, joint ventures, divestitures and other
similar transactions.
Further Areas of Responsibility
✓ Assists in the engagement of
investment and financial advisors and consultants in proposed financial
transactions.
✓ Reviews and approves entry into
swaps, including adopting and reviewing the policy relating to the use of
the non-financial end-user exception for the clearance of swap
transactions.
2014 Highlights
The
Finance Committee was focused in 2014 on our capital structure, dividend
policy, hedging policy, share repurchase program and other topics,
including oversight of the Office Depot acquisition
financing. |
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Executive Committee
Ronald L. Sargent Chairperson |
The Executive Committee
provides an opportunity to leverage the strength and diversity of our
Board for guidance when urgency is needed to act in the best interests of
shareholders. |
Other Committee
Members Rowland T. Moriarty Robert C.
Nakasone Robert Sulentic Vijay Vishwanath
Meetings in 2014 1
telephonic |
Introduction
The
Executive Committee is authorized to exercise all of the powers of our
Board in the management and affairs of Staples, with certain exceptions. A
quorum can only be established by the presence of both a majority of the
members of the Executive Committee and two non-management members of the
Executive Committee.
Key Objective
It is
intended that the Executive Committee will take action only when
reasonably necessary to expedite our interests between regularly scheduled
Board meetings.
2014 Highlights
The Executive Committee met once
during the year, with additional directors in attendance to provide
guidance on the Office Depot acquisition
strategy. |
RISK OVERSIGHT BY THE BOARD OF DIRECTORS
Our Board of Directors is ultimately
responsible for reviewing and approving our risk management strategy and
framework and key risk parameters. In terms of overseeing the broader enterprise
risk management (ERM) program, the Audit Committee, under powers delegated by
the Board, is responsible for the approval and establishment of our risk
management framework and ensuring that appropriate policies and practices are in
place for risk assessment and management, including that all risk areas are
being monitored by senior management, reported to the Board or appropriate Board
committee by senior management and addressed as needed. At each quarterly Board
meeting, the Audit Committee reports to the Board on all of its specific
activities.
Our most senior executives are
responsible for collaborating with the Audit Committee to provide oversight to
the risk management process and prioritize and validate key risks. Management is
then responsible for implementing the Board and Board committee approved risk
management strategy and for developing policies, controls, processes and
procedures to identify and manage risks. In 2014, our Internal Audit team met
with leaders from the functional areas of Staples to evaluate risks and to
coordinate information sharing and mitigation efforts for all types of risks.
The Audit Committee stays apprised of significant actual and potential risks
faced by Staples and the effectiveness of its risk assessment and management
process in part through detailed presentations at least twice a year from the
Vice President of Internal Audit. These presentations include an enterprise wide
review of the major financial, operational and legal risks facing the company,
steps that have been taken to monitor and control such exposures, as well as the
methodologies for identifying and prioritizing
financial, operational and legal risks. In addition, the
Audit Committee receives detailed presentations from senior
executives from Global Technology, Merchandising, Human
Resources and other areas to address specific risks and
mitigation strategies. In 2014, as part of the ERM process,
significant attention was given to the Companys information
security profile. In addition, the Audit Committee was integrally
involved in overseeing the response to the data security
incident announced in 2014. The Audit Committee provides
oversight to management with respect to network security
enhancements and other projects underway by the Global
Technology team.
Independent of the enterprise risk
management process, the Audit Committee is made aware of risks as a result of
being briefed in person regularly by our Vice President of Internal Audit, as
well as an annual briefing and quarterly reports by our Vice President, Ethics
& Compliance. The Audit Committee also meets regularly with the General
Counsel and at least quarterly, in executive session, alone with the Vice
President of Internal Audit. The Audit Committee uses the results of its
discussions with our Vice President of Internal Audit to inform its overall view
of risk and approve the proposed audit schedule for the internal audit group.
Our internal audit group identifies, assesses and assists management in
addressing and managing risks by using the Integrated Framework by the Committee
of Sponsoring Organizations of the Treadway Commission (2013), also known as the
COSO framework. Our Vice President, Ethics & Compliance also provides
quarterly reports to the Audit Committee on compliance and ethics matters. These
reports also are provided to the Board.
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The Audit Committee administers its risk
oversight role through the Board committee structure as well. Each Board
committee is responsible for monitoring and reporting on the material risks
associated with its respective subject matter areas of responsibility. The Audit
Committee oversees risks related to our accounting and financial reporting
processes and the integrity of our financial statements, the Finance Committee
oversees risks related to capital policies and practices and financial
transactions, the Nominating and Corporate Governance Committee oversees risks
related to corporate governance, including director independence and related
party transactions, and as discussed in the CD&A section of this proxy
statement, the Compensation Committee oversees risks related to our compensation
programs, including an annual review and risk
assessment of the Companys compensation policies and practices for all
associates and a risk assessment in connection with any changes to our
compensation program.
In addition, the Board and the Audit
Committee receive presentations throughout the year from management regarding
specific potential risks and trends as necessary. At each Board meeting, the
Chairman and CEO addresses in a directors only session matters of particular
importance or concern, including any significant areas of risk requiring Board
attention. Annually, our full Board reviews in detail the Companys near- and
long-term strategies, including consideration of significant risks facing the
Company and their potential impact. We believe that the practices described
above facilitate effective Board oversight of our significant risks.
DIVERSITY
Diversity has always been very important
to us. We strive to offer an inclusive business environment that offers
diversity of people, thought and experience, as well as diverse suppliers. This
also holds true for our Board of Directors. This year, our Board formalized its
commitment to seek out highly qualified women and individuals from diverse
groups to include in the candidate pool of Board nominees, by amending our
Guidelines. Additionally, the Board annually reviews the appropriate skills and
characteristics of the Board members in light of the current composition of the
Board, and diversity is one of the factors used
in this assessment. Not only does the Board view diversity of experience,
industry, skills and tenure as important, but also of gender and ethnic
backgrounds. Since 2007, we have added seven new directors to our Board. These
new directors, who include three women, one Hispanic, and one Asian, have
strengthened our Boards diversity of skills and perspectives. We exceed the
national average in minority representation on our Board. The Board is also
provided with an annual report on diversity initiatives and Staples approach
and progress on such initiatives.
DIRECTOR CANDIDATES
The process followed by the Nominating and Corporate Governance Committee to identify and evaluate director candidates includes requests to Board members and others for recommendations, engaging a professional recruiting firm to help identify and recruit potential candidates, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the Nominating and Corporate Governance Committee and our Board.
During 2014, the Nominating and Corporate Governance Committee engaged a third-party professional recruiting firm to search for a director candidate with e-commerce and technology expertise. After interviewing several qualified candidates identified by that recruiting firm, the Nominating and Corporate Governance Committee selected Paul-Henri Ferrand and recommended his candidacy to the Board. The Board nominated Mr. Ferrand as a director candidate for election at our 2015 Annual Meeting.
Shareholders may also recommend an individual to the Nominating and Corporate Governance Committee for consideration as a potential director candidate by submitting the following information: (1) the candidates name; (2) appropriate biographical information and background materials regarding the candidate; and (3) a statement as to whether the shareholder or group of shareholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made. Such information should be submitted to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Staples, Inc., 500 Staples Drive, Framingham, Massachusetts 01702. Assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating and Corporate Governance Committee will evaluate shareholder recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.
In addition, Shareholders have the right under our by-laws to directly nominate director candidates, without any action or recommendation on the part of the Nominating and Corporate Governance Committee or our Board, by following the relevant procedures summarized in this proxy statement under the caption Shareholder Proposals.
On March 4, 2015, in accordance with the process set forth in our bylaws, Starboard
Value and Opportunity Master Fund Ltd and certain of its affiliates (collectively, Starboard) submitted a
nomination notice in which Starboard nominated four individuals for election to the Board at the 2015 Annual Meeting. The
Board engaged in discussions and negotiations with Starboard about the nominations. On April 10, 2015, Staples and Starboard
entered into an agreement (the Starboard Agreement). Pursuant to the Starboard Agreement, the Board agreed to
nominate for election to the Board one individual proposed by Starboard. After an evaluation by the Nominating and Corporate
Governance Committee, the Board selected Kunal S. Kamlani as such nominee. Starboard has agreed to vote its shares of Staples common stock in favor of the nominees
selected by the Board, including Mr. Kamlani. On April 10, 2015, Justin King determined not to
stand for reelection at the 2015 Annual Meeting because of his view that the Board should not have approved the Starboard
Agreement.
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COMMUNICATING WITH OUR BOARD
Our Board will give appropriate attention
to written communications that are submitted by shareholders, and will respond
if and as appropriate. Absent unusual circumstances or as contemplated by the
committee charters, the Chairperson of the Board (if an independent director),
or the Lead Director (if one is appointed), or otherwise the Chairperson of the
Nominating and Corporate Governance Committee, with the advice and assistance of
our General Counsel, is primarily responsible for monitoring communications from
shareholders and other interested parties and for providing copies or summaries
of such communications to the other directors as he or she considers
appropriate.
Under procedures approved by our
independent directors and subject to the advice and assistance from our General
Counsel, communications are forwarded to the Chairperson of the Board (if an
independent director), the Lead Director (if one is appointed), or otherwise the
Chairperson of the Nominating and Corporate Governance Committee, who monitor
communications from shareholders and other interested parties. Copies or
summaries of such communications are provided to all directors, if such persons
consider it important and appropriate for all directors to know. In general,
communications relating to corporate governance and corporate strategy are more
likely to be forwarded than communications relating to ordinary
business affairs, personal grievances and matters as to which we tend to receive
repetitive or duplicative communications. In addition, as provided by our
Guidelines, if a meeting is held between a major shareholder (including
institutional investors) and a representative of the independent directors, the
Independent Lead Director will serve, subject to availability, as such
representative of the independent directors.
Shareholders who wish to send
communications on any topic to our Board should address such communications to
The Board of Directors, c/o Corporate Secretary, Staples, Inc., 500 Staples
Drive, Framingham, Massachusetts 01702.
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❯ ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY
CARD)
The members of our Board are elected
for a term of office to expire at the next annual meeting (subject to the
election and qualification of their successors or the earlier of their death,
resignation or removal). Eleven directors, constituting our entire Board, are to
be elected at the Annual Meeting.
In considering whether to recommend any
particular candidate for inclusion in our Boards slate of recommended director
nominees, the Nominating and Corporate Governance Committee applies the
assessment criteria set forth in our Corporate Governance Guidelines. These
criteria include diversity, age and skills such as understanding of the office
products market, the retail industry, e-commerce finance, accounting, marketing,
technology, risk oversight, international business and other operational and
business knowledge needed to oversee a global multi-channel business. The
principal qualification of a director is the ability to act effectively on
behalf of all of our stockholders.
The Nominating and Corporate Governance
Committee does not assign specific weights to particular criteria, and no
particular criterion is a prerequisite for any prospective nominee. We believe
that the specific skills, qualifications and experience of our directors,
considered as a group, should provide a mix of knowledge and abilities that will
allow our Board to fulfill its responsibilities.
Director Qualifications, Skills
and Experience
We believe each nominee in the slate
presented below, through their own personal accomplishments and dedication to
their profession and community, has demonstrated strong intellectual acumen,
solid business judgment, strategic vision, integrity and diligence.
The eleven nominees include Mr.
Ferrand and Mr. Kamlani, our new nominees, and two directors who joined the Board within the last
five years, three nominees who have served on our Board for five to ten years and
four nominees who have served on our Board at least 10 years.
Each of the current directors
consistently has demonstrated their strong work ethic and dedication to Staples,
including coming prepared to meetings, asking insightful questions, challenging
managements assumptions, focusing on long term business strategy, analyzing
challenges, evaluating solutions and overseeing implementation.
We believe that the composition of the
Board, including the varied tenure of our directors, combines institutional
knowledge and understanding of our business model, products and services and
historical growth strategies with fresh perspectives and exposure to alternative
approaches to business process, which promotes lively Board discussion and
effective oversight and problem solving.
Director Tenure
Balance
Many of the nominees are either current
or former chief executive officers or chairpersons or vice chairpersons of other
large international corporations. As such, they have a deep understanding of,
and extensive experience in, many areas that are critical to our operation and
success. We have determined that nominees who have served in these roles have
extensive experience with financial statement preparation, compensation
determinations, compliance, corporate governance, risk oversight, public
affairs and legal matters.
Below is biographical information of
each of the nominees, highlighting the particular experience, qualifications,
attributes or skills of each nominee that supports the conclusion of the
Nominating and Corporate Governance Committee that these individuals should
serve as directors of Staples.
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ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD) |
DIRECTOR
BIOGRAPHIES
Basil
Anderson |
Age: 70 Director
Since: 1997
Current Staples
Board Committees
- Audit, Finance
Skills and
Experience
- Audit, Financial Expertise
- Consumer and Business Sales
- Corporate Governance
- International Operations
- M&A/Integration
- Risk
Oversight
- Strategy |
Public Company
Boards Current
- Becton,
Dickinson and Company
- Hasbro,
Inc.
- Moodys
Corporation
Prior
- CRA
International, Inc. (2004-2011)
Selected Other
Positions
- Director,
Operation Warm
Education
- M.B.A,
Marketing and Management Science, University of
Chicago
- M.S., Hydraulic
Engineering, University of Illinois
- B.S.E., Israeli
Institute of Technology, summa cum laude |
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Career Highlights
Mr. Anderson has served on the Staples
Board since 1997, when he joined as an independent director. In 2001, he
was asked to join the management team as our Vice Chairman to assist the
then-CEO in the transformation of the company. Mr. Anderson was a key
player in the development of a new strategy that led to expansion of the
Contract business, the creation of our own brand products and the first
company-wide cost reduction efforts. This successful strategy led to a
tripling of the stock price before his retirement in 2006. In addition
to his executive experience at Staples, Mr. Anderson also acquired
experience in strategic, business and financial planning and operations,
and international operations in his role as Chief Financial Officer of
Campbell Soup Company from 1996 to 2001 and Scott Paper Company from 1993
to 1996. At Campbell Soup Company, Mr. Anderson initiated a strategy that
led to the restructuring of the company, including significant cost
reductions, disposition of nonstrategic assets, acquisition of strategic
businesses and significant share repurchases. Mr. Anderson also led a
strategic restructuring of Scott Paper Company and was a key player in the
companys merger with Kimberly Clark Corporation. In addition to his
extensive executive experience, Mr. Anderson has served as a director on
various public company boards in different industries. He has served as
Chair or as a member of the Audit, Compensation and Benefits, Governance
and MIS Committees of these boards. He was recently elected Lead
Independent Director of Hasbro, Inc., effective May 21,
2015. |
20 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD) |
Drew
Faust |
Age: 67 Director
Since: 2012
Current Staples
Board Committees
- Nominating and Corporate Governance
Skills and
Experience
- Corporate Governance
- Leadership and Management
- International Operations
- IT
Management and Security
- Risk
Oversight
- Strategy |
Selected Other
Positions
- Director,
Harvard Management Company
- Director, Broad
Institute
- Director, Ragon
Institute
Education
- M. A. and
P.H.D., American Civilization, University of
Pennsylvania
- B.A., History,
Bryn Mawr College, magna cum laude with
honors |
|
|
|
Career Highlights
Dr. Faust is the 28th
President of Harvard University. Leading up to her appointment as
President in 2007, Dr. Faust served as the Founding Dean of the Radcliffe
Institute for Advanced Study charged with integrating the former Radcliffe
College into Harvard University following the merger in 1999. Before
Harvard, Dr. Faust served as the Annenberg Professor of History at the
University of Pennsylvania, where she was a member of the faculty for 25
years. As President of Harvard, Dr. Faust is responsible for all aspects
of Harvards academic and administrative activities, which include
operations and research and teaching activities across the globe, and
oversees a $4.4 billion annual operating budget. During her tenure, she
restructured the system of university governance, and has expanded
financial aid to improve access to Harvard College for students of all
economic backgrounds and advocated for increased federal funding for
scientific research. Dr. Faust has broadened Harvards international
reach, raised the profile of the arts on campus, enhanced Harvards focus
on climate change and sustainability, launched edX, the online learning
partnership with MIT, and promoted collaboration across academic
disciplines and administrative units as she guided the university through
a period of significant financial challenges. Dr. Faust also serves on the
board of Harvard Management Company, which is responsible for investing
Harvards endowment ($36.4 billion in 2014, the largest endowment
in higher education in the United States) and related financial assets to
produce long term results to support the education and research goals of
the university. In her capacity as Harvard President, Dr. Faust also
serves as a member of the Broad Institute of Harvard and Massachusetts
Institute of Technology (MIT) and the Ragon Institute of Harvard, MIT and
Massachusetts General Hospital (MGH). |
Paul-Henri
Ferrand |
Age: 51 Director
Since: Nominee
Current Staples
Board Committees
- n/a
Skills and
Experience
- Consumer and Business Sales
- Ecommerce/Marketing
- International Operations
- IT
Management and Security
- Strategy |
Education
- École Nationale
Supérieure des Télécommunications (ENST)
- Lycée du
Parc |
|
|
|
Career Highlights
Mr. Ferrand has served as Vice
President and Sector Lead, U.S. Services and Distribution Sector, of
Google, Inc., a global provider of internet related services and products,
since May 2014. In his role as the head of Googles largest customer
sector ($4 billion), Mr. Ferrand leads performance-based advertising sales
and related analytics, with teams in the following sub-sectors: B2B
technology, industrial, social media and information services, local and
federal government and education. He also leads targeted teams working on
small company performance solutions as well as operations support teams in
India. Before joining Google, Mr. Ferrand was President, Dell North
America, at Dell, Inc., a global technology company, from August 2012 to
March 2014, where he was responsible for leading Dells business across
all of North America, covering all segments (consumer and business).
During this time, he restructured the North American unit, returning it to
growth and top position in key markets. Mr. Ferrand previously held other
positions at Dell, including Global Vice President & GM, Software and
Peripherals from September 2011 to August 2012, President Dell
Asia-Pacific-Japan from July 2010 to September 2011, Chief Marketing
Officer, Dell Consumer, Small and Medium Business from January 2009 to
September 2011, and President Dell APACs from March 2004 to December 2008.
Before Dell, Mr. Ferrand served in various management positions at
Nokia, Alcatel-Lucent and AT&T. |
www.staplesannualmeeting.com |
|
21 |
Table of Contents
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD) |
Kunal S. Kamlani |
Age: 42 Director
Since: Nominee
Current Staples
Board Committees
- n/a
Skills & Experience
- Audit, Financial Expertise
- Consumer Sales
- Marketing
- M&A / Integration
- Leadership and Management
- Risk Oversight |
Public Company Boards Current
- Sears Holdings Corp
Education
- M.B.A., Columbia University
- B.A., Economics and Political Science, Colgate University |
|
|
|
Career Highlights
Mr. Kamlani served as President and Chief Operating Officer of Prestige Cruise Holdings, the parent company of Oceania Cruises and Regent Seven Seas Cruises, from August 2011 until December 2014. In this role, Mr. Kamlani generated record revenue and EBITDA for three consecutive years and, in 2014, completed the sale of Prestige Cruise Holdings to Norwegian Cruise Lines for approximately $3 billion. Mr. Kamlani had previously served as Chief Financial Officer from August 2009 to March 2010 and was recruited back to the company in 2011. From March 2010 to May 2011, Mr. Kamlani served as head of the multi-billion dollar Global Investment Solutions division of Bank of America/Merrill Lynch where he was responsible for the Wealth Management Platform that Financial Advisors relied upon to develop client solutions. Mr. Kamlani also served as Managing Director and Chief Operating Officer of Citi Smith Barney from 2006 until 2009 where he oversaw the acquisition of Legg Mason's brokerage business and was instrumental in the formation of a joint venture between Citi Smith Barney and Morgan Stanley. Mr. Kamlani served in various other capacities at Citigroup since 2001.
|
Carol
Meyrowitz |
Age: 61 Director
Since: 2007
Current Staples
Board Committees
- Compensation
Skills and
Experience
- E-Commerce/Marketing
- Leadership and
Management
- Real
Estate
- Retail
- Strategy
- Supply Chain and Logistics |
Public Company
Boards
Current
- The TJX
Companies, Inc.
Prior
- Amscan
Holdings, Inc. (2005-2012)
- Yankee Candle
Corporation (2004-2007)
Selected Other
Positions
- Board of
Overseers, Joslin Diabetes Center
Education
- B.A., Marketing
and Management, Rider University |
|
|
|
Career Highlights
Ms. Meyrowitz has served as Chief
Executive Officer of The TJX Companies, Inc., a retailer of apparel and
home fashions, since 2007 and has been a director of TJX since 2006. Ms.
Meyrowitz was President of TJX from October 2005 to January 2011,
was President of The Marmaxx Group, the largest division of TJX, from January
2001 to January 2005, and was employed in an advisory role for TJX from
January 2005 to October 2005. She also consulted for Berkshire Partners
L.L.C., a private equity firm, from June 2005 to October 2005. While
serving as CEO of TJX, Ms. Meyrowitz has grown revenue since 2007 by $11.7 billion to $29.1 billion in 2014 and overseen the growth of the
companys market capitalization from $16.2 billion in 2010 to $46.6
billion as of March 2015. TJX has delivered excellent returns to shareholders and
has one of the highest returns on investment in the retail industry.
While Ms. Meyrowitz has served as CEO, TJX has been ranked in the top five
percent of Fortune 500 companies for returns on assets and shareholders
equity. |
22 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD) |
Rowland T.
Moriarty |
Age: 68 Director
Since: 1986
Current Staples
Board Committees
- Executive,
Finance, Nominating and Corporate Governance
Skills and
Experience
- Consumer and
Business Sales
- Corporate
Governance
- International Operations
- IT
Management and Security
- Marketing
- Real
Estate |
Public Company
Boards
Current
- CRA
International, Inc.
- WEX,
Inc.
- Virtusa
Corporation
Prior
- Trammel Crow
Company (1997-2006)
- Capital
American (1991-1997)
Selected Other
Positions
- Director,
Wharton Graduate School
- Director,
Packsize International LLC
Education
- D.B.A., Harvard
University
- M.B.A., Wharton
School of Business
- B.A., Rutgers
University |
|
|
|
Career Highlights
Dr. Moriarty has served as Chairman of the Board of CRA International, Inc., a worldwide economic and business consulting firm, since May 2002 and as Vice Chairman since 1992. Previously, he was a Professor of Business Administration at Harvard Business School. Dr. Moriarty has served as a consultant to more than 75 companies worldwide. Dr. Moriarty is a renowned expert and author on the subject of B2B marketing and has authored or co-authored three books on business marketing strategy and industrial buying behavior, and also numerous publications in the Harvard Business Review and other prestigious academic journals. Dr. Moriarty has extensive experience as a director of both public and private companies in a range of industries including commercial real estate, payment systems and software development and IT services. Dr. Moriarty has served as Chair of eight Governance Committees of these boards and also served as a member of the Executive, Finance, Compensation and Legal & Regulatory Committees of these boards. He also previously served as Chairman of the Board and subsequently as Lead Director and Vice Chairman at WEX, Inc. |
Ronald L.
Sargent |
Age: 59 Director
Since: 1999
Current Staples
Board Committees
- Executive
Skills and
Experience
- Audit,
Financial Expertise
- Consumer and Business Sales
- Corporate Governance
- Ecommerce/Marketing
- International Operations
- Leadership and Management
- M&A/Integration
- Retail
- Strategy
- Supply Chain/Logistics |
Other Public Company
Boards
Current
- The Kroger
Co.
- Five
Below
Prior
- Home Depot
(2011-2012)
- Mattel, Inc.
(2004-2011)
- Yankee Candle
Corporation (1999-2007)
Education
- M.B.A., Harvard
Business School
- A.B., Economics, Harvard College |
|
|
|
Career Highlights
Mr. Sargent has served as Chief
Executive Officer of Staples, Inc. since 2002 and Chairman of the Board of
Directors of Staples since 2005. Previously, Mr. Sargent served in various
positions at Staples since joining the company in 1989, including
President of Staples, Inc. from 1998 to 2006, Chief Operating Officer of
Staples.com from 1998 to 2002, President of Staples Contract &
Commercial from 1994 to 1997 and various other management positions. While
at Staples, Mr. Sargent has also overseen strategic acquisitions and
business integrations including Corporate Express, which was acquired for
approximately $4.4 billion in 2008. Before Staples, Mr. Sargent spent 10
years with The Kroger Co., where he served in a variety of positions in store
operations, human resources, strategy, sales and marketing. Mr. Sargent
has been a director of several public company boards and served as Chair
or a member of the Audit, Finance, Compensation, Governance & Social
Responsibility and Infrastructure Committees of these
boards. |
www.staplesannualmeeting.com |
|
23 |
Table of Contents
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD) |
Robert
Sulentic |
Age: 58 Director
Since: 2007
Current Staples
Board Committees
- Audit, Executive
Skills and
Experience
- Audit,
Financial Expertise
- International
Operations
- Leadership and Management
- M&A/Integration
- Real
Estate
- Risk
Oversight
- Strategy |
Public Company
Boards
Current
- CBRE,
Inc.
Prior
- Trammel Crow
Company (2002-2006)
Selected Other
Positions
- British
American Business Council
- Director, Baylor
Healthcare System Foundation
Education
- M.B.A., Harvard
Business School
- B.S., Computer
Science, Iowa State University |
|
|
|
Career Highlights
Mr. Sulentic has served as Chief
Executive Officer of CBRE, Inc., a global commercial real estate services
company, since 2012 and President since 2010. Mr. Sulentic also has been a
member of the CBRE Board since 2012. He previously served as President of
the Development Services business from 2006 to 2011 and as Chief Financial
Officer and Group President, each from 2009 until 2010. In addition, Mr.
Sulentic was a member of CBREs Board and Group President of Development
Services, Asia Pacific and Europe, Middle East and Africa from 2006
through 2009. During the period in which Mr. Sulentic has served as CEO
and CFO of CBRE, the company completed a significant balance sheet
restructuring and cost cutting/operational restructuring, as well as
engaged in M&A activity resulting in approximately 25 completed
acquisitions. Mr. Sulentic also has overseen a significant upgrade to
CBREs IT and other support systems. Over the six year period during which
he served as CFO and CEO, CBREs stock price increased approximately 11x
and the market capitalization of the company grew from $1 billion to $11
billion. CBRE is the only firm in its sector to be included in the Fortune
500, and also has been voted the industrys top brand for 13 consecutive
years. Before CBRE, Mr. Sulentic served as President and Chief Executive
Officer of Trammell Crow Company from 2000 through 2006, and was also
Chairman of the Board from 2002 through 2006. He previously served as its Executive
Vice President and Chief Financial Officer from September 1998 to October
2000. During his six years at Trammell Crow, the stock price increased
240%. |
Raul
Vazquez |
Age: 43 Director
Since: 2013
Current Staples
Board Committees
- Compensation
Skills and
Experience
- Consumer and
Business Sales
- E-commerce/Marketing
- International Operations
- IT
Management and Security
- Leadership and Management
- Retail
- Supply Chain/Logistics |
Selected Other
Positions
- Director,
Progreso Financiero
Education
- M.B.A., Wharton
Business School, University of Pennsylvania
- B.S. &
M.S., Industrial Engineering, Stanford
University |
|
|
|
Career Highlights
Mr. Vazquez has served as Chief
Executive Officer and a Director of Progreso Financiero, soon to be known
as Oportun, a financial services company serving the needs of the growing
Hispanic market, since 2012. Previously, Mr. Vazquez served as Executive
Vice President of Global E-commerce at Wal-Mart Stores Inc. in 2011 and as
Executive Vice President and President of Wal-Mart West at Wal-Mart Stores
Inc. from 2010 to 2011. He served as Chief Executive Officer of Walmart.com from 2007 to 2010, where he oversaw all day-to-day operations and
focused on providing multi-channel options for customers, and held other
positions at Wal-Mart since 2002, including in marketing and operations.
Before joining Wal-Mart, Mr. Vazquez worked at startup companies within
the e-commerce industry. He also spent several years at a boutique
consulting firm that specializes in competitive strategy for Fortune 100
firms, and as an industrial engineer at Baxter Healthcare. Mr. Vazquez has
been selected to Fortunes 40 under 40 on two
occasions. |
24 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD) |
Vijay
Vishwanath |
Age: 55 Director
Since: 2007
Current Staples
Board Committees
- Executive,
Nominating and Corporate Governance
Skills and
Experience
- Consumer and
Business Sales
- Corporate
Governance
- E-commerce/Marketing
- International Operations
- M&A/Integration
- Strategy |
Public Company
Boards
Prior
- Yankee Candle
Corporation (2005-2007)
Education
- M.B.A., Harvard Business School
- B.S., Chemical
Engineering, University of Texas, Austin |
|
|
|
Career Highlights
Mr. Vishwanath has been a Partner
at Bain & Company, a management consulting firm, since 1993 and is a
leader in Bains consumer products practice. Mr. Vishwanath first joined
Bain in 1986, after working at Procter & Gamble. In his position at
Bain, Mr. Vishwanath has counseled numerous Fortune 500 companies on
consumer product and brand strategy, as well as marketing. Additionally,
he advises CEOs and management teams of the leading global consumer
companies on matters of strategy, organization, mergers and performance
improvement, including growth, pricing, market spending and optimization,
trade and channel management, and cost reduction across the entire value
chain. Mr. Vishwanath has led several post-merger integrations in the
consumer space, including two of the largest global deals in the last five
years. Mr. Vishwanath also has valuable experience in corporate
governance. Mr. Vishwanath has published several articles on a variety of
consumer product issues, and has spoken to audiences around the world on
the topic of growth and brand
strategy. |
Paul F.
Walsh |
Age: 65 Director
Since: 1990
Current Staples
Board Committees
- Finance,
Compensation
Skills and
Experience
- Audit,
Financial Expertise
- Consumer and
Business Sales
- E-commerce/Marketing
- International Operations
- IT
Management and Security
- Leadership and Management
- M&A/Integration
- Retail
- Risk
Oversight
- Strategy |
Public Company
Boards
Prior
- eFunds Corporation (2002-2007)
- Incom,
Inc. (1995-1998)
Selected Other
Positions
- Director,
Sterling Backcheck
- Director,
Competitor Group Inc.
- Trustee, Thunderbird School of Management (2009-2013)
Education
- M.B.A., Boston
University, with honors
- B.S.,
Engineering, Tufts University |
|
|
|
Career Highlights
Mr. Walsh has served as an
Operating Partner of, and outside resource to, Calera Capital, a private
equity firm, since 2008. Mr. Walsh serves as Chairman of two Calera
Capital portfolio companies, Competitor Group Inc., an active lifestyle
sports events and media company, and Sterling Backcheck, a technology
enabled employment and background screening services company. Mr. Walsh
also acts as an outside consultant from time to time on other Calera
Capital portfolio company matters. Walsh expects to join Calera Capital as
a Senior Managing Director and to become a member of the general partner
entity concurrent with the closing of Calera Capitals fifth fund. Before
Calera, Mr. Walsh was the Chairman and CEO of eFunds Corporation from 2002
to 2007, a leading provider of risk management, electronic funds transfer
services, prepaid card processing, and global outsourcing solutions to
more than 10,000 financial services companies in more than 80 countries.
eFunds also provides point-of-sale fraud prevention solutions to retailers
and electronic benefits processing services to government entities. Mr.
Walsh led a dramatic improvement in the companys operating performance
and stock price driven by revenue growth initiatives, strategic
acquisitions, rationalization of non-core assets and cost reductions. Over
the 5 years of Mr. Walshs leadership, equity value increased from
approximately $300 million to $1.85 billion. Additionally, in 2002, Mr.
Walsh founded Clareon, which built one of the premiere B2B payment
solutions in the U.S., utilizing technology co-developed with the U.S.
Treasury. Clareon was later acquired by Fleet/Bank of
America. |
OUR BOARD RECOMMENDS THAT YOU
VOTE FOR THE ELECTION OF EACH OF THE NOMINEES AS
DIRECTORS. |
www.staplesannualmeeting.com |
|
25 |
Table of Contents
❯ DIRECTOR COMPENSATION
The Compensation Committee is
responsible for reviewing and making recommendations to our Board with respect
to the compensation paid to our non-employee directors (Outside Directors).
Our Outside Directors are predominantly compensated through equity awards,
reflecting the Compensation Committees philosophy that director pay should be
aligned with the interests of our shareholders.
It is the Compensation Committees goal
to maintain a level of Outside Director compensation at the median of companies
both within our peer group as well as similarly-sized companies in our general
industry. The Compensation Committee annually reviews an extensive analysis of
marketplace practices for Outside Director pay conducted by management and
reviewed by the Compensation Committees independent advisor. Consistent with
our equity program for associates, the Outside Director compensation program
also reflects a value-based approach to equity grants in which the amount of the
awards made to Outside Directors is based on a fixed value rather than a fixed
number of shares.
2014 COMPENSATION
Each Outside Director receives an
annual equity grant equal to $175,000 in the form of restricted stock units. The
annual grants vest after one year. In addition, the following Outside Directors
receive additional annual equity grants: (a) the Independent Lead Director
receives restricted stock units with a value of $40,000; (b) each chairperson of
the Audit Committee, Compensation Committee and Nominating and Corporate
Governance Committee receives restricted stock units with a value of $32,000;
and (c) the chairperson of the Finance Committee receives restricted stock units
with a value of $16,000. In each case, these additional grants vest on the date
of each of the four regularly scheduled quarterly Board meetings that such
Independent Lead Director or chairperson holds such position and are paid in
shares on the one year anniversary of the award. In addition, each Outside
Director receives a quarterly cash payment of $18,750 and is reimbursed for
reasonable expenses incurred in attending meetings of our Board. The chairperson
of the Audit Committee receives an additional quarterly cash payment of $3,750.
New Outside Directors receive a one-time initial grant of
restricted stock units equal to $150,000, which vests after
three years. There were no new Outside Directors in 2014.
All Outside Directors are subject to a
stock ownership guideline of five times the annual Board cash retainer and have
five years after joining the Board to meet such ownership guideline. In 2014, all directors met the guidelines.
During fiscal year 2014, on the second
business day following the first regularly scheduled Board meeting, each of our
Outside Directors received their annual restricted stock unit grants. The number
of shares of restricted stock units to be granted is
determined by dividing the fixed value by the closing price of our common stock
on the date of grant. Upon a change-in-control of Staples or upon a director
leaving our Board after reaching the age of 72, all of such directors restricted stock units
would fully vest and be paid out.
2015 CHANGES
In June 2014, the Compensation
Committee recommended a change to the Outside Director grant schedule to align
the annual vesting period with the annual service period. Beginning in 2015, the
grant date for annual equity awards to Outside Director will be made on the
second business day following the annual meeting of shareholders at which such
directors are elected. If an Outside Director is elected to the Board after the
annual grant date, the grant will be made on the second business day following
the first regularly scheduled quarterly Board meeting that occurs after his or
her election and such grant will be pro-rated based on the number of regularly
scheduled meetings occurring on or after election. Equity awards to the
Independent Lead Director and committee chairpersons will be granted on the same
date as the annual grant date.
26 |
|
Notice
of Annual Meeting of Stockholders |
Table of
Contents
The table below sets forth certain
information concerning our 2014 fiscal year compensation of our Outside
Directors.
DIRECTOR COMPENSATION FOR 2014 FISCAL YEAR
Name* |
|
Fees earned or paid in cash ($) |
|
Stock Awards ($) (1) |
|
Option Awards ($) |
|
All Other Compensation ($) (2) |
|
Total ($) |
Basil L. Anderson |
|
75,000 |
|
175,003 |
|
0 |
|
0 |
|
250,003 |
Drew Gilpin Faust |
|
75,000 |
|
175,003 |
|
0 |
|
0 |
|
250,003 |
Justin King (3) |
|
75,000 |
|
175,003 |
|
0 |
|
6,634 |
|
256,637 |
Carol Meyrowitz |
|
75,000 |
|
175,003 |
|
0 |
|
0 |
|
250,003 |
Rowland T. Moriarty |
|
75,000 |
|
191,014 |
|
0 |
|
0 |
|
266,014 |
Robert C. Nakasone (4) |
|
75,000 |
|
215,007 |
|
0 |
|
0 |
|
290,007 |
Elizabeth A. Smith (5) |
|
37,500 |
|
175,003 |
|
0 |
|
0 |
|
212,503 |
Robert E. Sulentic |
|
90,000 |
|
207,013 |
|
0 |
|
0 |
|
297,013 |
Raul Vazquez |
|
75,000 |
|
175,003 |
|
0 |
|
0 |
|
250,003 |
Vijay Vishwanath |
|
75,000 |
|
207,013 |
|
0 |
|
0 |
|
282,013 |
Paul F. Walsh |
|
75,000 |
|
207,013 |
|
0 |
|
0 |
|
282,013 |
* |
Excludes Mr. Sargent, our CEO,
who does not receive compensation for his services as director and whose
compensation as a named executive officer is reported in the Summary
Compensation Table included in this proxy statement. |
(1) |
The amounts shown in the Stock
Awards column represent the aggregate grant date fair value of awards
computed in accordance with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718 for awards granted
during our 2014 fiscal year, not the actual amounts paid to or realized by
our Outside Directors during our 2014 fiscal year. The aggregate fair
value of these awards is based on the market price of our common stock on
the date of grant. Fractional shares are rounded up to the nearest whole
share. Awards made during 2014 represent: |
|
●Annual grant of restricted stock units to each
director;
●For Mr. Nakasone, our Independent Lead Director, restricted stock
units with a grant date fair value of $40,000;
●For Messrs. Sulentic, Vishwanath and Walsh, chair of our Audit
Committee, chair of our Nominating and Corporate Governance Committee and
chair of our Compensation Committee, respectively, for fiscal year 2014,
restricted stock units with a grant date fair value of $32,000 each;
and
●For Mr. Moriarty, chair of our Finance Committee for fiscal year
2014, restricted stock units with a grant date fair value of
$16,000. |
(2) |
Amounts listed in the All Other
Compensation column consists of payments made to Mr. King in connection
with correcting tax filing deficiencies due to Staples inadvertent
failure to withhold U.S. and Massachusetts taxes as required due to Mr.
Kings status as a foreign citizen in tax years 2007-2011. Reimbursements
to Mr. King include (i) interest and penalties imposed by U.S. and
Massachusetts tax authorities for late payment, and (ii) taxes owed with
respect to the reimbursements. The amounts are pending final resolution
with U.S. tax authorities. |
(3) |
On April 10, 2015, Mr. King determined not to stand for reelection to the Board
at the 2015 Annual Meeting. |
(4) |
In January 2015, Mr. Nakasone
announced his decision to retire at the end of his term at the 2015 Annual
Meeting. |
(5) |
Upon Ms. Smiths departure from
the Board in June 2014, all of the shares relating to her annual grant of
restricted stock units were forfeited. |
www.staplesannualmeeting.com |
|
27 |
Table of
Contents
OUTSTANDING DIRECTOR AWARDS
The table below supplements the
Director Compensation table above by providing (1) the number of restricted
stock units awarded to our directors during our 2014 fiscal year and (2) the
total number of stock options, unvested restricted stock and outstanding
restricted stock units held by our directors as of January 31, 2015, the end of
our 2014 fiscal year.
Name |
|
Grant Date |
|
Award Type |
|
Number of Shares Awarded in FY 2014 |
|
Grant Date Fair Value ($) |
|
Total Options, Unvested Restricted Stock
and Outstanding Restricted Stock Units as of 2014
FYE (1)(2)(3) |
Basil L. Anderson |
|
3/6/2014 |
|
RSU |
|
15,412 |
|
175,003 |
|
15,412 |
|
|
|
|
OP |
|
0 |
|
0 |
|
91,367 |
Drew Gilpin Faust |
|
3/6/2014 |
|
RSU |
|
15,412 |
|
175,003 |
|
15,412 |
|
|
|
|
RS |
|
0 |
|
0 |
|
11,610 |
Justin King (4) |
|
3/6/2014 |
|
RSU |
|
15,412 |
|
175,003 |
|
15,412 |
|
|
|
|
OP |
|
0 |
|
0 |
|
82,367 |
Carol Meyrowitz |
|
3/6/2014 |
|
RSU |
|
15,412 |
|
175,003 |
|
15,412 |
|
|
|
|
OP |
|
0 |
|
0 |
|
77,867 |
Rowland T. Moriarty |
|
3/6/2014 |
|
RSU |
|
16,822 |
|
191,014 |
|
16,822 |
|
|
|
|
OP |
|
0 |
|
0 |
|
113,867 |
Robert C. Nakasone (5) |
|
3/6/2014 |
|
RSU |
|
18,935 |
|
215,007 |
|
18,935 |
|
|
|
|
OP |
|
0 |
|
0 |
|
113,867 |
Elizabeth Smith (6) |
|
3/6/2014 |
|
RSU |
|
15,412 |
|
175,003 |
|
0 |
Robert E. Sulentic |
|
3/6/2014 |
|
RSU |
|
18,231 |
|
207,013 |
|
18,231 |
|
|
|
|
OP |
|
0 |
|
0 |
|
82,367 |
Raul Vazquez |
|
3/6/2014 |
|
RSU |
|
15,412 |
|
175,003 |
|
25,644 |
Vijay Vishwanath |
|
3/6/2014 |
|
RSU |
|
18,231 |
|
207,013 |
|
18,231 |
|
|
|
|
OP |
|
0 |
|
0 |
|
86,867 |
Paul F. Walsh |
|
3/6/2014 |
|
RSU |
|
18,231 |
|
207,013 |
|
18,231 |
|
|
|
|
OP |
|
0 |
|
0 |
|
113,867 |
RS = Restricted stock, RSU = Restricted
stock unit, OP = Stock option
(1) |
Restricted stock unit awards
granted in connection with the annual director grant vest in full on the
first anniversary of the grant date, provided that the director then
serves on our Board. Restricted stock and restricted stock unit awards
made upon initial election as a director vests in full on the third
anniversary of the grant date. Restricted stock (granted prior to 2013) will fully vest, and
restricted stock units will fully vest and pay out, upon retirement or
resignation should such director leave our Board after reaching the age of
72. Restricted stock awards granted from 2008 through 2010 may be sold only
upon leaving our Board. |
(2) |
Restricted stock units awarded to
our Independent Lead Director and each chairperson of the Audit Committee,
Compensation Committee, Nominating and Corporate Governance Committee and
Finance Committee vest ratably on the date of each of the four regularly
scheduled quarterly Board meetings that such Lead Director or chairperson
held such position and are paid on the one year anniversary of the
award. |
(3) |
Stock options awarded during
2008, 2009 and 2010 vested in full on the first anniversary of the grant
date, provided that the director served on our Board. Stock option awards
made prior to 2008 vested ratably on an annual basis over a four-year
vesting period, provided that the director then served on our
Board. |
(4) |
On April 10, 2015, Mr. King determined not to stand for reelection to the Board
at the 2015 Annual Meeting. |
(5) |
In January 2015, Mr. Nakasone
announced his decision to retire at the end of his term at the 2015 Annual
Meeting. |
(6) |
Upon Ms. Smiths departure from
our Board in June 2014, all of the shares relating to her annual grant of
restricted stock units were forfeited. |
28 |
|
Notice
of Annual Meeting of Stockholders |
Table of
Contents
❯ APPROVE AN AMENDMENT TO THE
2012 EMPLOYEE STOCK
PURCHASE PLAN
(ITEM 2 ON THE PROXY CARD)
INTRODUCTION
We are asking our shareholders to
approve an amendment to the 2012 Employee Stock Purchase Plan (the 2012 ESPP),
which was adopted, subject to shareholder approval, by the Board on March 3,
2015. If approved, the amendment would authorize a 12,000,000 share increase in
the number of shares of common stock available for issuance under the 2012 ESPP
from 15,000,000 to 27,000,000 shares. The Board believes that the future success
of Staples depends, in large part, upon our ability to maintain a competitive
position in attracting, retaining and motivating key personnel. The Compensation
Committee recommended, and our Board adopted, the amendment to increase the
shares of common stock authorized for issuance under the 2012 ESPP because there
may not be enough shares currently available under the 2012 ESPP to satisfy
offerings to associates beyond the current offering period. We believe the
opportunity for our associates to purchase shares of our common stock through
the 2012 ESPP is a recruiting and retention tool, and also increases associate
engagement by encouraging associates to act like an owner.
DESCRIPTION OF THE AMENDED 2012 ESPP
The following is a summary of the
material terms of the 2012 ESPP, as amended assuming that shareholders approve
this Proposal. This summary is qualified in its entirety by reference to the
full text of the 2012 ESPP, included as Appendix A to this
proxy statement.
The purpose of the 2012 Employee
Stock Purchase Plan, as amended, is to provide eligible employees of Staples and
of its designated subsidiaries and affiliates with opportunities to purchase
shares of our common stock through a series of offerings.
The 2012 ESPP provides eligible
employees with opportunities to purchase shares of our common stock during one
or more consecutive offering periods, which, unless the plan administrator
provides otherwise, will coincide with a purchase period. During each offering
period, participants will accrue funds in an account through payroll deductions.
On the last trading day of each purchase period, the funds in the account will be applied to
the purchase of our common stock, up to the maximum number of shares for which
the option was granted, currently at a 15% discount from the fair
market value of our common stock on the last trading day of the purchase period.
The 2012 ESPP has two components
in order to give us increased flexibility in the granting of stock purchase
rights to U.S. and to non-U.S. employees. Specifically, the 2012 ESPP authorizes
the grant of options that are intended to qualify for favorable U.S. federal tax
treatment (the 423 Component) under Section 423 of the U.S. Internal Revenue
Code of 1986, as amended (the Code). To facilitate participation for employees
located outside of the U.S. in light of non-U.S. law and other considerations,
the 2012 ESPP also provides for the grant of options that are not intended to be
tax-qualified under Code Section 423 (the Non-423 Component). The plan
administrator will designate offerings made under the Non-423 Component and,
except as otherwise noted below, the 423 Component and the Non-423 Component
generally will be operated and administered in the same way.
The maximum aggregate number of
shares of our common stock that may be issued under the amended 2012 ESPP is
27,000,000, all of which may be issued under the 423 Component or the non-423
Component, and any such shares issued upon exercise may consist of authorized
and unissued shares or of treasury shares. In order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made under the 2012 ESPP, the plan administrator will make
equitable adjustments to the number of shares approved for the 2012 ESPP (as
well as to the per share purchase price and
number of shares subject to outstanding options) upon changes in our corporate structure that affect our common stock,
including a dividend or other distribution (in common stock or cash or other property) recapitalization, stock split, reverse stock split,
reorganization, merger consolidation, split-up, spin-off or combination or
repurchase or exchange of common stock or other securities of
Staples.
www.staplesannualmeeting.com |
|
29 |
Table of
Contents
APPROVE AN AMENDMENT TO THE 2012 EMPLOYEE STOCK PURCHASE PLAN (ITEM 2 ON THE PROXY CARD) |
The 2012 ESPP is administered by the Board, the Compensation Committee or, to
the extent permitted by applicable laws, the Committee on Employee Benefit Plans as constituted pursuant to the terms of
the Companys 401(k) Plan. The Board has determined that the Compensation Committee shall have the authority to adopt,
amend or terminate the 2012 ESPP. The Board also determined that amendments with an estimated annual budget impact of $5
million or less may be approved by the Executive Vice President, Human Resources.
Unless otherwise determined by the Board, the plan
administrator will have the
exclusive authority to construe, interpret and apply the terms of the 2012 ESPP,
designate and change offering and purchase periods, designate subsidiaries and
affiliates for purposes of participation in the 2012 ESPP, determine
eligibility, adjudicate all disputed claims filed under the 2012 ESPP, change
the frequency and number of changes that may be made to the amount withheld
during an offering or purchase period, permit excess
payroll withholding to adjust for delays or mistakes in the processing of
subscription agreements, establish reasonable waiting and adjustment periods and
accounting and crediting procedures to ensure that amounts applied toward the
purchase of common stock for each participant properly correspond to their
contribution amounts and establish other limitations or procedures that the plan
administrator determines are advisable and consistent with the 2012
ESPP.
Further, the plan administrator
may adopt rules, procedures and sub-plans relating to the operation and
administration of the 2012 ESPP to facilitate participation in the 2012 ESPP by
employees who are foreign nationals or employed outside the United States. To
the extent any sub-plan is inconsistent with the requirements of Code Section
423, it will be considered part of the Non-423 Component. The provisions of the
2012 ESPP govern any sub-plan unless superseded by the terms of such
sub-plan.
Generally, individuals who are
employees of Staples, including directors of Staples who are also employees, as
well as employees of any of our designated subsidiaries or affiliates, on the
first day of the applicable offering period are eligible to participate in the
2012 ESPP, subject to the following limitations:
● |
participation in the 423
Component is subject to the eligibility requirements of Code Section
423; |
● |
participation in the Non-423
Component may be limited by the plan administrators determination that an
otherwise eligible employees participation is not advisable or
practicable; |
● |
employees who are citizens or
residents of a non-U.S. jurisdiction may be excluded from participation in the
2012 ESPP or an offering if such employees participation would violate the laws
of the applicable jurisdiction or if complying with the laws of the applicable
jurisdiction would cause the 2012 ESPP or offering to violate Code Section 423;
and |
● |
the plan administrator may
impose additional eligibility requirements prior to the enrollment date of an
offering to the extent permitted under Code Section 423 or other applicable
law. |
In addition, no employee may be
granted an option under the 2012 ESPP if, immediately after the grant, the
employee would own stock and/or hold outstanding options to purchase stock
possessing 5% or more of the total voting power or value of all classes of stock
of Staples or any of its subsidiaries. Further, no employee may be granted an
option under the 2012 ESPP which would give the employee the right to purchase
our common stock under any of the stock purchase plans of Staples and its
subsidiaries at a rate that exceeds $25,000 in fair market value of such common
stock (determined at the time the option is granted) for each calendar year in
which the option is outstanding at any time.
If a participant ceases to be
eligible to participate in the 2012 ESPP during an offering period, he or she
will be deemed to have withdrawn from the 2012 ESPP and the contributions
credited to such participants account but not yet used to purchase our common
stock will be returned to such participant.
Participation in the 2012
ESPP |
Participation in the 2012 ESPP is
voluntary. An eligible employee may participate in the 2012 ESPP by submitting
to the designated human resources representative a properly completed
subscription agreement, or by completing an electronic enrollment procedure, on
or before the date determined by the plan administrator for the applicable
offering period. A participants enrollment will authorize a regular payroll
deduction from the compensation he or she receives during the offering period,
and deductions and purchases will continue at the same rate for
future offerings under the 2012 ESPP unless the participant changes his or her
enrollment or withdraws from the 2012 ESPP in the manner and within the time
prescribed by the plan administrator from time to time.
Staples may use all payroll deductions received during an
offering period for any corporate purpose and will not segregate
any such funds unless required under applicable law. No
interest accrues on the contributions paid by the participant
under the 2012 ESPP unless required by applicable law.
As of April 3, 2015, Staples had
approximately 78,844 employees (including those employed by its designated subsidiaries and
affiliates) eligible to participate in the 2012 ESPP.
30 |
|
Notice
of Annual Meeting of Stockholders |
Table of
Contents
APPROVE AN AMENDMENT TO THE 2012 EMPLOYEE STOCK PURCHASE PLAN (ITEM 2 ON THE PROXY CARD) |
A participant may at any time
prior to the deadline and in accordance with the procedures as may be
established by the plan administrator permanently withdraw all (but not less
than all) the contributions credited to the participants account, resulting in
the withdrawal from the offering. If a participant withdraws, he or she is not
permitted to participate again during the remainder of the applicable offering.
Participants who withdraw may participate in subsequent offerings in accordance
with the normal enrollment procedures established by the plan
administrator.
The 2012 ESPP will be implemented
by consecutive offering periods commencing on the first trading day on or after
January 1 and July 1 of each year, and ending, respectively, on the last trading
day on or before June 30 and December 31 of each year. Each offering period will
consist of one six-month purchase period that will run simultaneously with the
offering period. However, the plan
administrator may, in its discretion, change the dates, duration and other terms
of an offering period if such change is announced prior to the beginning of the
first offering period affected. No offering period may be
longer than 24 months. Payroll deductions will be made during the
offering period and held for the purchase of our common stock at the end of the purchase period.
Payroll Deductions; Purchase Price |
Staples will make payroll
deductions from enrolled participants compensation during the offering period
in an amount of up to 10% of an individuals compensation for the offering
period. Once the employee has properly enrolled, he or she will be deemed to
have been granted an option on the applicable offering commencement date to
purchase up to the number of shares of common stock determined by dividing the
participants payroll deductions accumulated during the purchase period by the
applicable purchase price. Under the terms of the 2012 ESPP, the purchase price
is an amount equal to 85% of the fair market value (as determined
in accordance with the provisions of the 2012 ESPP) per share of our common
stock on the
last trading day of such period. However, the plan administrator has the
authority to determine a different purchase price in its sole discretion. In no
event will a participant be permitted to purchase during a purchase period more
than (1) the number of shares determined by dividing (A) $12,500 by (B) the fair
market value (as determined in accordance with the provisions of the 2012 ESPP)
of common stock on the first trading day of the applicable offering period, or
(2) such other number of shares as determined by the plan administrator prior to
the first day of the applicable offering period. If a purchase period is for any
period other than six months, the $12,500 amount will be adjusted
proportionately to reflect the length of the purchase period.
Dividends on Shares Purchased Under the 2012 ESPP |
Unless the plan administrator
determines otherwise, shares that participants receive under the 2012 ESPP and
hold in an account with the financial institution designated by Staples must
participate in the Staples dividend reinvestment program (the DRIP). Participants in the
DRIP will receive shares of our common stock instead of cash if any cash
dividend is paid on shares of our common stock.
Neither payroll deductions credited to
a participants account nor any rights to exercise an option or to receive
shares of common stock under the 2012 ESPP may be assigned, transferred,
pledged or otherwise disposed of
in any way by the participant other than by will or the laws of descent and distribution.
Dissolution or Liquidation |
In the event of a proposed
dissolution or liquidation, any offering period in progress will be shortened
and will terminate, at the latest, immediately prior to the consummation of
such dissolution or liquidation,
unless the plan administrator provides otherwise.
In the event of a change in
control of Staples (as defined in
the 2012 ESPP), the 2012 ESPP provides for the successor corporation either to assume
all outstanding options or substitute equivalent options for such outstanding
options. If the successor corporation refuses to assume or substitute for any
outstanding options, the plan administrator will either cancel such outstanding
options prior to the effective date of the change in control and refund all
contributions to the participants or shorten the offering period with respect to
such options to end on a date prior to the change in control. In addition, if Staples merges
into another corporation and the holders of capital stock of Staples immediately
prior to the merger continue to hold at least 75% by voting power of the capital
stock of the surviving corporation, then the holders of outstanding options will
be entitled to receive on the next exercise date securities or property that
holders of common stock were entitled to receive in connection with the merger
with respect to each share of common stock.
www.staplesannualmeeting.com |
|
31 |
Table of
Contents
APPROVE AN AMENDMENT TO THE 2012 EMPLOYEE STOCK
PURCHASE PLAN (ITEM 2 ON THE PROXY CARD)
The plan administrator may at any
time amend, suspend or terminate the 2012 ESPP in any respect, unless the
amendment requires shareholder approval pursuant to Code Section 423, other
applicable laws or stock exchange rules. If the plan administrator determines
that the operation of the 2012 ESPP results in unfavorable accounting
consequences, the plan administrator may amend the terms of the 2012 ESPP and
any outstanding offerings without obtaining shareholder approval or the
participants consent. Similarly, the plan administrator may amend an
outstanding option or grant a replacement option for an outstanding option under
the 2012 ESPP to achieve the tax consequences for Staples or the participants
that were expected when the option was granted or to take advantage of or comply with changes or
clarifications to applicable laws. If the 2012 ESPP is terminated, the plan
administrator may (1) terminate all outstanding offering periods either
immediately or upon completion of the purchase of shares of common stock on the
next exercise date, which may be sooner than originally scheduled, or (2) allow
the offering periods to expire in accordance with their terms.
2012
ESPP BENEFITS
Each employees participation in
the 2012 ESPP, as amended, is purely voluntary. Future benefits under the 2012
ESPP are not currently determinable, as they will depend on the actual purchase
price of our shares of common stock in future offering periods, the fair market
value of our common stock on various future dates, the amount of contributions
eligible employees elect to make under the 2012 ESPP and similar factors. Our
named executive officers will be subject to the same purchase limitations as all
other participants.
Federal Income
Tax Consequences |
The following generally
summarizes the United States federal income tax consequences that will arise
with respect to participation in the 2012 ESPP and with respect to the sale of
common stock acquired under the 2012 ESPP, but it is not a detailed or complete
description of all U.S. federal tax laws or regulations that may apply, and does
not address any local, state or foreign laws. Therefore, no one should rely on this summary for
individual tax compliance, planning or decisions. Participants in the 2012 ESPP
should consult their own professional tax advisors concerning tax aspects of
rights under the 2012 ESPP. Nothing in this proxy statement is written or
intended to be used, and cannot be used, for the purposes of avoiding taxpayer
penalties. The discussion below concerning tax deductions that may become
available to us under U.S. federal tax law is not intended to imply that we will
necessarily obtain a tax benefit or asset from those deductions. Taxation of
equity-based payments in other countries is complex, does not generally
correspond to U.S. federal tax laws, and is not covered by the summary below. This
summary assumes an option price that is equal to 85% of the closing
price of our common stock on
the last trading day of the purchase period. This summary also assumes that the 423 Component
complies with Code Section 423 and is based on the tax laws in effect as of the
date of this proxy statement. Changes to these laws could alter the tax
consequences described below.
As described above, the 2012
ESPP has a 423 Component and a Non-423 Component. The tax consequences for a
U.S. taxpayer will depend on whether he or she participates in the 423 Component
or the Non-423 Component.
Tax Consequences to Participants in the 423
Component
Rights to purchase shares granted
under the 423 Component are intended to qualify for favorable federal income tax
treatment associated with rights granted under an employee stock purchase plan
which qualifies under the provisions of Section 423(b) of the Code. Under these
provisions, no income will be taxable to a participant until the shares
purchased under the 2012 ESPP are sold or otherwise disposed of. Accordingly, a
participant will not have income upon enrolling in the 2012 ESPP or upon
purchasing stock at the end of a purchase period.
A participant may have both
compensation income and a capital gain or loss upon the sale of common stock
that was acquired under the 2012 ESPP. The amount of each type of gain or loss
will depend on when the participant sells the common stock.
If the participant sells the
common stock more than two years after the commencement of the offering period
during which the common stock was purchased and more than one year after the
date that the participant purchased the stock at a profit (if the sales proceeds exceed the purchase price), then the
participant will have compensation income equal to the lesser of:
● |
15% of the value of the common stock on the
first day of the offering period; or |
● |
the participants profit. |
Any amount in excess of the amount
that the participant recognized as compensation income will be long-term capital
gain. If the participant sells the common stock at a loss (if sales proceeds are
less than the purchase price) after satisfying these waiting periods, then the
loss will be a long-term capital loss.
If the participant sells the
common stock prior to satisfying these waiting periods, then he or she will have
engaged in a disqualifying disposition. Upon a disqualifying disposition, the
participant will have compensation income equal to the value of the stock on the
day he or she purchased the stock less the purchase price. The
participant also will have a capital gain or loss equal to the difference
between the sales
32 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
APPROVE AN AMENDMENT TO THE 2012 EMPLOYEE STOCK
PURCHASE PLAN (ITEM 2 ON THE PROXY CARD)
proceeds and the value of the common stock on the day he or
she purchased the common stock. This capital gain or loss will be long-term if
the participant has held the stock for more than one year and otherwise will be
short-term.
Any compensation income that a
participant receives upon sale of the common stock that he or she purchased
under the 2012 ESPP will not be subject to
withholding for income, medicare and social security taxes, as applicable.
Staples is required to report as ordinary income on a participants annual Form
W-2 any compensation income that he or she receives from selling common stock
purchased under the 2012 ESPP. However, Staples may not always be in a position
to ascertain the amount of a participants ordinary income. As a result, it is
the participants responsibility to report this income on their individual
income tax return.
Tax Consequences
to Participants in the Non-423 Component
A participant will not have income when
he or she enrolls in the 2012 ESPP. A participant will have compensation income
equal to the value of the common stock on the day he or she purchased the common
stock less the purchase price.
When a participant sells the common
stock he or she purchased under the 2012 ESPP, he or she also will have a capital
gain or loss equal to the difference between the sales proceeds and the value of
the common stock on the day he or she purchased it. This capital gain or loss
will be long-term if the participant held the common stock for more than one
year and otherwise will be short-term.
Any compensation income that a
participant receives upon sale of the common stock that he or she purchased
under the 2012 ESPP is subject to withholding for income, medicare and social
security taxes, as applicable. In addition, the compensation income is required
to be reported as ordinary income to the participant on his or her annual wage statement, and the participant is responsible for ensuring that this income is
reported on his or her individual income tax return.
Tax Consequences
to Participants in both the 423 and Non-423 Components
The amount that a participant elects to
have deducted from his or her base pay for the purchase of common stock under
the 2012 ESPP constitutes compensation income and is subject to withholding for
income, medicare and social security taxes, as applicable.
Distributions on our common stock will
be treated as dividends to the extent paid from our current earnings and
profits. If a distribution exceeds our current and accumulated earnings and
profits, the excess will be treated as a tax-free return of a participants
investment up to his or her tax basis in the common stock. Any excess will be
treated as capital gain which will be long-term capital gain if the participant
held the common stock for more than one year and otherwise will be treated as
short-term.
If a participant is required to
participate in the Staples DRIP, he or she will receive dividends in the form of
our common stock rather than in cash, however, the participant will be taxed in
the same manner as if he or she had received cash.
Tax Consequences
to Staples
There will be no tax consequences to
Staples except that we will be entitled to a deduction when a participant has
compensation income upon a disqualifying disposition for purchases made under
the 423 Component and upon purchases made under the Non-423 Component. Any such
deduction will be subject to the limitations of Code Section 162(m).
OUR BOARD RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL OF THE AMENDMENT TO THE 2012 EMPLOYEE STOCK PURCHASE
PLAN.
www.staplesannualmeeting.com |
|
33 |
Table of Contents
❯ EXECUTIVE COMPENSATION AND
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and
Analysis (CD&A) describes the principles that guide our compensation
program, its design, the process used to evaluate performance in the context of
executive pay decisions, and performance goals and results for each named
executive officer.
Our Named Executive Officers (NEOs)
for fiscal year 2014 were:
NEO |
|
Title in 2014 |
|
Years in
Position
At End of 2014 |
|
Years at
Staples
At End of 2014 |
Ronald L. Sargent |
|
Chairman & CEO |
|
13 |
1 |
26 |
Christine T. Komola |
|
Executive Vice President and CFO |
|
3 |
2 |
18 |
Joseph G. Doody |
|
Vice Chairman |
|
1 |
3 |
16 |
Demos Parneros |
|
President North American Stores & Online
(NAS&O) |
|
13 |
4 |
27 |
John Wilson |
|
President Staples Europe |
|
2 |
|
2 5 |
1 |
Chief Executive Officer since 2002 and Chairman since
2005 |
2 |
Chief Financial Officer since 2012 and Executive Vice President
since 2013 |
3 |
Vice Chairman since 2014, President North American Commercial
from 2013-2014 and President North American Delivery since
2002 |
4 |
President NAS&O since 2013 and President U.S. Stores since
2002 |
5 |
President Staples Europe since 2012 and Chief Financial Officer and EVP Finance Strategy from 1992-1996. |
CD&A
HIGHLIGHTS
PERFORMANCE
OVERVIEW |
|
35 |
|
SHAREHOLDER OUTREACH & RESPONSE TO 2014 |
|
|
SAY-ON-PAY
VOTE |
|
36 |
|
PLAN DESIGN & COMPONENTS OF |
|
|
EXECUTIVE
COMPENSATION |
|
37 |
Guiding Principle
of Our Compensation Program |
The Staples Compensation Committee (the
Committee) believes that executive compensation should be tightly linked to
performance and the creation of long-term value for our shareholders.
Based on this principle, as well as
consultation with shareholders, 100% of our near-term and long-term incentive
programs now are tied to objective, quantifiable, and rigorous performance
metrics. With the transition of our senior executive incentive compensation
program to 100% performance shares now complete, we believe our program going
forward is simple and consistent with best practices in compensation
design.
34 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND
COMPENSATION DISCUSSION AND ANALYSIS
Staples provides products and services
that serve the needs of business customers of all sizes and consumers through a
highly complex, multi-channel business in 25 countries.
We operate three business segments. The
North American Stores & Online segment offers easy-to-shop stores and
websites. Our North American Commercial segment consists of the U.S. and
Canadian businesses that sell and deliver products and services directly to
businesses, including Staples Advantage and Quill.com. Finally, our
International Operations segment consists of businesses in 23 countries in
Europe, Australia, South America and Asia.
North
American Stores & Online |
|
North
American Commercial |
|
International Operations |
46% of 2014 Sales |
|
37% of 2014 Sales |
|
17% of 2014 Sales |
● 1,679 stores in North America
● One
of the largest e-Commerce players in North
America |
|
● Business-to-business distribution channel: Staples Advantage and
Quill.com |
|
● Contract,
retail, and catalog operations in 23 countries outside the US and
Canada
● 74% Europe, 19% Australia, 7%
High Growth Markets |
FY14 Performance Highlights
The needs of our customers are rapidly
changing. Over the past several years, demand for office supplies, computers,
business machines and technology accessories has been under pressure. The
company is engaged in a strategic reinvention program focused on building scale
and credibility in categories beyond office supplies, accelerating growth in
Contract and staples.com, enhancing our copy and print offering, optimizing our
retail store network, building a stronger connection between our online and
retail businesses, stabilizing Europe, and aggressively reducing expenses to
fund investments in key growth initiatives.
These reinvention priorities are
designed to position the company to generate long-term sales and earnings
growth. The Committee sets rigorous financial metrics tied directly to the
success of our reinvention program and the creation of long-term shareholder
value in a highly competitive industry.
During 2014 the company made progress
against many of our key reinvention goals:
● |
Achieved more than $200 million of growth in
categories beyond office supplies in North America |
● |
Added more than 100 category specialists which
supported double-digit sales growth in our $3.4 billion beyond office supply
business in North American Contract |
● |
Invested heavily in e-commerce capabilities,
talent, and business customer acquisition in staples.com, which drove 8%
local currency sales growth |
● |
Over the past two years expanded our assortment
on staples.com from 100,000 products to well over 1,000,000
products |
● |
In copy and print, achieved high single-digit same store sales growth and
double-digit sales growth online in copy and print |
● |
Acquired PNI Digital Media, a copy and print
software company that dramatically enhances our offering of personalized
products |
● |
Closed 169 stores in North America and
downsized and relocated 23 stores to our highly productive 12,000 square
foot format |
● |
Increased the coordination between our retail
stores and staples.com with the launch of Buy Online, Pickup in Store, and
enhancements to our in-store staples.com kiosks |
● |
Stabilized Europe sales and earnings and took
aggressive actions to reduce costs, streamline the organization, and
improve the customer experience |
● |
Eliminated more than $250 million of global
expenses |
● |
Returned approximately $500 million to
shareholders through cash dividends and share repurchases |
● |
In 2015, announced our plans to acquire Office
Depot, which we believe will create significant value for our shareholders
and customers and better position us to accelerate our reinvention and
more effectively compete against a wide set of competitors in office supplies and a range of
categories beyond office supplies |
Total shareholder return (TSR) improved in fiscal 2014, largely
driven by our success with the reinvention strategy and
influenced by market speculation about industry consolidation.
Total Shareholder Return |
|
Staples |
|
S&P Retail Index |
1-year |
|
+35% |
|
+20% |
3-year |
|
+18% |
|
+98% |
www.staplesannualmeeting.com |
|
35 |
Table of Contents
EXECUTIVE COMPENSATION AND
COMPENSATION DISCUSSION AND ANALYSIS
Shareholder Outreach & Response to 2014 Say-on-Pay
Vote |
Staples has undertaken a comprehensive shareholder outreach
program for a number of years. Our Board values the opportunity to engage
directly with our shareholders to hear their thoughts, since it allows the Board
to better represent their interests.
In 2014, our Say-on-Pay proposal received support from 46% of
our shareholders. We considered these results seriously, particularly after the
strong level of support a year earlier. Following the 2014 annual meeting, the
Committee asked management to intensify our outreach program to make sure we
fully understood shareholder concerns that led to the results in order to
address them promptly and effectively.
We completed two rounds of engagement with institutional
investors since the 2014 annual meeting, with constructive dialogue with
stockholders representing more than 40% of shares. A summary of their
perspectives is listed below.
Shareholder
Feedback, Board Response and 2015 Changes
● |
General Compensation
Structure: In 2013, we completely
overhauled our compensation structure and adopted a program that is 100%
performance based for both long-term and short-term incentive plans. This
change reflected our belief that executive compensation should drive
long-term value creation for shareholders. Staples is among only 11% of
S&P 500 companies that grant 100% of long-term equity awards in the
form of performance shares, according to Equilar. While this emphasis on
performance shares was well received by our leading investors, some
shareholders expressed concerns about the size of the pay opportunity for
our CEO. However, as discussed in more detail in this CD&A, Mr.
Sargents total target compensation is below the median of our peer group.
Additionally, approximately 89% of Mr. Sargents total target compensation
is performance-based. |
● |
Reinvention Award:A
number of shareholders expressed concern with the reinvention award - a
special one-time cash award we provided in 2013 to approximately 5,000 of
our 83,000 employees, including our executives after no bonuses were
paid from the annual incentive plan for the second year in a
row. |
|
Though we slightly missed our EPS threshold in
2013, we were increasingly concerned with retention, and therefore,
granted all of our bonus-eligible employees a one-time cash award of 16%
of their target bonus to recognize their hard work and level of effort, as
well as the progress made towards our sales goal, which was above the
threshold performance in a difficult sales environment. Many associates
had also assumed additional responsibilities in connection with the
reinvention. |
|
After our engagement with
shareholders we understand that a number of them do not believe NEOs
should have received the cash award. While the Committee was concerned
with retention at all levels, including for NEOs, Committee members heard
the message on discretionary awards to NEOs clearly. We did not provide
such an award to any NEOs this year and have no plan to do so in the
future. |
● |
Concern with Overlapping Cash
Awards: Some shareholders
expressed concerns with the fact that two of our legacy long-term cash
awards the 2012-2014 grant, (which was granted prior to the 2013
overhaul of our compensation program) and the 2013-2014 grant
overlapped with the new equity awards granted
under our new program design, the 2013-2015 performance share awards. |
|
We understand that shareholders prefer a simplified,
transparent structure that avoids multiple opportunities to compensate
executives for the same results. The legacy cash award programs ended in
2014. Going forward, we intend to rely solely on three-year, 100%
performance based awards for our long-term equity
program. |
● |
Length of
Performance Periods: Several
shareholders also expressed concerns with the Boards decision to set
performance goals annually within our three-year performance awards,
rather than set a single target three years in
advance. |
|
The needs of our customers are rapidly changing and the short-term
impacts of these secular changes on our business are difficult to predict.
Accordingly, there is a lot of variability in goals set 3-years out they
could end up unrealistically high, in which case they would lose their
ability to incentivize and retain executives, or unrealistically low,
which would provide payouts for performance the Board we would not find
sufficiently rigorous. We made the decision that at this point, during our
reinvention, to respond to rapid market evolution, three-year goals would
be counter-productive from the standpoint of the company and shareholder
value. |
|
That said, we understand that some shareholders have expressed a
preference for longer-term metrics. Our performance shares include a
3-year performance modifier of +/-25% based on relative TSR over
the period, and we may consider additional metrics with longer horizons in the future when we have greater
visibility into the companys expected performance. |
● |
Change in
Performance Metrics: Some
shareholders felt that too much emphasis was placed on sales metrics
within the incentive plans and suggested more focus on profit
drivers. |
|
In response to that
feedback, we have replaced the Total Sales metric in the 2015 Annual Cash
Incentive Plan with Gross Margin Dollars to place greater emphasis on
driving profitability. |
Additional
Program Changes in Response to Shareholder Feedback
● |
CEO Salary: Our CEO elected
not to accept a 2.5% base salary increase that had been granted in early
2014. |
● |
Elimination of Tax-Gross Up: In January 2015, our CEO
agreed to amend his existing severance agreement to remove a legacy
tax-gross-up provision that could have potentially triggered in the event
of a change in control. |
36 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND
COMPENSATION DISCUSSION AND ANALYSIS
Plan Design &
Components of Executive Compensation |
Following the overhaul of our
compensation program that began in 2013 and continued in 2014, our program today
is substantially simplified and highly performance-based.
The principal elements of our executive
compensation program now comprise just three basic elements: (1) base salary,
(2) annual performance-based cash incentive, and (3) long-term
stock incentives composed of 100% performance shares.
CEO |
|
Other NEOs |
|
|
|
|
|
|
CEO Target Opportunity Mix |
|
|
|
NEO Average (excluding
CEO) Target Opportunity Mix |
|
|
www.staplesannualmeeting.com |
|
37 |
Table of Contents
EXECUTIVE COMPENSATION AND
COMPENSATION DISCUSSION AND ANALYSIS
Component |
|
Fixed or Variable |
|
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 companys 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.
38 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND
ANALYSIS
2014
Compensation Results
Sales and earnings results for 2014 were
slightly above 97% of target goal with both RONA and sales beyond office
supplies exceeding target. Specific results and the corresponding amount of
compensation rewarded for each is provided below. This table provides
information only where there was a 2014 payout opportunity. No three-year
performance shares under our long-term program, implemented for 2013, were yet
eligible for payout. For more information about achievement under outstanding
performance share awards, see the Setting
Performance Goals section of this
CD&A.
|
Annual Cash Award |
|
Legacy Long-term Cash Awards |
|
|
|
|
|
Beyond Office Supplies Sales Growth* |
|
2012-2014 (Cumulative RONA) |
|
2013-2014 (RONA % and Sales Growth
%) |
|
EPS* |
|
Total Sales* |
|
|
|
Sales Growth%* |
|
RONA%* |
Actual Results |
$0.981 |
|
$22.67 billion |
|
$210 million |
|
Below Threshold |
|
(0.6)% |
|
8.95% |
Target Goal |
$1.01 |
|
$23.338 billion |
|
$200 million |
|
|
|
2.29% |
|
8.90% |
Weighting |
50% |
|
25% |
|
25% |
|
|
|
50% |
|
50% |
Achievement % |
87.34% |
|
70.97% |
|
103.28% |
|
0 |
|
70.97% |
|
103.55% |
|
Amount
Awarded Actual @ 87.23% of Target Award |
|
Amount Awarded 2014
results @ 87.26% of Target Award |
Ronald L. Sargent |
|
$1,634,526 |
|
|
|
0 |
$956,951 |
|
Christine T. Komola |
|
$425,045 |
|
|
|
0 |
$70,302 |
|
Joseph G. Doody |
|
$502,803 |
|
|
|
0 |
$252,385 |
|
Demos Parneros |
|
$514,069 |
|
|
|
0 |
$252,385 |
|
John Wilson |
|
$495,292 |
|
|
|
0 |
n/a |
|
* |
Additional
information about the calculation of goals is set forth in the applicable
2014 Compensation Program section
below. |
Threshold and maximum payout levels for
each target are described on pages 43-45 of this proxy statement.
Realized Pay and Alignment with
Performance
As the following chart indicates, Mr.
Sargents realized compensation over the last three years is aligned with
performance and reflects the fact that our reinvention strategy continues to
gain traction
CEO Compensation: As Reported vs.
Realized
For 2012, 88% of Realized Compensation
was attributable to exercise of expiring 2002 stock options and vesting of
restricted stock granted in prior years
Realized Compensation has been flat
since implementation of performance shares in 2013 and equals 60% of reported
pay over the two year period
No Annual Cash Incentive was earned in
2012 or 2013
|
|
Total Shareholder Return |
|
|
1 year |
|
3 year |
|
5 year |
Staples |
|
+35% |
|
+18% |
|
-16% |
S&P 500 |
|
+14% |
|
+62% |
|
+106% |
S&P Retail |
|
+20% |
|
+98% |
|
+197% |
1 |
As Reported Pay includes Base Salary, Actual Annual and Long-Term Cash
Incentives earned and the grant date fair value of Long-Term Equity Awards
as reported in the Summary Compensation Table for the applicable
year. |
2 |
Realized Compensation includes
Base Salary and Actual Annual and Long-Term Cash incentives earned as
reported in the Summary Compensation Table, plus the value of Stock
Options exercised or Stock Awards vested for the applicable
year. |
www.staplesannualmeeting.com |
|
39 |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND
ANALYSIS
Sound Compensation Governance and
Practices |
Long-Term
Alignment |
|
✓ |
Stock ownership guidelines
(5x for CEO, 3x to 4x for other NEOs) |
|
|
✓ |
No employment agreements
for NEOs |
|
|
✓ |
Double trigger change in
control provisions in severance agreements |
|
|
✓ |
3-year performance periods tied to TSR |
Transparency |
|
✓ |
Rigorous, objective
financial metrics on annual and long-term awards |
|
|
✓ |
No excise tax gross-ups in
executive severance agreements |
|
|
✓ |
Minimal, reasonable perquisites |
Compensation Risk
Oversight |
|
✓ |
Robust clawback
policy |
|
|
✓ |
Policy prohibiting
hedging |
|
|
✓ |
Predetermined stock grant
dates |
|
|
✓ |
Independent compensation
consultant hired by the Committee performs no other services for the
Company |
40 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND
ANALYSIS
|
2014 COMPENSATION
PROGRAM |
The Committees compensation decisions in
2014 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. In the course of its review, the Committee
considered the complexity of the business, historical regression analysis of
relevant performance metrics, input on current market practices from the
Committees independent compensation consultant and management, the highly
competitive environment for talent and prior years Say-on-Pay votes.
The Committees objective was to create a
stronger link between pay and performance and to simplify our executive
compensation program. To continue to motivate our executives to execute on the
key priorities of the strategic plan, the Committee reaffirmed its commitment to
pay for performance and the compensation philosophy established in
2013.
Objective |
|
2014
Action |
Support our growth
strategy |
|
● |
Annual cash incentive plan performance metrics: |
|
|
|
○ |
50% Earnings Per Share
(EPS) |
|
|
|
○ |
50% Sales |
|
|
|
|
■ |
25% Total Sales |
|
|
|
|
■ |
25% Beyond Office Supplies Sales
Growth |
|
|
● |
For purposes of calculating beyond office supplies,
office supplies is defined as paper, ink, toner and core office products
(writing, folders, paperclips, etc.) |
Emphasize long term |
|
● |
Long-term awards are 100% in the form of performance
shares |
stockholder value
creation |
|
● |
Performance share metrics: |
|
|
|
○ |
50% Return on Net Asset percentage
(RONA%) |
|
|
|
○ |
50% Sales Growth % |
|
|
● |
Three year performance period, with goals set annually for each
year |
|
|
● |
Award earned may be
increased or decreased by 25% based on the companys cumulative total
shareholder return (TSR) over three year performance period relative to
the S&P 500 |
● |
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 are 100% performance based, with base salary as the only guaranteed
element of total pay. |
● |
For our CEO, 89% of total target pay is
performance based. |
Setting Performance Goals |
We set our goals for our incentive
programs within the first 90 days of the fiscal year. Target performance goals
generally are based on our fiscal year operating plan and outlook for the
upcoming year. Our 2014 goals for Earnings per Share,
Total Sales and Beyond Office
Supplies Sales Growth, which would have resulted in 100% payout if achieved, were
$1.01 per share, $23.3 billion, and $200 million, respectively.
The table below highlights our history of
setting challenging performance goals.
|
Payout/Achievement |
Performance Award |
2011 |
|
2012 |
|
2013 |
|
2014 |
Annual Cash Incentive
Awards |
Average 78% achievement
of target 2009-2011 |
|
No achievement |
|
No achievement |
|
87% achievement
of target |
2011-2013 Long-Term Cash
Awards (1 year goals over 3 year
performance period) |
41.38% achievement |
|
No achievement |
|
14.34% achievement
Payout of 18.57% of target in
March 2014 |
|
– |
2012-2014 Long-Term Cash
Awards (3 year goal) |
– |
|
– |
|
– |
|
No payout |
2013-2014 Long-Term Cash
Awards |
– |
|
– |
|
49.74% achievement |
|
87.26% achievement
Payout of 68.5% of target in
March 2015 |
2013-2015 Performance Share
Awards (1 year goals over 3 year performance period) |
– |
|
– |
|
49.74% achievement |
|
87.26% achievement |
2014-2016 Performance Share
Awards (1 year goals over 3 year performance period) |
– |
|
– |
|
– |
|
87.26%
achievement |
www.staplesannualmeeting.com |
|
41 |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND
ANALYSIS
The table below summarizes the core
elements of our 2014 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 executives
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, Total Sales and Beyond Office
Supplies Sales Growth |
|
RONA%, Sales Growth
% |
We believe that a significant portion of
the compensation opportunities of our CEO and other NEOs should be performance
based and drive long-term value creation for our shareholders.
The charts below show that between 80-90%
of total compensation for our NEOs is performance based, and a substantial
majority (63-72%) is long-term.
CEO Target Opportunity
Mix
|
CFO Target Opportunity
Mix |
|
|
|
Presidents of NAC/NAS&O and
Europe Target Opportunity Mix
|
|
42 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND
ANALYSIS
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 executives level of
responsibility, experience, expertise and performance.
In March 2014, the Committee
approved:
● |
A 2% and 5% increase for the Vice
Chairman (Mr. Doody) and President NAS&O (Mr. Parneros), respectively.
Prior to these increases, the base salaries of Mr. Doody and Mr. Parneros
were at the 25th percentile of our peer group. The salary for
the President Europe (Mr. Wilson) did not increase since no merit
increases were awarded in Europe other than those legally required in each
country. |
● |
A 15% promotion increase for the
Chief Financial Officer (Ms. Komola) and a change in grade level
recognizing her second full year in the role and overall pay position
relative to the market. Ms. Komolas salary remains below the median of
the peer group. |
|
The Committee recommended and the
Board approved a 2.5% salary increase for the Chief Executive Officer. Mr.
Sargent subsequently declined this salary increase and his 2014 salary
remained the same as the prior year. |
Annual Cash Incentive Plan
Awards |
The NEOs are eligible to earn cash awards
under the Amended and Restated Executive Officer Incentive Plan (EOIP) based on
Company performance.
Funding
Staples funds an annual incentive plan
pool based on performance against pre-established financial targets and certain
qualitative criteria described below. Funding is expressed as a percentage of
target. The better our performance in relation to targets, the higher the
percentage of incentive pool funding; the weaker
our performance, the lower the percentage of incentive pool funding. When
performance for the year equates to target, the incentive pool is funded at 100%
of target.
Financial Performance
Metrics
The Committee selected three performance
metrics for the 2014 annual cash incentive awards: EPS (50%), Total Sales (25%)
and Beyond Office Supplies Sales Growth (25%). The Committee set threshold
requirements for payment of awards, and a maximum payout of 200% of target
payout. The Committee, working with its independent compensation consultant,
employed statistical modeling and judgment to assess the degree of difficulty of
hitting various levels of performance to ensure the goals were robust yet
attainable in the context of our business environment and progress to date on
the reinvention strategy.
1) |
Earnings per Share (EPS)
- Earnings per share is calculated based on
figures reported in our financial statements, adjusted to remove certain
non-recurring or non-cash charges. EPS is a funding mechanism for our
annual cash incentive program and minimum performance must be attained for
any payment to be earned. EPS generally is deemed to be a measure of
financial success and its maximization is a prime ingredient in
communicating operational health. The target goal was $1.01 per share, in
line with the Companys 2014 financial
budget. |
2) |
Total Company Sales
- Total Sales is calculated based on figures
reported in our financial statements, adjusted for the impact of foreign
exchange rates and unplanned store closures. Inclusion of a sales measure
motivates and directs associates to drive a central measure of
organization growth. The target goal was $23,338 million, in line with the
Companys financial budget. |
3) |
Beyond Office Supplies
Sales Growth (BO$$) - Beyond Office Supplies
Sales Growth is calculated as sales in categories other than traditional office
supplies as compared to fiscal 2013 Beyond Office Supplies Sales Growth and encourages our strategy of expanding our
product assortment, accelerating growth online and generally growing sales
beyond our core categories. The target goal was $200 million which was an
increase of 250% over 2013
results. |
2014 Annual Cash Incentive Plan -
Goals & Metrics
|
EPS |
|
Sales (millions) |
|
BO$$ (millions) |
Threshold |
$0.86 |
|
$21,611 |
|
$61 |
Target |
$1.01 |
|
$23,338 |
|
$200 |
Maximum |
$1.21 |
|
$24,715 |
|
$500 |
Actual Result |
$0.981 |
|
$22,670 |
|
$210 |
Each performance objective was assigned an
associated threshold achievement level below which no portion of the bonus
attributable to that measurement was to be paid. Additionally, target and
maximum levels are set with increased payouts for better than expected
performance. No portion of any bonus is payable in the event the company fails
to achieve the threshold EPS.
Annual Cash Incentive Awards
NEOs
Target awards for the annual cash
incentive are granted as a percentage of base salary. For 2014, the target
awards for Mr. Sargent, and Messrs. Doody, Parneros and Wilson were 150%, and
85% of base salary, respectively. In March 2014, Ms. Komolas target percentage
was increased from 60% to 85% in connection with her grade level change,
individual performance and to bring her total target cash more in line with
market practice for the CFO role.
www.staplesannualmeeting.com |
|
43 |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND
ANALYSIS
Long Term Incentive Plan
Awards |
Performance Share Awards
Long-term incentive awards for our NEOs
are delivered solely in performance shares, which for 2014 were authorized under
our Amended and Restated 2004 Stock Incentive Plan. These long-term awards are
subject to a three year performance period, with goals set annually for each
year of the performance period. The Committee believes that setting annual goals
are more appropriate milestones in measuring progress against our reinvention
strategy in light of the high level of uncertainty in our industry during this
dynamic period, but that overall performance should be measured over a
three-year period. In addition, any award that is earned based on performance
will be increased or decreased by 25% based on the companys three-year TSR
relative to the returns generated by the S&P 500 companies. As of January
31, 2015, two years into the 2013-2015 grant, our total shareholder return over
the first two years of the performance period is at the 56th percentile of the
S&P 500.
The Committee selected RONA% (50%) and
Sales Growth % (50%) as the 2014 performance metrics because these metrics are
linked to the execution of our reinvention strategy and are indicators of
stockholder value enhancement. The Committee, working with its independent
compensation consultant, employed statistical modeling and 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 2014 target goals were as
follows:
2014 Performance Share Plan - Goals
& Metrics
|
RONA
% |
|
Sales Growth
% |
Threshold |
7.92% |
|
-5.20% |
Target |
8.90% |
|
2.29% |
Maximum |
10.22% |
|
8.25% |
Actual Result |
8.95% |
|
-0.61% |
● |
RONA% - Return on net assets 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
8.9% was set in line with the Companys financial
budget. |
● |
Sales Growth % - Sales Growth is
based on the sales figures reported in our financial statements of 2014 as
compared to 2013, which included a 53rd week. The target goal was
2.29%. |
The tables below set forth, for each NEO,
the level of goal achievement for fiscal 2014, along with the target award for
the three-year performance periods 2013-2015 and 2014-2016.
|
3 Year Performance Period Achievement (2013 -
2015) |
|
|
|
|
Named Executive Officer |
2013 (RONA% and Sales Growth%) |
|
2014 (RONA% and Sales Growth%) |
|
2015 (RONA% and Sales Growth%) |
|
Target Award ($) |
|
Target Award (Shares) |
Ronald L. Sargent |
49.7% |
|
87.3% |
|
* |
|
$8,225,000 |
|
624,526 |
Christine T. Komola |
49.7% |
|
87.3% |
|
* |
|
$1,549,800 |
|
117,677 |
Joseph G. Doody |
49.7% |
|
87.3% |
|
* |
|
$2,169,100 |
|
164,701 |
Demos Parneros |
49.7% |
|
87.3% |
|
* |
|
$2,169,100 |
|
164,701 |
John Wilson |
49.7% |
|
87.3% |
|
* |
|
$1,518,475 |
|
115,299 |
* |
Achievement against 2015 goals
will be determined by the Committee in March 2016 |
As of January 31 2015, two years
into the 2013-2015 grant, our total shareholder return over the first two
years of the performance period is at the 56th percentile of
the S&P 500.
|
3 Year Performance Period Achievement (2014 -
2016) |
|
|
|
|
Named Executive
Officer |
2014 (RONA% and Sales Growth%) |
|
2015 (RONA% and Sales Growth%) |
|
2016 (RONA% and Sales Growth%) |
|
Target Award ($) |
|
Target Award (Shares) |
Ronald L. Sargent |
87.3% |
|
* |
|
* |
|
$8,225,000 |
|
613,806 |
Christine T. Komola |
87.3% |
|
* |
|
* |
|
$2,169,100 |
|
161,874 |
Joseph G. Doody |
87.3% |
|
* |
|
* |
|
$2,169,100 |
|
161,874 |
Demos Parneros |
87.3% |
|
* |
|
* |
|
$2,169,100 |
|
161,874 |
John Wilson |
87.3% |
|
* |
|
* |
|
$2,169,100 |
|
161,874 |
* |
Achievement against 2015 and 2016 goals will
be determined by the Committee in March
2016 and March 2017, respectively. |
44 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
Legacy Long-Term Cash
Award In March 2013, the Committee 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). The one time award
was in recognition of the belief that the three-year cumulative RONA goal under
the outstanding 2012-2014 long term cash award was highly unlikely to be
achieved as it no longer represented the companys priorities due to the
strategic reinvention plan. The 2013-2014 long term cash award was contingent on
achieving Sales Growth % and RONA% goals that were more reflective of the
current strategy. One half of the target award was the target amount for each of
the two fiscal years within the performance cycle and goals were established annually. In March
2015, at the end of the two-year period, the Committee certified the results
based on performance in each of the two fiscal years, and cash awards were paid
in accordance with goal achievement. The approved performance metrics,
weightings and goals for the 2013-2014 award were the same as the goals (RONA%
and Sales Growth %) approved for the 2013-2015 performance shares. The chart
below shows the goals results for both 2013 and 2014 and the resulting payments
that equated to a 68.5% payout under the plan. Going forward into 2015, the only
long-term incentive vehicle for executive officers are the performance
shares.
|
|
2 Year Performance Period Achievement (2013 - 2014) |
|
|
|
|
Named Executive Officer |
|
2013 (RONA%
and Sales Growth%) |
|
2014 (RONA%
and Sales Growth%) |
|
Target Award |
|
Actual Payout |
Ronald L. Sargent |
|
49.7% |
|
87.3% |
|
$2,193,333 |
|
$1,502,433 |
Christine T. Komola |
|
49.7% |
|
87.3% |
|
$161,133 |
|
$110,376 |
Joseph G. Doody |
|
49.7% |
|
87.3% |
|
$578,467 |
|
$396,250 |
Demos Parneros |
|
49.7% |
|
87.3% |
|
$578,467 |
|
$396,250 |
Executive
Benefits & Perquisites |
Retirement & Other Benefits
We do not have a pension plan in which
our NEOs participate. However, our NEOs are eligible to participate in defined
contribution retirement income plans. These plans include a standard 401(k)
qualified plan and a Supplemental Executive Retirement Plan (SERP). Both plans
are fully funded by the NEOs and supported by Staples through limited matching
contributions. Our NEOs are eligible to participate in our 401(k) qualified plan
on the same basis as our other salaried associates; however, their contributions
are limited to 2% of eligible compensation. Due to the limitations on our
officers ability to contribute to our 401(k) plan, we maintain the SERP, which
is a non-qualified deferred compensation plan intended to provide comparable
benefits above the applicable limits of our 401(k) qualified plan. Under the
SERP, officers of Staples may defer a total of up to 100% of their base salary,
bonus, and long term cash incentive awards and receive matching contributions up
to a maximum of 4% of base salary and bonus.
Additionally, the NEOs are eligible to
participate in standard health and welfare programs on the same basis as our
other salaried associates. These programs include medical, dental, vision,
disability, and supplemental life insurance. We also have an Executive Benefits
Program consisting of life insurance, long term care insurance, supplemental
long term disability, a survivor benefit plan, and an executive physical and
registry program. This program was implemented to enhance our retirement and
benefit offerings for senior management consistent with competitive practices
and to further support our efforts to attract and retain top talent. All senior
officers of Staples, including the NEOs, are eligible to participate in this
program. For each plan or policy described above that requires payment of
periodic premiums or other contributions, we generally pay such premiums or
other contributions for the benefit of each NEO. For more information about
retirement and other benefits, see the All
Other Compensation table following the
Summary Compensation Table in this proxy statement.
Expatriate Benefits
For more information about expatriate
benefits, see the All Other
Compensation table following the
Summary Compensation Table in this proxy statement. Mr. Wilson received certain ex-pat
benefits in connection with his assignment to the Netherlands in his role as
President Staples Europe.
Executive Perquisites
Our executive compensation program is
relatively free of perquisites. The Committee has adopted a policy prohibiting
gross up payments to cover taxes triggered by a change in control in any future
compensation, severance, or employment-related agreement.
Aircraft Policy. Under our aircraft policy, our CEO is permitted to use our
leased aircraft for personal use so long as the incremental cost to Staples is
treated as compensation income to our CEO. Subject to prior approval by our CEO
and similar compensation treatment, other NEOs may also use our leased aircraft
for personal use. There was no personal use of our leased aircraft during our
2014 fiscal year.
www.staplesannualmeeting.com |
|
45 |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
Tax Services Reimbursement
Program. We reimburse each NEO, other than
our CEO, up to $5,000 each year for tax, estate, or financial planning services
or advice from a pre-approved list of service providers that must not include
our independent registered public accounting firm. Our CEO is reimbursed up
to $50,000 each year for these services. The reimbursements are not grossed up
for taxes.
Policy against reimbursement of
excise tax on change in control payments. We
maintain a policy that prohibits Staples from entering into any compensation,
severance, or employment-related agreement that provides for a gross
up payment to 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 Companys 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.
|
PLAN DESIGN & COMPENSATION
PROCESS |
It is the companys 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 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.
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 Committees compensation consultants from serving as Staples regular
advisors and consultants. In our 2014 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 2014 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 2014, with the
Committees 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 2014 fiscal year. Exequity was paid $79,047 for all services rendered
during 2014. In March 2014, the Committee performed a conflict of interest
assessment with respect to Exequity and no conflict of interest was
identified.
46 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND ANALYSIS |
In March 2014, the Committee set
compensation for the NEOs based on its December 2013 review of 2010-2012
compensation, its assessment of our 2013 performance, stockholder feedback and
results of 2013 Say-on-Pay advisory vote, and general consideration of the
totality of the data, advice, and information provided by management and
Exequity.
In December 2014, the Committee
evaluated the competitiveness of our NEOs compensation relative to marketplace
norms and practices by analyzing current proxy statement data from our peer
group. During the course of this analysis, the Committee focused on whether
Staples pay practices were aligned with performance. In addition, the Committee
considered input from the Companys shareholder outreach process during the
preceding fall. This analysis was intended to inform the Committee as to whether
any changes to the executive compensation program were needed.
The Committee evaluated the
competitiveness of base salary, total cash compensation (base salary plus annual
cash bonus) and total direct compensation levels being extended to our CFO,
President NAS&O, President NAC, and President Europe. The Committees review
extended to pay in 2013 and also over the three year period 2011-2013. The
Committee then analyzed its findings with respect to pay competitiveness in
relation to the Companys performance measured by one year and three year TSR,
EPS, revenue growth, and ROIC relative to peer company results.
The principal consultant from Exequity
met with the Committee in executive session, without the presence of management,
to review CEO compensation. The Committee examined an assessment of our CEOs
total target compensation relative to peer group standards, pay mix relative to
peers, pay relationships between CEOs and other NEOs and actual compensation
realized relative to shareholder return, each over one and three
years.
The Committee reviews our peer group
extensively every three years. The most recent comprehensive review of our peer
group was performed in September 2012. The peer group analysis was conducted by
the Committees independent consultant. The current peer group was analyzed
using a proprietary model to compare the fit of each of the peer group
companies to Staples profile based on industry, company size, market valuation,
and performance. The composition of our peer group goes beyond just
retailers and business to business competitors. The Committee compared the fit
of the peer group companies to the fit of fifteen other potential peer
organizations that closely matched Staples profile. Based on a quantitative and
qualitative assessment, the Committee determined not to make any changes to the
existing peer group. The companies in our peer group are set forth
below.
Amazon.com, Inc* Best Buy Co.,
Inc. Costco Wholesale Corporation FedEx Corporation Gap
Inc. Home Depot, Inc. J.C. Penney Company, Inc.* |
|
Kohls Corporation Limited
Brands, Inc. Lowes Companies, Inc. Macys, Inc. Office Depot,
Inc. Safeway Inc. |
|
Starbucks Corp. Sysco
Corporation Target Corporation The TJX Companies, Inc. Walgreen
Co. Xerox Corporation |
* |
The Committee excluded from
consideration in its benchmarking analysis data pertaining to CEOs at
Amazon.com Inc. and J.C. Penney Company, Inc. Amazon.com, Inc.s
information is excluded because of the irregular character of the
compensation paid to its CEO, Jeffrey Bezos, who owns 19% of the company.
J.C. Penney Company, Inc.s information is excluded because of its pattern
of irregular compensation due to CEO turnover. |
The Committee intends to conduct a
comprehensive review of our peer group in June 2015 in light of the changing
dynamics of the marketplace and our business and based on shareholder feedback
received during our 2014 outreach discussions.
Compensation
Findings, Analysis & Conclusions |
This section describes the Committees
decision process, analysis and rationale relating to compensation for our CEO
and other named executive officers.
CEO
Compensation
Total CEO compensation for 2014 as
reported in our Summary Compensation Table was $12,391,537, including the grant
date fair value of the performance shares (66% of total 2014 compensation),
which are earned over the fiscal 2014-2016 period and paid only if the
performance goals are achieved. In addition, total CEO compensation includes the
amounts earned in 2014 under the 2013-2014 long term cash plan.
We are required under Summary
Compensation Table rules to report grant date value for performance shares, and
amounts actually earned for cash awards, so the change in long-term incentive
compensation design makes year over year comparisons within the Summary
Compensation Table more difficult.
www.staplesannualmeeting.com |
|
47 |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
In December 2014, the Committee
reflected on the companys performance in relation to Mr. Sargents earned
compensation. The Committee examined Staples 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 CEOs 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 CEOs 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. Sargents 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
incumbents 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 1 |
|
CFO
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. Komolas 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 Companys relative and absolute performance and the
significant changes we had made to our compensation program in the prior year.
The Committees 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.
48 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND ANALYSIS |
The Committee regularly reviews all
compensation components for our NEOs, including salary, bonus, current vested
and unvested long term incentive compensation, the current value of owned
shares, and cost to us of all perquisites and benefits. In addition, the
Committee periodically examines similar information for other senior executives.
The Committee also reviews the projected payout obligations under potential
retirement, termination, severance, and change-in-control scenarios to fully
understand the financial impact of each of these scenarios to Staples and to the
executives.
Documentation detailing the above
components and scenarios with their respective dollar amounts was prepared by
management for each of our NEOs and reviewed by the Committee in March 2014. This information was prepared based on
compensation data as of the end of fiscal year 2013 and assumed that the various
scenarios occurred at the end of fiscal year 2013. Similar termination scenario
information with respect to our 2014 fiscal year is presented under the heading
Potential Payments upon Termination or Change-in-Control. Based on this
review, the Committee found the total compensation for each of our NEOs under
these various scenarios to be reasonable. Many factors were considered,
including, but not limited to, the contributions of the executive to Staples,
the financial performance of Staples, the marketplace, the particular
contemplated scenario and the guidance provided by the independent compensation
consultant.
Certain officers within our Human
Resources department regularly attend Committee meetings to provide information
and recommendations regarding our executive compensation program, including the
Executive Vice President of Human Resources and Vice President of Compensation
and Benefits. Among other things, these officers present our CEOs
recommendations regarding any change in the base salary, bonus, equity
compensation, goals related to performance-based cash or equity compensation and
other benefits of other senior executives. These officers also compile other
relevant data at the request of the Committee. The CEOs recommendations are
based in part on the results of annual performance reviews of the other executives. The Committee is not bound
by such recommendations but generally takes them into consideration before
making final determinations about the compensation of such executives other than
our CEO. The CEO, at the discretion of the Committee, may be invited to attend
all or part of any Committee meeting to discuss compensation matters pertaining
to the other executives, and in fiscal 2014, he attended all four Committee
meetings. When discussing compensation matters pertaining to our CEO, the
Committee generally meets in executive sessions with its independent
compensation consultant without any member of management present.
Administration of Incentive
Plan |
The Board and the Committee, through
delegated powers, have broad discretion in administering the cash and stock
incentive plans. This discretion includes the authority to grant awards,
determine target awards, and select performance objectives and goals, along with
the ability to adopt, amend and repeal such administrative rules, guidelines and
practices as deemed advisable. In addition, the Committee has broad discretion
to modify awards and determine goal attainment and the payment of awards under
each plan. The Committee may determine to what extent, if any, specific items
are to be counted in the relevant financial measures for any particular business
and whether special one-time or extraordinary gains and/or losses and/or
extraordinary events should or should not be included or considered in the
calculation of goals. The Committee can decrease but not increase incentive
awards for NEOs.
The Board has delegated authority to
the Chairman and CEO to grant stock options and restricted stock units and, in
his capacity as Chairman, restricted stock to non-executive employees out of an
annual pool of 600,000 shares. The annual pool is designed to be used between
quarterly Committee meetings to facilitate making new hire and retention grants
and to reward special accomplishments and achievements of associates. Awards
from the annual pool are granted on the earlier of the first business day of the
month that follows appropriate approval or two business days after the
Committees ratification of the award. Awards from this pool cannot be granted
to executive officers.
In December 2014, the Committee
conducted its annual risk assessment of our executive officer compensation
programs. The evaluation included an analysis of the appropriateness of our peer
group, compensation mix, performance metrics, performance goals and payout
curves, payment timing and adjustments, equity incentives, stock ownership
guidelines/trading policies, performance appraisal process and
leadership/culture. In addition, the Committee reviewed the major compensation
plans with regard to risk mitigators attributable to each of the programs. The
risk mitigators included the balanced mix of cash and equity incentives, the mix
and quality of the performance metrics, the stock ownership guidelines and an aggressive recoupment policy. The Committee
also considered and reviewed the input from participants in the Companys
corporate governance outreach program. Based on its evaluation and recognizing
that all compensation programs are inherently risk laden, the Committee
determined that the level of risk within our compensation programs was
appropriate and did not encourage excessive risk taking by our executives.
Accordingly, the Committee concluded that our compensation programs are not
reasonably likely to have a material adverse effect on the Company.
www.staplesannualmeeting.com |
|
49 |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
Stock
Ownership Guidelines |
Within five years of becoming an
officer of the Company, our senior executives must attain minimum ownership of
Staples common stock equal in value to no less than a defined multiple of their
salary. The applicable multiples for Company officers are:
● |
CEO: 5x Salary |
● |
CFO: 4x Salary |
● |
Presidents: 3x Salary |
● |
Other Executive
Officers: 1 - 2x
Salary |
As of January 31, 2015, all executives
had achieved the ownership guidelines except Ms. Komola, who became our CFO in
February 2012 and an Executive Vice President in March 2013 and is therefore
still within the phase-in period.
Our annual cash bonus plans, long term
incentive plans and agreements and severance arrangements provide for forfeiture
and recovery of undeserved cash, equity and severance compensation from any
associate that engages in certain particularly
harmful or unethical behaviors such as intentional deceitful acts resulting in
improper personal benefit or injury to the company, fraud or willful misconduct
that significantly contributes to a material financial restatement, violation of
the Code of Ethics and breach of key associate agreements.
Hedging and
Pledging Company Securities |
Hedging. Our Insider Trading Policy prohibits, among many other actions, our
associates and directors from entering into derivative transactions such as
puts, calls, or hedges with our stock.
Pledging. Our Insider Trading Policy prohibits the use of Staples securities as
collateral in margin accounts. However, in limited circumstances, pledging of
Staples securities for bona fide loans which may require such securities as
collateral may be allowed, provided such pledge is cleared with the General
Counsel. In the past five years, the General Counsel has not cleared, or been asked to clear, any pledge of Staples’ securities.
Tax and
Accounting Implications |
Under Section 162(m) of the U.S.
Internal Revenue Code, certain executive compensation in excess of $1 million
paid to our CEO and to our three most highly compensated officers (other than
the CEO and CFO) whose compensation is required to be disclosed to our
stockholders under the Securities Exchange Act of 1934, is not deductible for
federal income tax purposes unless the executive compensation is awarded under a
performance-based plan approved by stockholders. To maintain flexibility in
compensating executive officers in a manner designed to promote varying
corporate goals, the Committee has not adopted a policy that all compensation
must be deductible. The Committee reviews the impact of Section 162(m) and
intends, to the extent practicable, to preserve deductibility under the Internal
Revenue Code of compensation paid to our executive officers when consistent with
our goal of utilizing compensation programs that attract and retain key
executives and align with stockholder interests.
All annual cash incentive awards
(except the Reinvention Cash Award paid in 2013), long term cash awards, stock
options and performance shares awarded to our NEOs are paid pursuant to plans
approved by our stockholders and are potentially deductible by us. Time-based
restricted stock does not qualify for the performance-based exception to Section
162(m), but the Committee in prior years has determined that the retention
benefit derived from such awards outweighed any potential tax benefit to us.
However, we are no longer granting time-based awards to our named executive
officers.
The compensation that we pay to our
NEOs is expensed in our financial statements as required by U.S. generally
accepted accounting principles. As one of many factors, the Committee considers
the financial statement impact in determining the amount of, and allocation
among the elements of, compensation. Stock-based compensation is accounted for
as required under FASB ASC Topic 718.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the
Company has reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of Regulation S-K with management and, based on this
review and discussion, recommended to the Board that the Compensation Discussion
and Analysis be included in this proxy statement.
Compensation
Committee |
|
Paul F. Walsh, Chair |
Carol Meyrowitz |
Raul
Vazquez |
50 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND
COMPENSATION DISCUSSION AND ANALYSIS |
EXECUTIVE COMPENSATION TABLES
Summary
Compensation Table |
The following table sets forth certain
information concerning the compensation of our CEO, CFO and the three other most
highly compensated executive officers, who we refer to collectively as the
NEOs.
|
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
Stock Awards ($)
(2)(3) |
|
Option Awards ($)
(2)(4) |
|
Non-Equity Incentive
Plan Compensation ($) (5) |
|
All
Other Compensation ($) (6) |
|
Total ($) |
|
Ronald L.
Sargent |
|
2014 |
|
1,249,208 |
|
|
|
8,225,000 |
|
|
|
2,591,478 |
|
325,851 |
|
12,391,537 |
(1) |
Chairman & Chief Executive Officer |
|
2013 |
|
1,249,208 |
|
299,810 |
|
8,225,007 |
|
|
|
667,415 |
|
326,440 |
|
10,767,880 |
(1) |
|
2012 |
|
1,203,386 |
|
|
|
2,467,504 |
|
2,467,502 |
|
|
|
336,212 |
|
6,474,604 |
|
Christine T.
Komola |
|
2014 |
|
584,063 |
|
|
|
2,169,112 |
|
|
|
495,347 |
|
59,142 |
|
3,307,664 |
|
Chief
Financial Officer |
|
2013 |
|
518,214 |
|
49,257 |
|
1,549,806 |
|
|
|
61,648 |
|
53,641 |
|
2,232,566 |
|
|
|
2012 |
|
430,000 |
|
|
|
181,208 |
|
181,203 |
|
|
|
58,224 |
|
850,635 |
|
Joseph G.
Doody |
|
2014 |
|
678,020 |
|
|
|
2,169,112 |
|
|
|
755,188 |
|
115,799 |
|
3,718,119 |
|
Vice
Chairman |
|
2013 |
|
653,351 |
|
88,856 |
|
2,169,112 |
|
|
|
176,469 |
|
141,483 |
|
3,229,271 |
|
|
|
2012 |
|
606,708 |
|
|
|
650,705 |
|
650,702 |
|
|
|
122,515 |
|
2,030,630 |
|
Demos
Parneros |
|
2014 |
|
693,050 |
|
|
|
2,169,112 |
|
|
|
766,454 |
|
86,186 |
|
3,714,802 |
|
President North America Stores & Online |
|
2013 |
|
653,351 |
|
88,856 |
|
2,169,112 |
|
|
|
176,469 |
|
98,498 |
|
3,186,286 |
|
|
2012 |
|
606,708 |
|
|
|
650,705 |
|
650,702 |
|
|
|
129,674 |
|
2,037,789 |
|
John
Wilson |
|
2014 |
|
668,000 |
|
|
|
2,169,112 |
|
|
|
495,292 |
|
326,725 |
|
3,659,129 |
|
President Staples
Europe |
|
2013 |
|
653,351 |
|
414,160 |
|
1,518,488 |
|
|
|
|
|
76,756 |
|
2,662,755 |
|
(1) |
The increase in total compensation for our CEO in 2014 from 2013 is
primarily due to the payment in 2014 of an annual cash incentive award
earned under the Amended and Restated Executive Officer Incentive Plan. No
annual cash incentive award was earned in 2013. The increase in total
compensation for our CEO in 2013 and 2014 as compared to 2012 is primarily
related to a change in the form of incentive awards granted to our NEOs.
Beginning in 2013, we changed our long term incentive awards for our
executives to 100% performance shares from a mix of stock options,
restricted stock and long-term cash awards. The total target compensation
opportunity for our CEO did not materially change for 2014, 2013 and 2012,
but the awards are reported differently in the Summary Compensation Table.
For more information, see the CD&A section of the proxy
statement. |
(2) |
The amounts shown in the Stock Awards and Option Awards columns
represent the aggregate grant date fair value of awards computed in
accordance with Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 718, not the actual amounts paid to
or realized by the NEOs during our 2014, 2013 and 2012 fiscal years. An
explanation of the vesting of restricted stock, restricted stock unit and
option awards, as well as the methodology for payouts under performance
share awards, is discussed in the footnotes to the Grants of Plan-Based Awards for 2014 Fiscal Year
and Outstanding Equity Awards at 2014 Fiscal Year End tables below. |
(3) |
The amounts shown in the Stock Awards column in 2014 represent the
grant date fair value of the 2014-2016 performance share awards granted
under the 2014 Stock Incentive Plan. The fair value of these awards is
based on the closing price of our common stock ($13.40) on March 5, 2014
(grant date) and is calculated at the target share payout for all three
years of the performance period. For information about the threshold and
maximum payout amounts under these awards, see Grants of Plan-Based Awards for 2014 Fiscal Year table below.
For our three-year performance share
awards, one-third of the three-year target award is applied as a target
amount for each of the fiscal years within the performance period. Actual
shares earned are based on achievement of goals established for each year.
In addition, any award that is earned based on performance will be increased or decreased by 25% based on Staples three-year TSR relative to the returns generated by the S&P 500 over the same period. See CD&A for information about 2014 goal achievement. |
(4) |
The fair value of each stock option award, which were granted in
2012, is estimated as of the date of grant using a binomial valuation
model. Additional information regarding the assumptions used to estimate
the fair value of all stock option awards is included in Note K in the
Notes to the Consolidated Financial Statements contained in our Annual
Report on Form 10-K for our 2014 fiscal
year. |
www.staplesannualmeeting.com |
|
51 |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
(5) |
The Non-Equity Incentive Plan Compensation column in 2014
represents (a) amounts earned under the annual cash incentive award and
(b) amounts earned under a legacy long term cash award granted in 2013
pursuant to our Amended and Restated Long Term Cash Plan. No annual cash
incentive award was earned in 2013. NEOs no longer receive long term cash
awards.
The table below provides additional information about the amounts
earned in 2014 under our non-equity incentive
plans: |
NEO |
|
Annual Incentive Plan ($) |
|
Legacy Long Term Cash Award ($) |
Ronald L. Sargent |
|
$1,634,526 |
|
$956,951 |
Christine T. Komola |
|
$425,045 |
|
$70,302 |
Joseph G. Doody |
|
$502,803 |
|
$252,385 |
Demos Parneros |
|
$514,069 |
|
$252,385 |
John Wilson |
|
$495,292 |
|
|
(6) |
The All Other Compensation column
represents the following amounts, as applicable for each
NEO: |
● Contributions made on a matching basis pursuant to the terms of our
401(k) plan and SERP.
● Dividend equivalents paid on shares of restricted stock
granted prior to January 2009.
● Premiums paid under our executive life insurance and
long-term disability plans, reimbursement of taxes owed with respect to such
premiums, and premiums paid under our long-term care plan. In fiscal year 2014,
annual premiums paid under our executive life insurance plan for Mr. Sargent,
Ms. Komola, Mr. Doody and Mr. Parneros were $100,000, $19,304, $50,000 and
$30,000, respectively. There was no annual premium paid for Mr. Wilson in 2014.
Mr. Wilsons life insurance coverage is in the form of Death Benefit Only,
providing for Staples to pay his beneficiary upon his death. In fiscal year
2014, annual premiums paid under our long-term disability plans for Messrs.
Sargent and Parneros were $16,836 and $3,570,
respectively.
● Tax preparation services.
● Executive physical and registry
program.
● Cash payments described in the All Other Compensation
table below.
The table below sets forth the dollar
amounts that we paid for each applicable item listed above.
|
|
|
|
401(k) ($) |
|
SERP ($) |
|
Dividend Equivalents ($) |
|
Executive
Life Insurance ($) |
|
Long-Term Disability ($) |
|
Long-Term Care ($) |
|
Tax Services ($) (1) |
|
Physical ($) |
|
Cash Payments ($) (1)
|
|
|
2014 |
|
2,600 |
|
50,625 |
|
|
|
189,215 |
|
31,856 |
|
1,555 |
|
50,000 |
|
|
|
|
Ronald L.
Sargent |
|
2013 |
|
2,550 |
|
49,741 |
|
|
|
189,394 |
|
33,200 |
|
1,555 |
|
50,000 |
|
|
|
|
|
|
2012 |
|
2,500 |
|
76,715 |
|
5,037 |
|
171,527 |
|
28,878 |
|
1,555 |
|
50,000 |
|
|
|
|
|
|
2014 |
|
2,600 |
|
23,100 |
|
|
|
28,620 |
|
|
|
1,022 |
|
1,050 |
|
2,750 |
|
|
Christine T.
Komola |
|
2013 |
|
2,550 |
|
20,367 |
|
|
|
28,677 |
|
|
|
1,022 |
|
1,025 |
|
|
|
|
|
|
2012 |
|
2,500 |
|
18,760 |
|
|
|
28,264 |
|
|
|
1,022 |
|
1,326 |
|
2,650 |
|
3,702 |
|
|
2014 |
|
2,600 |
|
27,076 |
|
|
|
79,327 |
|
|
|
1,796 |
|
5,000 |
|
|
|
|
Joseph G.
Doody |
|
2013 |
|
2,550 |
|
25,903 |
|
|
|
103,484 |
|
|
|
1,796 |
|
5,000 |
|
2,750 |
|
|
|
|
2012 |
|
2,500 |
|
35,837 |
|
1,526 |
|
73,206 |
|
|
|
1,796 |
|
5,000 |
|
2,650 |
|
|
|
|
2014 |
|
2,600 |
|
27,611 |
|
|
|
44,477 |
|
5,292 |
|
1,206 |
|
5,000 |
|
|
|
|
Demos
Parneros |
|
2013 |
|
2,550 |
|
25,903 |
|
|
|
56,818 |
|
7,021 |
|
1,206 |
|
5,000 |
|
|
|
|
|
|
2012 |
|
2,500 |
|
34,879 |
|
|
|
51,458 |
|
6,157 |
|
1,206 |
|
5,000 |
|
|
|
28,474 |
John Wilson |
|
2014 |
|
|
|
26,720 |
|
|
|
|
|
|
|
5,064 |
|
18,200 |
|
|
|
276,741 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
3,094 |
|
|
|
|
|
73,662 |
(1) |
The Tax Services and Cash Payments columns for 2014 includes payments made to or on
behalf of Mr. Wilson as a direct result of his expatriate assignment from
the U.S. to the Netherlands. The total shown for tax services is the actual cost of Mr. Wilsons tax preparation services. The total shown for the cash payments
includes cost of secondary housing while on assignment, a cost of living
differential allowance, school fees, automobile and home leave costs.
Amounts increased in 2014 over 2013 due to the move of Mr. Wilsons family
to the Netherlands. |
52 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND ANALYSIS |
Grants of
Plan-Based Awards for 2014 Fiscal Year |
The following table sets forth summary
information regarding grants of plan-based awards made to the NEOs for our 2014
fiscal year.
|
|
|
|
|
|
Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards |
|
Estimated Future Payouts Under Equity Incentive Plan Awards (1) |
|
|
Name |
|
Grant Date |
|
Committee Approval Date |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
|
Grant Date Fair Value of Stock (1) |
Ronald L. Sargent |
|
(2) |
|
|
|
234,227 |
|
1,873,812 |
|
3,747,624 |
|
|
|
|
|
|
|
|
|
|
3/5/2014 |
|
3/3/2014 |
|
|
|
|
|
|
|
153,452 |
|
613,806 |
|
1,227,612 |
|
$8,225,000 |
Christine T. Komola |
|
(2) |
|
|
|
60,909 |
|
487,269 |
|
974,538 |
|
|
|
|
|
|
|
|
|
|
3/5/2014 |
|
3/3/2014 |
|
|
|
|
|
|
|
40,469 |
|
161,874 |
|
323,748 |
|
$2,169,112 |
John Wilson |
|
(2) |
|
|
|
70,975 |
|
567,800 |
|
1,135,600 |
|
|
|
|
|
|
|
|
|
|
3/5/2014 |
|
3/3/2014 |
|
|
|
|
|
|
|
40,469 |
|
161,874 |
|
323,748 |
|
$2,169,112 |
Joseph G. Doody |
|
(2) |
|
|
|
72,051 |
|
576,411 |
|
1,152,821 |
|
|
|
|
|
|
|
|
|
|
3/5/2014 |
|
3/3/2014 |
|
|
|
|
|
|
|
40,469 |
|
161,874 |
|
323,748 |
|
$2,169,112 |
Demos Parneros |
|
(2) |
|
|
|
73,666 |
|
589,326 |
|
1,178,653 |
|
|
|
|
|
|
|
|
|
|
3/5/2014 |
|
3/3/2014 |
|
|
|
|
|
|
|
40,469 |
|
161,874 |
|
323,748 |
|
$2,169,112 |
(1) |
On March 3, 2014, the Compensation Committee established the
threshold, target and maximum payout levels for the 2014-2016 performance share awards granted
pursuant to our 2014 Stock Incentive Plan. Amounts earned under performance share
awards may be increased or decreased by 25% based on Staples’ three-year TSR relative to the returns generated by
the S&P 500 over the same period. |
|
The grant date fair value of these
awards is based on the closing price of our common stock ($13.40) on March
5, 2014 (grant date). The table below provides additional information
about the value of the awards based on threshold and maximum payout levels
for all three years of the performance period, excluding any increase or
decrease based on TSR performance: |
|
NEO |
|
2014-2016 Threshold ($) |
|
2014-2016 Target ($) |
|
2014-2016 Max ($) |
|
Ronald L. Sargent |
|
$2,506,257 |
|
$8,225,000 |
|
$16,450,001 |
|
Christine T. Komola |
|
$542,285 |
|
$2,169,112 |
|
$4,338,223 |
|
Joseph G. Doody |
|
$542,285 |
|
$2,169,112 |
|
$4,338,223 |
|
Demos Parneros |
|
$542,285 |
|
$2,169,112 |
|
$4,338,223 |
|
John Wilson |
|
$542,285 |
|
$2,169,112 |
|
$4,338,223 |
|
For our three-year performance share awards, one-third of the
three-year target award is applied as a target amount for each of the
fiscal years within the performance period. Actual shares earned are based
on achievement of goals established for each year. See CD&A for
information about 2014 goal achievement. |
(2) |
On April 14, 2014, the Compensation Committee established the
performance objectives for the 2014 annual cash incentive awards under the
Amended and Restated Executive Officer Incentive Plan, as well as the
threshold, target and maximum payment levels. See CD&A for
information about 2014 goal achievement. |
www.staplesannualmeeting.com |
|
53 |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
Vesting Provisions of Plan-Based
Awards |
2014
Compensation Program:
Annual Cash Incentive Plan Awards.
Payments of annual cash incentive plan awards under the Executive Officer
Incentive Plan are determined based on achievement of performance goals and
continued service to Staples. In addition, the following provisions
apply:
● |
Retirement. If a NEO terminates
his employment before the end of a performance period and if the NEO has
satisfied the Rule of 65 requirements (attainment of age 55 plus years
of service to Staples is equal to or greater than 65), then the NEO is
eligible for a prorated award based on the number of days the NEO was
employed during the plan year. A prorated award will only be paid out if
the Compensation Committee certifies achievement of the objectives and the
payouts at the end of the plan year. |
● |
Death. Upon a NEOs death before
the end of the plan year, annual cash incentive plan awards will be paid
out at 100% of the target award, regardless of the amount that would have
been earned based upon achievement of the performance
goals. |
● |
Disability. If a NEOs
employment is terminated due to disability before the end of the plan
year, then the NEO is eligible for a prorated award based on the number of
days the NEO was employed during the plan year. Prorated awards will only
be paid out if the Compensation Committee certifies achievement of the
objectives and the payouts at the end of the plan
year. |
● |
Termination of Employment. Other
than as described above, all annual cash incentive plan awards are
forfeited upon termination of employment. |
Performance Shares. Performance share awards are earned based on achievement of
performance objectives for each year of the performance period, but do not fully vest until the three-year performance period is completed. In
addition, the following provisions apply:
● |
Termination of Employment by Staples, Retirement or
Resignation. If a NEO is terminated
other than for cause (as defined in the award agreement) or the NEO retires or resigns and the age and years of service
requirements of our Rule of 65 have been satisfied, then the NEO may be eligible to receive (i) shares earned for
completed fiscal years within the performance period and, for partial
fiscal years during which the named executive officer was employed by
Staples, a pro rata portion based on the days employed by Staples,
as adjusted by (ii) the TSR multiplier. Prorated awards will only be paid out if the
Compensation Committee certifies achievement of the objectives and the
payouts will be made at the end of the applicable performance
period. |
● |
Termination for Cause by Staples. All performance shares are forfeited if a NEO is terminated for
cause. |
● |
Death or Disability. In the
event of a NEOs death or disability, performance shares will vest and be
paid out at the end of the performance period, to the extent the
performance objectives are met, as if the NEO were employed on such
date. |
● |
Change-in-Control. If, in
connection with a change-in-control, (a) the NEO does not accept employment
with the surviving corporation upon the change-in-control or (b) within
one year following the change-in-control, the NEOs employment is
terminated without cause (or the NEO resigns for good reason), the NEO is
entitled to receive the greater of the target number of shares or the
shares earned based on achievement of the performance objectives and TSR
multiplier. |
Legacy Compensation Programs:
Long Term Cash Awards. Payments of long
term cash awards under the Amended and Restated Long Term Cash Incentive Plan
are determined based on achievement of performance goals and continued service
to Staples. In addition, the following provisions apply:
● |
Retirement or Resignation. If a
NEO terminates his employment before the end of a performance period and
if the NEO has satisfied the Rule of 65 requirements, then the NEO is
eligible for a prorated award based on the number of days employed during
the performance cycle. For long term cash awards granted prior to fiscal
2013, a NEO that terminates employment before the end of the performance
cycle that has not met the requirements of the Rule of 65 is eligible for
a prorated long term cash award based on completed years in the
performance cycle. Prorated awards will only be paid out if the Committee certifies achievement of the objectives and the
payouts at the end of the applicable performance
period. |
● |
Termination of Employment by Staples. If a NEO is terminated by Staples other than for cause (as
defined in the Amended and Restated Long Term Cash Incentive Plan), the
NEO is eligible for a prorated award based on the number of days employed
during the performance cycle. Prorated awards will only be paid out if the
Compensation Committee certifies achievement of the objectives and the
payouts at the end of the performance cycle. |
● |
Termination for Cause by Staples. All long term cash awards are forfeited if a NEO is terminated
for cause. |
● |
Death. Upon a NEOs death before
the end of a performance period, long term cash awards will be paid out at
100% of the target award, regardless of the amount that would have been
earned based upon achievement of the performance
goals. |
54 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND ANALYSIS |
● |
Disability. If a NEOs
employment is terminated due to disability before the end of any
performance period, then the NEO is eligible for a prorated award based on
the number of days employed during
the performance cycle. Prorated awards will only be paid out if the
Compensation Committee certifies achievement of the objectives and the
payouts at the end of the performance period. |
● |
Change-in-Control. A
change-in-control would entitle a NEO at the end of the performance cycle
to a long term cash award payment equal to the greater of 100% of the
target award or the amount earned based on actual achievement of the
performance objectives if (1) the NEO does not accept employment by the
surviving corporation upon the change-in-control or (2) within one year
following the change-in-control, the NEOs employment is terminated
without cause (or the NEO resigns for good
reason). |
Restricted Stock and Option Awards.
Under certain circumstances, the time-based vesting or payout of restricted
stock and stock options, which were granted to NEOs prior to 2013, may be
accelerated or the awards may be forfeited as described below.
● |
Retirement or Resignation. If a
NEO retires or resigns and (i) the age of 65 has been attained, then all
stock options and restricted stock awards vest or (ii) the age and years
of service requirements of our Rule of 65 have been satisfied, then all
stock option awards vest in full. |
● |
Termination of Employment by Staples. All unvested restricted stock and stock options are forfeited if
a NEO is terminated by Staples, regardless of whether such termination was
for cause. |
● |
Death or Disability. All
restricted stock and stock options vest in full upon a NEOs death or
disability. |
● |
Change-in-Control. Under our
standard form of non-qualified stock option agreement, a change-in-control
would result in a partial vesting acceleration of outstanding options and
a termination without cause (or resignation for good reason) within one
year after a change-in-control would result in acceleration of vesting of
all remaining options. Under our standard form of restricted stock award
agreement, a change-in-control would result in acceleration of vesting of
all outstanding restricted shares if (1) the change-in-control results in
a NEO not being offered employment by the surviving corporation under
certain conditions or (2) within one year following the change-in-control,
the NEOs employment is terminated without cause (or the officer resigns
for good reason). |
2010 Special Performance and Retention
Awards. The number of shares eligible to vest under our 2010 Special Performance
and Retention Awards was determined in March 2013 based on achievement of
performance objectives over the fiscal year 2010-2012 performance period. 33% of
such shares vested in March 2013, 33% vested in March 2014 and 34% vested in
March 2015 based on continued service to Staples.
www.staplesannualmeeting.com |
|
55 |
Table of Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND
ANALYSIS |
Outstanding Equity Awards at 2014 Fiscal Year
End |
The following
table sets forth summary information regarding the outstanding equity awards
held by each of the NEOs as of the end of our 2014 fiscal year.
|
|
|
|
Option Awards |
|
Stock
Awards |
Name |
|
Grant Date/ Performance Share Period |
|
|
Number of Securities Underlying Unexercised Options
(#) Exercisable |
|
Number of Securities Underlying Unexercised Options
(#) Unexercisable (1) |
|
Option Exercise Price ($)
|
|
Option Expiration Date (2) |
|
Number of Shares or Units of Stock
That Have Not
Vested (#) (3) |
|
Market Value of Shares or
Units of Stock
That Have
Not Vested
($) (4) |
|
Equity Incentive Plan Awards:
Number of
Unearned Shares, Units or Other Rights
That Have Not
Vested (#) (5) |
|
Equity Incentive Plan Awards: Market or Payout Value
of Unearned
Shares, Units
or Other Rights That Have Not Vested ($)
(4) |
Ronald L. Sargent |
|
2/2/2014-1/31/2015 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
613,806 |
|
$10,465,392 |
|
|
2/3/2013-2/1/2014 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
624,526 |
|
$10,648,168 |
|
|
7/2/2012 |
|
|
412,034 |
|
412,034 |
|
13.03 |
|
7/2/2022 |
|
94,686 |
|
$1,614,396 |
|
|
|
|
|
|
7/1/2011 |
|
|
647,259 |
|
215,753 |
|
15.93 |
|
7/1/2021 |
|
|
|
|
|
|
|
|
|
|
7/1/2010 |
|
|
645,583 |
|
|
|
19.27 |
|
7/1/2020 |
|
|
|
|
|
|
|
|
|
|
1/31/2010 - 2/2/2013 |
(8) |
|
|
|
|
|
|
|
|
|
47,297 |
|
$806,414 |
|
|
|
|
|
|
7/1/2009 |
|
|
649,424 |
|
|
|
20.12 |
|
7/1/2019 |
|
|
|
|
|
|
|
|
|
|
7/1/2008 |
|
|
603,932 |
|
|
|
24.30 |
|
7/1/2018 |
|
|
|
|
|
|
|
|
|
|
7/2/2007 |
|
|
557,653 |
|
|
|
24.42 |
|
7/2/2017 |
|
|
|
|
|
|
|
|
|
|
7/3/2006 |
|
|
431,250 |
|
|
|
24.50 |
|
7/3/2016 |
|
|
|
|
|
|
|
|
|
|
6/30/2005 |
|
|
525,000 |
|
|
|
21.29 |
|
6/30/2015 |
|
|
|
|
|
|
|
|
Christine T. Komola |
|
2/2/2014-1/31/2015 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
161,874 |
|
$2,759,952 |
|
|
2/3/2013-2/1/2014 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
117,677 |
|
$2,006,393 |
|
|
7/2/2012 |
|
|
30,258 |
|
30,258 |
|
13.03 |
|
7/2/2022 |
|
6,954 |
|
$118,566 |
|
|
|
|
|
|
7/1/2011 |
|
|
29,554 |
|
9,852 |
|
15.93 |
|
7/1/2021 |
|
|
|
|
|
|
|
|
|
|
7/1/2010 |
|
|
29,478 |
|
|
|
19.27 |
|
7/1/2020 |
|
|
|
|
|
|
|
|
|
|
7/1/2009 |
|
|
29,653 |
|
|
|
20.12 |
|
7/1/2019 |
|
|
|
|
|
|
|
|
|
|
7/1/2008 |
|
|
18,736 |
|
|
|
24.30 |
|
7/1/2018 |
|
|
|
|
|
|
|
|
|
|
7/2/2007 |
|
|
17,300 |
|
|
|
24.42 |
|
7/2/2017 |
|
|
|
|
|
|
|
|
|
|
7/3/2006 |
|
|
14,075 |
|
|
|
24.50 |
|
7/3/2016 |
|
|
|
|
|
|
|
|
|
|
6/30/2005 |
|
|
18,000 |
|
|
|
21.29 |
|
6/30/2015 |
|
|
|
|
|
|
|
|
John Wilson |
|
2/2/2014-1/31/2015 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
161,874 |
|
$2,759,952 |
|
|
2/3/2013-2/1/2014 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
115,299 |
|
$1,965,848 |
|
|
12/5/2012 |
|
|
|
|
|
|
|
|
|
|
50,431 |
|
$859,849 |
|
|
|
|
|
|
10/1/2012 |
|
|
213,406 |
|
213,406 |
|
11.61 |
|
10/1/2022 |
|
|
|
|
|
|
|
|
Joseph G. Doody |
|
2/2/2014-1/31/2015 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
161,874 |
|
$2,759,952 |
|
|
2/3/2013-2/1/2014 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
164,701 |
|
$2,808,152 |
|
|
7/2/2012 |
|
|
108,657 |
|
108,657 |
|
13.03 |
|
7/2/2022 |
|
24,970 |
|
$425,739 |
|
|
|
|
|
|
7/1/2011 |
|
|
173,061 |
|
57,688 |
|
15.93 |
|
7/1/2021 |
|
|
|
|
|
|
|
|
|
|
7/1/2010 |
|
|
172,614 |
|
|
|
19.27 |
|
7/1/2020 |
|
|
|
|
|
|
|
|
|
|
1/31/2010 - 2/2/2013 |
(8) |
|
|
|
|
|
|
|
|
|
10,090 |
|
$172,035 |
|
|
|
|
|
|
7/1/2009 |
|
|
173,642 |
|
|
|
20.12 |
|
7/1/2019 |
|
|
|
|
|
|
|
|
|
|
7/1/2008 |
|
|
161,478 |
|
|
|
24.30 |
|
7/1/2018 |
|
|
|
|
|
|
|
|
|
|
7/2/2007 |
|
|
149,104 |
|
|
|
24.42 |
|
7/2/2017 |
|
|
|
|
|
|
|
|
|
|
7/3/2006 |
|
|
14,843 |
|
|
|
24.50 |
|
7/3/2016 |
|
|
|
|
|
|
|
|
|
|
7/3/2006 |
|
|
115,325 |
|
|
|
24.50 |
|
7/3/2016 |
|
|
|
|
|
|
|
|
|
|
6/30/2005 |
|
|
75,000 |
|
|
|
21.29 |
|
6/30/2015 |
|
|
|
|
|
|
|
|
56 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION
DISCUSSION AND ANALYSIS |
|
|
|
|
|
Option Awards |
|
Stock
Awards |
Name |
|
Grant
Date/ Performance Share Period |
|
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable |
|
Number of Securities Underlying Unexercised Options
(#) Unexercisable (1) |
|
Option Exercise Price ($)
|
|
Option Expiration Date (2) |
|
Number of Shares or Units of Stock
That Have
Not Vested (#) (3) |
|
Market Value
of Shares or Units of Stock That Have Not Vested ($)
(4) |
|
Equity Incentive Plan
Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested (#) (5) |
|
Equity Incentive Plan
Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have
Not Vested ($) (4) |
Demos
Parneros |
|
2/2/2014-1/31/2015 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
161,874 |
|
$2,759,952 |
|
|
2/3/2013-2/1/2014 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
164,701 |
|
$2,808,152 |
|
|
7/2/2012 |
|
|
108,657 |
|
108,657 |
|
13.03 |
|
7/2/2022 |
|
24,970 |
|
$425,739 |
|
|
|
|
|
|
7/1/2011 |
|
|
173,061 |
|
57,688 |
|
15.93 |
|
7/1/2021 |
|
|
|
|
|
|
|
|
|
|
7/1/2010 |
|
|
172,614 |
|
|
|
19.27 |
|
7/1/2020 |
|
|
|
|
|
|
|
|
|
|
1/31/2010 -
2/2/2013 |
(8) |
|
|
|
|
|
|
|
|
|
10,090 |
|
$172,035 |
|
|
|
|
|
|
7/1/2009 |
|
|
173,642 |
|
|
|
20.12 |
|
7/1/2019 |
|
|
|
|
|
|
|
|
|
|
7/1/2008 |
|
|
161,478 |
|
|
|
24.30 |
|
7/1/2018 |
|
|
|
|
|
|
|
|
|
|
7/2/2007 |
|
|
149,104 |
|
|
|
24.42 |
|
7/2/2017 |
|
|
|
|
|
|
|
|
|
|
7/3/2006 |
|
|
14,843 |
|
|
|
24.50 |
|
7/3/2016 |
|
|
|
|
|
|
|
|
|
|
7/3/2006 |
|
|
115,325 |
|
|
|
24.50 |
|
7/3/2016 |
|
|
|
|
|
|
|
|
|
|
6/30/2005 |
|
|
75,000 |
|
|
|
21.29 |
|
6/30/2015 |
|
|
|
|
|
|
|
|
(1) |
Stock options vest 25% per year
after the date of grant. The exercisability of the options is accelerated
in the circumstances described under the caption Accelerated Vesting of Awards following the Grants of
Plan-Based Awards for 2014 Fiscal Year
table above. |
|
(2) |
The expiration date for stock
options is typically the tenth anniversary of the date of
grant. |
|
(3) |
Unless otherwise indicated,
restricted stock vests 50% on the second anniversary of the date of grant
and 50% on the third anniversary of the date of grant. The vesting of
restricted stock awards is accelerated in the circumstances described
under the caption Accelerated Vesting
of Awards following the
Grants of Plan-Based Awards for 2014
Fiscal Year table above. |
|
(4) |
Based on the fair market value of
our common stock on January 31, 2015 ($17.05 per share). |
|
(5) |
The shares in the Equity
Incentive Plan Awards column represent performance share awards based on
target share payout. |
|
(6) |
Performance share awards vest
based on achievement of performance objectives over the performance period
covering fiscal years 2014 through 2016. For our three-year performance
share awards, one-third of the three-year target award is applied as a
target amount for each of the fiscal years within the performance period.
Actual shares earned are based on achievement of goals established for
each year. In addition, any award that is earned based on performance will be increased or decreased by 25% based on Staples three-year TSR relative to the returns generated by the S&P 500 over the same period. See the CD&A section of our proxy
statement for information about 2014 goal achievement. |
|
(7) |
Performance shares awards vest
based on achievement of performance objectives over the performance period
covering fiscal years 2013 through 2015. For our three-year performance
share awards, one-third of the target award is applied as a target amount
for each of the fiscal years within the performance period. Actual shares
earned are based on achievement of goals established for each year. In addition, any award that is earned based on performance will be increased or decreased by 25% based on Staples three-year TSR relative to the returns generated by the S&P 500 over the same period. See
the CD&A section of this proxy statement for information about 2014 and
2013 goal achievement. |
|
(8) |
Performance shares were paid out
in March 2013 based on achievement of the performance objectives for
fiscal years 2010 through 2012. Awarded shares vested 33% immediately, an
additional 33% vested in March 2014 and the remaining 34% vested in March
2015. |
www.staplesannualmeeting.com |
|
57 |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION
DISCUSSION AND ANALYSIS |
Option Exercises and Stock Vested During 2014 Fiscal
Year |
The following table summarizes the
option exercises and vesting of stock awards for each of the NEOs during our
2014 fiscal year:
|
|
Option Awards |
|
Stock Awards |
|
|
Number
of Shares Acquired on Exercise (#) |
|
Value
Realized Upon Exercise ($) |
|
Number
of Shares Acquired Upon Vesting (#) |
|
Value
Realized on Vesting ($) (1) |
Ronald L. Sargent |
|
0 |
|
0 |
|
213,323 |
|
2,466,460 |
Christine T. Komola |
|
0 |
|
0 |
|
10,124 |
|
111,813 |
John Wilson |
|
0 |
|
0 |
|
50,431 |
|
725,198 |
Joseph G. Doody |
|
0 |
|
0 |
|
53,189 |
|
610,974 |
Demos Parneros |
|
0 |
|
0 |
|
53,189 |
|
610,974 |
(1) |
Represents the fair market value of the stock
award on the date of vesting. |
58 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION
DISCUSSION AND ANALYSIS |
Non-Qualified Deferred Compensation for 2014 Fiscal
Year |
The following
table sets forth summary information with respect to each of the NEOs regarding
contributions to our Supplemental Executive Retirement Plan (SERP) for our
2014 fiscal year:
|
|
Executive Contributions in Last FY ($) |
|
Company Contributions in Last FY ($)* |
|
Aggregate
Earnings in Last FY ($) |
|
Aggregate Withdrawals/ Distributions ($) |
|
Aggregate Balance at Last FYE ($)* |
Ronald L. Sargent |
|
224,857 |
|
50,625 |
|
469,267 |
|
0 |
|
6,559,305 |
Christine T. Komola |
|
35,044 |
|
23,100 |
|
72,305 |
|
0 |
|
921,146 |
John Wilson |
|
26,943 |
|
26,720 |
|
545 |
|
0 |
|
56,245 |
Joseph G. Doody |
|
339,010 |
|
27,076 |
|
389,488 |
|
0 |
|
7,019,511 |
Demos Parneros |
|
34,652 |
|
27,611 |
|
126,739 |
|
0 |
|
1,395,599 |
* |
Company contribution amounts in 2014 are included in the All Other Compensation
column of the Summary Compensation Table included in this proxy statement. In addition, amounts reported in the
aggregate balance that were previously included in the Summary Compensation Table in prior years can be found in the
All Other Compensation Table included in this proxy statement. |
Our SERP is a non-qualified deferred
compensation plan which is generally intended to provide comparable benefits
above the applicable limits of our 401(k) qualified plan. Our SERP provides
participants with a range of well diversified investment options similar to our
401(k) plan. Eligible executives, including the named executive officers, may
contribute up to 100% of their base salary and annual cash bonus and will
receive matching contributions in cash equal to 100% of each dollar saved, up to
a maximum of 4% of base salary and bonus. The matching contributions generally
vest 20% per year during the first five years of service
based on hours worked during a calendar year. After five years of service,
participants are generally fully vested in all matching contributions. All of
our named executive officers, other than Mr. Wilson, are fully vested in their
SERP balances. Benefits generally are paid to the participant in accordance with
a predefined distribution schedule based on the requirements of Section 409A
under the Internal Revenue Code. Executives may also contribute a portion of
their Long Term Cash Incentive Plan payments; however, they will not receive
matching contributions from us.
Potential Payments Upon Termination or
Change-in-Control |
The tables
below show the estimated incremental value transfer to each current named
executive officer under various scenarios relating to a termination of
employment. The tables below and the discussion that follows assume that such
termination occurred on January 31, 2015. The actual amounts that would be paid to any named
executive officer can only be determined at the time of an actual termination of
employment and would vary from those listed below. The estimated amounts listed
below are in addition to any retirement, welfare and other benefits that are
available to associates generally.
www.staplesannualmeeting.com |
|
59 |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION
DISCUSSION AND ANALYSIS |
Fiscal 2014 Termination
Scenarios
|
|
Retirement
or Resignation |
|
Termination for
Cause |
|
Termination Without Cause |
|
Resignation for
Good Reason |
|
Termination Following Change- in- Control |
|
Change- in- Control
Only |
|
Death
or Disability |
|
Ronald L. Sargent * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment |
|
$0 |
|
$0 |
|
$3,787,974 |
|
$3,787,974 |
|
$5,681,960 |
|
$0 |
|
$0 |
|
Value of Accelerated Vesting
of Incentive Compensation |
|
$1,898,020 |
|
$0 |
|
$4,318,830 |
|
$1,898,020 |
|
$17,525,675 |
|
$474,505 |
|
$14,845,159 |
|
Continuation of Benefits |
|
$14,550 |
|
$14,550 |
|
$404,654 |
|
$404,654 |
|
$608,065 |
|
$0 |
|
$1,195,838 |
|
Life Insurance Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
Survivor Death Benefit
Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$8,213,400 |
(1) |
Excise and 409A Tax (Gross-up)
(2) |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
Total |
|
$1,912,570 |
|
$14,550 |
|
$8,511,458 |
|
$6,090,648 |
|
$23,815,700 |
|
$474,505 |
|
$24,254,397 |
|
|
|
Christine T. Komola * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment |
|
$0 |
|
$0 |
|
$761,851 |
|
$761,851 |
|
$1,142,776 |
|
$0 |
|
$0 |
|
Value of Accelerated Vesting
of Incentive Compensation |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$3,298,525 |
|
$33,168 |
|
$2,760,008 |
|
Continuation of Benefits |
|
$0 |
|
$0 |
|
$28,620 |
|
$28,620 |
|
$42,930 |
|
$0 |
|
$0 |
|
Life Insurance Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
Survivor Death Benefit
Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$2,747,063 |
(1) |
Total |
|
$0 |
|
$0 |
|
$790,471 |
|
$790,471 |
|
$4,484,231 |
|
$33,168 |
|
$5,507,071 |
|
|
|
Joseph G. Doody * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment |
|
$0 |
|
$0 |
|
$878,580 |
|
$878,580 |
|
$1,317,869 |
|
$0 |
|
$0 |
|
Value of Accelerated Vesting
of Incentive Compensation |
|
$501,412 |
|
$0 |
|
$673,446 |
|
$501,412 |
|
$4,582,091 |
|
$125,353 |
|
$3,875,215 |
|
Continuation of Benefits |
|
$9,142 |
|
$9,142 |
|
$89,189 |
|
$89,189 |
|
$134,055 |
|
$0 |
|
$0 |
|
Life Insurance Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
Survivor Death Benefit
Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$3,100,188 |
(1) |
Total |
|
$510,554 |
|
$9,142 |
|
$1,641,215 |
|
$1,469,180 |
|
$6,034,015 |
|
$125,353 |
|
$6,975,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demos Parneros * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment |
|
$0 |
|
$0 |
|
$902,375 |
|
$902,375 |
|
$1,353,563 |
|
$0 |
|
$0 |
|
Value of Accelerated Vesting
of Incentive Compensation |
|
$0 |
|
$0 |
|
$172,035 |
|
$0 |
|
$4,582,091 |
|
$125,353 |
|
$3,875,215 |
|
Continuation of Benefits |
|
$0 |
|
$0 |
|
$56,997 |
|
$56,997 |
|
$85,841 |
|
$0 |
|
$0 |
|
Life Insurance Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
Survivor Death Benefit
Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$3,191,370 |
(1) |
Total |
|
$0 |
|
$0 |
|
$1,131,407 |
|
$959,372 |
|
$6,021,494 |
|
$125,353 |
|
$7,066,585 |
|
60 |
|
Notice
of Annual Meeting of Stockholders |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION
DISCUSSION AND ANALYSIS |
|
|
Retirement
or Resignation |
|
Termination for
Cause |
|
Termination Without Cause |
|
Resignation for Good Reason |
|
Termination Following Change- in- Control |
|
Change- in- Control
Only |
|
Death
or Disability |
|
John Wilson* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance Payment |
|
$0 |
|
$0 |
|
$1,015,076 |
|
$1,015,076 |
|
$1,522,614 |
|
$0 |
|
$0 |
|
Value of Accelerated Vesting
of Incentive Compensation |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$5,046,044 |
|
$290,232 |
|
$4,516,028 |
|
Continuation of Benefits |
|
$0 |
|
$0 |
|
$20,009 |
|
$20,009 |
|
$30,565 |
|
$0 |
|
$0 |
|
Life Insurance Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
Survivor Death Benefit
Payout |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$0 |
|
$3,039,400 |
(1) |
Total |
|
$0 |
|
$0 |
|
$1,035,085 |
|
$1,035,085 |
|
$6,599,223 |
|
$290,232 |
|
$7,555,428 |
|
(1) |
Includes one year payout at
target under the Amended and Restated Executive Officer Incentive Plan in
addition to any Survivor Death Benefit Payout. |
|
(2) |
In January 2015, our CEO agreed
to amend his existing severance agreement to remove a legacy tax gross-up
provision that could have potentially triggered in the event of a change
in control. |
|
|
* |
Payouts subject to 409A
regulations. |
See below for additional explanation of
the terms of these payments and our assumptions calculating them. In addition,
please see the CD&A section of this proxy statement.
Retirement or
Resignation
The Retirement or Resignation column
includes:
● |
Value of Accelerated Vesting
of Incentive Compensation. For Messrs.
Sargent and Doody, who have met the age and service requirement under our
Rule of 65 (as described under the caption Accelerated Vesting of Awards
following the Grants of Plan Based
Awards for 2014 Fiscal Year table
earlier in this proxy statement), amounts represent the intrinsic value of
all unvested stock options as of fiscal year
end. |
● |
Continuation of Benefits. The
continuation of benefits for Messrs. Sargent and Doody represents the
provision of long-term care coverage beginning at age 65 under a group
long-term care insurance plan. |
Termination for Cause
The Termination for Cause column
includes:
● |
Continuation of Benefits. The
continuation of benefits for Messrs. Sargent and Doody represents the
provision of long-term care coverage beginning at age 65 under a group
long-term care insurance plan. |
Termination without Cause or
Resignation for Good Reason
In addition to our equity and cash
incentive award agreements that provide for the acceleration of vesting upon a
termination without cause, we have entered into severance benefits agreements
with each of the NEOs that provide compensation following a termination without
cause or resignation for good reason. The circumstances constituting cause or
good reason are specifically described in the severance benefits agreements for
the named executive officers, which are listed as exhibits to our most recent
Annual Report on Form 10-K and our cash and equity incentive plans, if
applicable. In general, under the severance benefit agreements and our incentive
plans:
● |
a termination will be for cause
if the NEO has willfully failed to perform his or her duties, breached any
confidentiality or non-compete agreement with us, or engaged in misconduct
that harms us; and |
● |
the NEO will have good reason to
resign if we significantly diminish his or her authority or
responsibilities, reduce his or her salary or eligibility for bonus and
other benefits, or require that he or she relocate their office more than
50 miles following a change-in-control of
Staples. |
The Termination without Cause and
Resignation for Good Reason columns include:
● |
Cash Severance Payments. For Mr.
Sargent, the amount represents the continuation of salary and bonus for 24
months and for Ms. Komola and Messrs. Doody, Parneros and Wilson, amounts
represent the continuation of salary and bonus for 12
months. |
www.staplesannualmeeting.com |
|
61 |
Table of Contents
EXECUTIVE COMPENSATION AND COMPENSATION
DISCUSSION AND ANALYSIS |
● |
Value of Accelerated Vesting of Incentive
Compensation. For Mr. Sargent, pursuant
to his severance benefit agreement, the amount includes the actual value
of all unvested stock options and restricted stock as of fiscal year end.
For Mr. Doody, who has met the age and service requirement under our Rule
of 65, the amount includes the intrinsic value of all unvested stock
options as of fiscal year end. For all named executive officers other than
Mr. Wilson and Ms. Komola, amounts in the Termination without Cause column
also include the actual value of all unvested 2010 Special Performance and
Retention Shares. |
● |
Continuation of Benefits. The
continuation of benefits represents health and dental insurance coverage
for the severance period, as well as executive life insurance. For Messrs.
Sargent and Doody, amounts also include the provision of long-term care
coverage beginning at age 65 under a group long-term care insurance plan.
The amounts listed are estimates based on the current policies in place
after applying a reasonable benefit cost
trend. |
Termination Following
Change-in-Control
Under our severance benefits agreements
with the NEOs, if we terminate the NEOs employment without cause or the NEO
resigns for good reason within two years following a change-in-control of
Staples, the NEO would receive payments in addition to those triggered by a
termination without cause or resignation for good reason. The circumstances
constituting a change-in-control of Staples are specifically described in the
severance benefits agreements for the NEOs, which are listed as exhibits to our
most recent Annual Report on Form 10-K. In general, a change-in-control will
occur:
● |
if another person becomes the
owner of 30% or more of the combined voting power of our stock, |
● |
there is a change in a majority
of the members of the then-incumbent Board, or |
● |
our shareholders approve a merger
with another entity in which our shareholders fail to own more than 75% of
the combined voting power of the surviving entity.
|
The Termination Following
Change-in-Control column includes:
● |
Cash Severance Payments. For Mr.
Sargent, amounts represent the continuation of salary and bonus for 36
months and for Ms. Komola and Messrs. Doody, Parneros and Wilson, amounts
represent the continuation of salary and bonus for 18
months. |
● |
Value of Accelerated Vesting of Incentive Compensation.
For all NEOs, amounts represent the
target value of the 2014-2016 performance share award and the 2013-2015
performance share awards. For all NEOs, other than Mr. Wilson, amounts
also include the intrinsic value of all unvested stock options, restricted
stock and, other than Ms. Komola, 2010 Special Performance and Retention
Share Awards, each as of fiscal year end. |
● |
Continuation of Benefits. The
continuation of benefits represents health and dental insurance coverage
for the severance period, as well as executive life insurance. For Messrs.
Sargent and Doody, amounts also include the provision of long-term care
coverage beginning at age 65 under a group long-term care insurance plan.
The amounts listed are estimates based on the current policies in place
after applying a reasonable benefit cost
trend. |
Change-in-Control Only
The Change-in-Control Only
column includes:
● |
Value of
Accelerated Vesting of Incentive Compensation. For all NEOs other than Mr. Wilson, amounts
represent 25% of the intrinsic value of all unvested stock options as of
fiscal year end. |
Death or Disability
The Death or Disability column
includes:
● |
Value of
Accelerated Vesting of Incentive Compensation. For all NEOs, amounts represent the target value
of the 2014-2016 performance share awards and 2013-2015 performance share
awards, minus amounts earned for completed plan years. In addition, for
all NEOs, other than Mr. Wilson, amounts include the intrinsic value of
all unvested stock options, the actual value of all restricted stock and,
other than Ms. Komola, 2010 Special Performance and Retention Share
Awards, each as of fiscal year end. |
● |
Survivor Death
Benefit Payout. For all NEOs,
amounts represent payouts of 100% of base salary for the first year and
50% of base salary for the second and third years, made monthly over a
period of three years. Not included in the table above are the death
benefit payouts from insurance policies for which the NEOS pay the
premiums. Payouts under these policies would be $2,044,080, $2,104,200,
and $1,811,250 for Messrs. Doody and Parneros and Ms. Komola,
respectively. Mr. Sargents life insurance coverage is in the form of a
second-to-die policy providing for payments either upon the latter of his
death or his wifes death. For purposes of the table above, we have
assumed that payments under this policy (which would amount to
approximately $12,690,000) are not triggered. |
● |
Continuation of
Benefits. For Mr. Sargent, amount
represents the costs of continuation of executive life insurance premiums
needed to support the $12,690,000 death
benefit. |
62 |
|
Notice
of Annual Meeting of Stockholders |
Table of
Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND ANALYSIS |
If the termination is due to the
NEOs disability, he or she would be entitled to receive a distribution from our
SERP, generally in accordance with the plan provisions and any predefined
distribution schedule based on the requirements of Section 409A of the Internal
Revenue Code. The NEO would also be entitled to receive disability payments from
our disability carriers, if the named executive officer has enrolled in such
policy. Disability coverage is generally designed to replace 60% of the NEOs
compensation up to $600,000 for each of the named executive officers who
participated in the group disability plan on July 1, 2005. The disability
benefit payouts from disability insurance policies for which the named executive
officer pays the premiums are not included in the table above. In addition,
executive life insurance premiums will be continued to age 65 as necessary to
support the life insurance coverage in place at the time of
disability.
Agreements Affecting Payments
We provide for forfeiture and recovery of undeserved cash, equity and
severance compensation from any associate that engages in misconduct. We also view recoupment as a risk management and
asset recovery tool for dealing with particularly harmful or unethical behaviors such as intentional deceitful acts
resulting in improper personal benefit or injury to the company, fraud or willful misconduct that significantly contributes
to a material financial restatement, violation of the Code of Ethics and breach of key
associate agreements. For instance, each of the named executive officers has executed a Proprietary and Confidential
Information Agreement that covers the two year period subsequent to termination of his employment. Violation of any of the
terms of these agreements entitles us to recover any severance payments and value received in connection with any equity
awards.
EQUITY COMPENSATION PLAN INFORMATION AT 2014 FISCAL YEAR
END
Plan
Category |
|
Number of
Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) (1) |
|
Weighted-Average Exercise Price
of Outstanding
Options, Warrants and Rights
(b) (2) |
|
Number of Securities Remaining Available
for Future Issuance
under Equity
Compensation Plans
(excluding securities reflected
in column (a)) (c)
(3) |
Equity compensation plans
approved by security holders |
|
42,363,966 |
|
$20.37 |
|
11,455,511 |
Equity compensation plans not
approved by security holders |
|
0 |
|
0 |
|
0 |
Total |
|
42,363,966 |
|
$20.37 |
|
11,455,511 |
(1) |
Includes the maximum number of shares issuable under
performance share awards (including the potential 25% increase as a result of relative TSR performance), as described in the
CD&A section of this proxy
statement, and restricted stock units, in each case outstanding as of fiscal year end. |
(2) |
Weighted-average exercise price calculation excludes
outstanding performance share awards and restricted stock units, which do
not have an exercise price. |
(3) |
Includes 8,005,484 shares available for issuance under
our 2014 Stock Incentive Plan as well as 3,450,027 shares available for issuance under our 2012 ESPP. Does not
include shares that may become available for issuance, as provided in the 2014 Stock Incentive
Plan, through the expiration, termination, surrendering, cancellation, forfeiture or settlement
of awards granted under our 2014 Stock Incentive Plan or our Amended and Restated 2004 Stock
Incentive Plan. Also does not include shares that may become issuable under the proposed Amendment to
the 2012 ESPP described in this proxy statement. |
www.staplesannualmeeting.com |
|
63 |
Table of
Contents
EXECUTIVE COMPENSATION
AND COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
During our 2014 fiscal year, Ms.
Meyrowitz, Mr. Vazquez and Mr. Walsh served on the Compensation Committee and
were independent directors during such service. None of our executive officers
has served as a director or member of the compensation committee (or other
committee serving an equivalent function) of any other entity whose executive
officers served on our Compensation Committee or our Board of
Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Based solely on our review of copies of
reports filed during fiscal year 2014 by the directors, executive officers and
beneficial owners of more than 10% of our common stock required to file such
reports pursuant to Section 16(a) of the Securities Exchange Act of 1934, and a
review of written certifications provided by them to the Company, we believe
that all of our directors and executive officers complied with the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934.
64 |
|
Notice
of Annual Meeting of Stockholders |
Table of
Contents
❯ APPROVAL, ON AN ADVISORY BASIS,
OF NAMED EXECUTIVE OFFICER COMPENSATION
(ITEM 3 ON THE PROXY
CARD)
Our Board recognizes that it is
appropriate to seek on an annual basis the views of shareholders on Staples
executive compensation program. Our shareholders are being asked to approve, on
an advisory basis, the compensation of our named executive officers as disclosed
in this proxy statement.
The primary objective of our
compensation program is to align executive pay with long term shareholder value
creation. The Executive
Compensation section of this proxy
statement, including the CD&A, describes in detail our
executive compensation programs and the decisions made by the Compensation
Committee with respect to the 2014 fiscal year ended January 31, 2015.
In accordance with Section 14A of the Exchange Act, our Board is asking shareholders
to approve, on an advisory basis, Staples named executive officer compensation
by approving the following resolution:
RESOLVED, that the compensation
paid to the Companys named executive officers, as disclosed pursuant to the
compensation disclosure rules of the Securities and Exchange Commission,
including the Compensation Discussion and Analysis, the compensation tables and
any related material disclosed in this proxy statement is hereby
APPROVED.
As an advisory vote, this proposal
is not binding upon Staples. The Compensation Committee considers the results of
the voting in making future compensation decisions for our named executive
officers.
OUR BOARD RECOMMENDS THAT YOU
VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER
COMPENSATION.
www.staplesannualmeeting.com |
|
65 |
Table of
Contents
❯ RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
(ITEM 4 ON THE PROXY
CARD)
The Audit Committee is directly
responsible for appointing, compensating, overseeing, evaluating and, when
necessary, terminating our independent registered public accounting firm, and
our independent registered public accounting firm reports directly to the Audit
Committee. The Audit Committee of our Board has appointed the firm of Ernst
& Young LLP as our independent registered public accounting firm for the
current fiscal year. Ernst & Young LLP has served as our independent auditor
since our inception. The Audit Committee evaluates the performance of our
independent auditors, including the senior audit engagement team, each year and
determines whether to reengage the current independent auditors or consider
other audit firms. The members of the Audit Committee and the Board believe that
the continued retention of Ernst &Young LLP to serve as our independent
auditor is in the best interests of our shareholders.
Although shareholder approval of
the Audit Committees selection of Ernst & Young LLP is not required by law,
our Board believes that it is advisable to give shareholders an opportunity to
ratify this selection. If this proposal is not approved at the Annual Meeting,
the Audit Committee may reconsider its selection.
Representatives of Ernst &
Young LLP are expected to be present at the Annual Meeting. They will have the
opportunity to make a statement if they desire to do so and will also be
available to respond to appropriate questions from shareholders.
OUR BOARD RECOMMENDS THAT YOU
VOTE FOR THE RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee of the Board
of Directors is composed of three members and acts under a written charter, as
amended and restated on December 3, 2013, a copy of which is available in the
Corporate Governance section of our Investor Information webpage at
www.staples.com. The members of the Audit Committee are independent
Directors, as defined by its charter and the rules of the Rule 10A-3 of the
Securities Exchange Act of 1934 and the applicable rules of the NASDAQ Global
Select Market.
The Audit Committee provides
independent, objective oversight of Staples financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the preparation, presentation and integrity of Staples consolidated financial
statements and for maintaining an adequate system of disclosure controls and
procedures and maintaining effective internal control over financial reporting
for that purpose. In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed with management the audited consolidated
financial statements, and related schedules, for the 2014 fiscal year, which
review included a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the consolidated financial statements.
The Audit Committee discussed with
Staples internal auditors and independent registered public accounting firm the
overall scope and plans for their respective audits. The Audit Committee met
with the internal auditors and independent registered public accounting firm,
with and without management present, to discuss the results of their
examinations, their evaluations of Staples internal controls, and the overall
quality of Staples financial reporting.
The Audit Committee reviewed and
discussed with Ernst & Young LLP, Staples independent registered public
accounting firm, which is responsible for expressing an opinion on the
conformity of those audited consolidated financial statements and related
schedules with US generally accepted accounting principles, its judgments as to
the quality, not just the acceptability, of Staples accounting principles and
such other matters as are required to be discussed with the Audit Committee by
the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), including PCAOB Auditing Standard No. 16 (Communications with Audit
Committees), the rules of the Securities and Exchange Commission, and other
applicable regulations. The Audit Committee also received the written
disclosures and the letter from the independent registered public accounting
firm required by PCAOB Rule 3526, Communication with Audit Committees Concerning
Independence. The Audit Committee
66 |
|
Notice
of Annual Meeting of Stockholders |
Table of
Contents
RATIFICATION OF
SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 4 ON THE
PROXY CARD) |
discussed with the independent
registered public accounting firm the independent registered public accounting
firms independence from management and Staples and considered the compatibility
of non-audit related services provided to Staples by the independent registered
public accounting firm with the independent registered public accounting firms
independence.
The Audit Committee also reviewed
and discussed together with management and the independent registered public
accounting firm Staples audited consolidated financial statements for the year
ended January 31, 2015, and the results of managements assessment of the
effectiveness of the Staples internal control over financial reporting and the
independent auditors audit of internal control over financial
reporting.
Based on the reviews and
discussions referred to above, the Audit Committee recommended to Staples
Board, and the Board approved, that Staples audited consolidated financial
statements and related schedules be included in Staples Annual Report on Form
10-K for the year ended January 31, 2015 for filing with the Securities and
Exchange Commission.
Audit Committee:
Robert Sulentic, Chair
Basil L.
Anderson
Justin King
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRMS FEES
Ernst & Young LLP billed us an
aggregate of approximately $8.7 million and $8.2 million in fiscal years 2014
and 2013, respectively, for professional services rendered in connection with
our annual audit, the audit of our internal control over financial reporting, the review of
our interim financial statements included in our Form 10-Q, statutory filings,
registration statements, accounting consultation and compliance with regulatory
requirements.
Ernst & Young LLP billed us an
aggregate of approximately $316,000 and $322,000 in fiscal years 2014 and 2013,
respectively, for services primarily related to employee benefit plan audits, due diligence and
other reports required to satisfy regulatory requirements.
Ernst & Young LLP billed us an
aggregate of approximately $2.0 million and $1.9 million in fiscal years 2014
and 2013, respectively, for services related to tax compliance, tax planning and tax advice. For
fiscal years 2014 and 2013, approximately $300,000 and $150,000, respectively,
of these fees was related to tax compliance.
We did not receive any other
services from Ernst & Young LLP; therefore, they did not bill us in fiscal
years 2014 and 2013 for other services.
Pre-Approval Policy and
Procedures |
The Audit Committee has adopted
policies and procedures relating to the approval of all audit and non-audit
services that are to be performed by our independent registered public
accounting firm. These policies provide that we will not engage our independent
registered public accounting firm to render audit or non-audit services (other
than de minimus non-audit services as defined by
the Sarbanes-Oxley Act) unless the service is specifically approved in advance
by the Audit Committee. All services provided to us by Ernst & Young LLP in
each of fiscal years 2014 and 2013 were approved in accordance with these
policies.
www.staplesannualmeeting.com |
|
67 |
Table of
Contents
❯ SHAREHOLDER PROPOSALS
We have been advised that the
following non-binding shareholder proposals will be presented at the 2015 Annual
Meeting. The proposals will be voted on if the respective proponent, or a
qualified representative, is present at the 2015 Annual Meeting and submits the
proposal for a vote. Our respective statements in opposition follow each
shareholder proposal.
FOR THE REASONS SET FORTH
BELOW IN OUR BOARDS STATEMENTS IN OPPOSITION, OUR BOARD OF DIRECTORS RECOMMENDS
A VOTE AGAINST THE SHAREHOLDER PROPOSALS.
The text of the shareholder
proposals and supporting statements appear below as received by us, and we
assume no responsibility for their content or accuracy.
SHAREHOLDER PROPOSAL REGARDING SENIOR
EXECUTIVE SEVERANCE
AGREEMENTS
(ITEM 5 ON THE PROXY CARD)
The following stockholder proposal
was submitted by the New York State Common Retirement Fund, 59 Maiden Lane
30th Floor, New York, NY 10038, beneficial owner of 1,711,690 shares of our
common stock (as of December 11, 2014) and the Board of Trustees of the
International Brotherhood of Electrical Workers Pension Benefit Fund, 900
Seventh Street, NW, Washington D.C. 20001, beneficial owner of 9,744 shares of
our common stock (as of December 17, 2014).
RESOLVED: that the shareholders of Staples, Inc. (the Company)
urge the Board of Directors to seek shareholder approval of future severance
agreements with senior executives that provide benefits in an amount exceeding
2.99 times the sum of the executives base salary plus bonus.
Future severance agreements
include employment agreements containing severance provisions, special
retirement provisions and agreements renewing, modifying or extending such
agreements.
Benefits include lump-sum cash
payments (including payments in lieu of medical and other benefits); the payment
of any gross-up tax liability; the estimated present value of special
retirement provisions; any stock or option awards that are awarded under any
severance agreement; any prior stock or option awards as to which the
executives access is accelerated under the severance agreement; fringe
benefits; and consulting fees (including reimbursable expenses) to be paid to
the executive.
We believe that requiring
shareholder ratification of golden parachute severance packages with a total
cost exceeding 2.99 times an executives base salary plus target annual incentive will
provide valuable feedback, encourage restraint, and strengthen the hand of the
Boards compensation committee.
According to the 2014 Proxy (page
56), the potential payout to CEO Ronald L. Sargent under termination and a
change in control as of Feb. 1, 2014 was approximately $23 million, more than
seventeen times the average of his base salary plus bonus in the past three
years.
Similarly, under the same
termination and change in control scenario, four additional named executive
officers could have received an estimated total of $20 million.
Although the cash severance
payment to the CEO in connection with a termination and change in control is a
continuation of salary for 36 months, the proxy reveals that total payments are
much higher when accelerated vesting of equity and other perquisites are
included.
We believe that the Companys
policy on shareholder ratification of executive severance should include the
full cost of termination payments.
Please VOTE FOR this proposal.
68 |
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Notice
of Annual Meeting of Stockholders |
Table of Contents
Boards Statement
in Opposition |
The Board unanimously recommends that
you vote AGAINST this proposal for the following reasons:
● |
Our current approach to severance benefits is
reasonable, appropriate and consistent with market practice, and is
critical to our ability to attract and retain senior
executives. |
● |
Implementing the proposal could result in a
need to change our executive compensation program to deemphasize the use
of equity awards. |
● |
Implementing the proposal is impractical, could
disrupt operations, and could reduce stockholder
value. |
Our current approach to severance
benefits is reasonable, appropriate and consistent with market practice, and is
critical to our ability to attract and retain senior executives.
Our ability to act quickly in recruiting
executives, including negotiation of severance benefits agreements, is critical
to recruiting and retaining highly qualified executives. We do not enter into
employment agreements with our senior executives, but instead provide limited
severance benefits. Other than the agreement with our current CEO, which was
entered into in 2006, our severance benefits agreements do not provide for
acceleration of equity. The award agreements governing performance shares, which
are the only form of equity currently granted to our executives, provide for
full acceleration only under a double trigger arrangement. This arrangement
provides for payment only in the event of a change in control followed by the
termination of the senior executives employment within two years after a change
in control. Moreover, we have a policy prohibiting gross up payments to cover
taxes triggered by a change in control in compensation, severance or employment
related agreements.
The Board believes that competitive
severance, provided contractually, is an important and entirely appropriate
element of an executive compensation program. These arrangements allow the
senior executives to remain focused on protecting shareholders interests in the
event of a potential change in control, and not be distracted by concerns about
their job security. The decision of whether or not to offer severance benefits
is one that is made in the context of the competitive marketplace for executive
talent. The Compensation Committee, which is comprised entirely of independent
directors, recognizes its responsibility and obligation to recommend and
implement executive compensation packages that are in the long-term interests of
Staples stockholders.
Implementing the proposal could
result in a need to change our executive compensation program to deemphasize the
use of equity awards. Our executive
compensation program is comprised of three elements: (1) base salary, (2) an
annual performance-based cash incentive and (3) a long-term stock incentive
comprised of 100% performance shares. This compensation structure enables us to
attract and retain top talent and is also essential to aligning pay with
long-term performance. In light of the fundamental role equity plays in our
compensation structure with approximately 72% of our CEOs compensation in the
form of equity as described elsewhere in this proxy statement it is
appropriate that certain termination scenarios result in the acceleration of
equity awards.
We believe our equity compensation
structure properly incentivizes our senior executives to achieve performance
goals and to deliver stockholder value. The Compensation Committee believes that
our severance benefits agreements are in line with agreements at companies with
which we are competitive in the marketplace. Implementing the proposed change
could, as a practical matter, require the Compensation Committee to either
re-design the executive compensation program to significantly reduce the role of
equity-based pay or provide for different terms. Such changes could place us in
a competitively disadvantaged position in attracting and retaining highly
qualified executives because it is common for large public companies to provide
for accelerated vesting of equity upon a change in control.
Consistent with our overall
pay-for-performance philosophy and desire to ensure that our executives
interests align with those of stockholders, the Compensation Committee believes
it is important to operate an executive compensation program under which
performance-based pay constitutes the substantial majority of an executives
annual compensation. We believe that implementation of the proposal could
undermine this fundamental goal of our program.
Implementing the proposal is
impractical, could disrupt operations, and could reduce stockholder value.
Adopting the proposal could require us to
incur significant expense in calling special stockholders meetings each time
there is a need for future severance benefits agreements. Furthermore, adopting
the proposal could delay, possibly for a significant amount of time, the
finalization of such agreements until after approval at a regularly scheduled
annual meeting. This is an impractical mechanism that will likely hinder our
ability to attract and retain talented executives.
The Board believes that it is in the
stockholders best interest to have the responsibility for the entire
compensation process vested in the Compensation Committees independent
directors rather than inhibited and diminished by the potential hurdles
associated with this proposal. Our Compensation Committee engages an independent
compensation consultant and also has conducted extensive engagement with
numerous stockholders on compensation practices. Our historical practice of not
having employment agreements with our officers and providing limited severance
benefits demonstrates the Boards commitment to protecting stockholder value by
attracting and retaining skilled executives without providing excessive
severance packages. In light of our historical practices, the Board believes
that adoption of the proposal is unnecessary and unwarranted, and is not in the
best interest of stockholders.
OUR BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL.
www.staplesannualmeeting.com |
|
69 |
Table of Contents
SHAREHOLDER PROPOSAL REGARDING
INDEPENDENT BOARD CHAIRMAN
(ITEM 6 ON THE PROXY CARD)
The following stockholder proposal was
submitted by John Chevedden, 2215 Nelson Ave., No. 205 Redondo Beach, California
90278, beneficial owner of no fewer than 300 shares of our common stock (as of
December 31, 2014).
Resolved: The shareholders request the
Board of Directors to adopt as policy, and amend the bylaws as necessary, to
require the Chair of the Board of Directors, whenever possible, to be an
independent member of the Board. The Board would have the discretion to phase in
this policy for the next CEO transition, implemented so it did not violate any
existing agreement. If the Board determines that a Chair who was independent
when selected is no longer independent, the Board shall select a new Chair who
satisfies the requirements of the policy within a reasonable amount of time.
Compliance with this policy is waived if no independent director is available
and willing to serve as Chair.
When our CEO is our board chairman,
this arrangement can hinder our boards ability to monitor our CEOs
performance. Many companies already have an independent Chairman. An independent
Chairman is the prevailing practice in the United Kingdom and many international
markets. This proposal topic won 50%-plus support at 5 major U.S. companies in
2013 including 73%-support at Netflix.
This topic is particularly important
for Staples because we had long-tenured directors on our board, which is
supposed to serve a checks and balances role in regard to our Chairman/CEO
Ronald Sargent. Long-tenure of 10 to 15-years detracts from the independent
oversight role of a director. The worst example of this is our Lead Director,
Robert Nakasone, with 28-years long tenure.
Staples had 4 directors who each had 17
to 28-years long-tenure. Plus Paul Walsh (24-years tenure) chaired our executive
pay committee. Basil Anderson (17-years) was an inside-related director who was
on our audit committee. Rowland Moriarty (28-years) and Robert Nakasone
(28-years) controlled 50% of the votes on our Nomination committee. Plus Basil
Anderson and Rowland Moriarty were both potentially over-extended with director
duties at 4 public companies each.
Ronald Sargent was given $10 million in
2013 Total Summary Pay. There was a 46% shareholder vote against Staples
executive pay in 2014. GMI Ratings, an independent investment research firm,
said Staples had not disclosed specific, quantifiable performance objectives for
our CEO. Unvested equity awards partially or fully accelerate upon CEO
termination. Staples pays long-term incentives to executives without requiring
the company to perform above the median of its peer group. Our CEOs annual
incentive pay did not rise or fall in line with annual financial
performance.
Please vote to protect shareholder
value:
Independent Board Chairman - Proposal
6
70 |
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Notice
of Annual Meeting of Stockholders |
Table of Contents
Boards Statement
in Opposition |
The Board unanimously recommends that
you vote AGAINST this proposal because:
● |
The Board has already adopted a policy
implementing the proposal. |
● |
The Board sought feedback and considered the
views of our stockholders in responding to the proposal. |
● |
Our approach strikes the right balance to
transition to a new Board leadership structure. |
The Board has already adopted a
policy implementing the proposal. On
January 13, 2015, our Board adopted a policy to require the Chairman of the
Board, whenever possible, to be an independent director. The policy is
prospective, and begins to apply when Mr. Sargent retires or otherwise no longer
serves as Chairman of the Board. The policy does not apply:
● |
If the appointment violates any contractual
obligation; |
● |
If no independent director is available or
willing to serve as Chairman; |
● |
If the appointment would be inconsistent with
the Boards fiduciary obligations. |
In accordance with its fiduciary
duties, the Board will periodically make a determination as to the
appropriateness of its policies in connection with the recruitment and
succession of the Chairman and Chief Executive Officer.
The full text of our policy is found in
Section 19 of our Corporate Governance Guidelines, which is available in the
Corporate Governance section of the Investor Relations page on our website,
www.staples.com. The Board believes that we adopted a policy that favorably acts
upon this proposal.
The Board sought feedback and
considered the views of our stockholders in responding to the proposal.
After a similar proposal received
approximately 51% support in the 2014 Annual Meeting, the Board carefully
reviewed the question of Board leadership, among other steps seeking feedback
from major stockholders in the fall of 2014 through our annual corporate
governance outreach program. We spoke with stockholders representing 40% of our
shares and nearly all of these stockholders told us that they viewed a policy
similar to the one we adopted as being responsive. Our Board reviewed the
feedback of the outreach program in December 2014 and the following month
implemented our independent chair policy.
Our approach strikes the right
balance to transition to a new Board leadership structure. In adopting the new independent chair policy, the Board and
some of our stockholders were concerned about the unintended consequences or
disruptions that may occur if the Chairman and CEO roles were split and an
independent chair was appointed now. Prospective implementation of the
independent chair policy provides for a succession period for our Board
leadership structure and allows us have a single, clear focus for command to
successfully execute against our multi-year reinvention plans and the
acquisition of Office Depot.
Moreover, at this time the Board has an
Independent Lead Director role with robust responsibilities. We announced in
January 2015 the retirement of current Independent Lead Director Robert Nakasone
from the Board at the 2015 annual meeting, and that Robert Sulentic will be the
Boards new Independent Lead Director. Our Independent Lead Director provides
important oversight and leadership. The duties of the Lead Director, among many
others, include the following:
● |
Presiding at all meetings at which the Chairman
is not present, including executive sessions of the independent
directors; |
● |
Serving as a liaison between the Chairman and
the independent directors; |
● |
Approving agendas, schedules and information
before they are sent to the Board; |
● |
Having the authority to call meetings of the
independent directors; and |
● |
Ensuring availability for consultation and
direct communication, if requested by a major
stockholder. |
The Board does not believe that any
further action is necessary or appropriate and, therefore, unanimously
recommends that you vote AGAINST this proposal.
OUR BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL.
www.staplesannualmeeting.com |
|
71 |
Table of Contents
❯ |
BENEFICIAL OWNERSHIP OF COMMON
STOCK |
The following table sets forth the
beneficial ownership of our common stock held as of April 6, 2015 by (1) each
person who is known by us to beneficially own more than 5% of the outstanding
shares of our common stock, (2) each current director and nominee of the Staples
Board for director; (3) each of the named executive officers listed in the
Summary Compensation Table included in this proxy statement; and (4)
by all current directors and executive officers as a group:
Name of beneficial owner |
Shares directly or
indirectly owned (1) |
|
Shares acquirable within 60 days (2) |
|
Total shares beneficially owned (3) |
|
Percentage of common
stock beneficially owned (4) |
5% Shareholders |
|
|
|
|
|
|
|
Vanguard Group (5) 100 Vanguard Blvd
Malvern, PA 19355 |
49,004,910 |
|
|
|
49,004,910 |
|
7.65% |
BlackRock, Inc. (6) 40 East 52nd Street New
York, NY100222 |
37,800,765 |
|
|
|
37,800,765 |
|
5.90% |
FMR, LLC (7) 245 Summer Street Boston, MA
02109 |
34,127,551 |
|
|
|
34,127,551 |
|
5.33% |
Directors, Nominees for Director and Named
Executive Officers |
|
|
|
|
|
|
|
Basil L. Anderson (8) |
216,105 |
|
91,367 |
|
307,472 |
|
* |
Joseph G. Doody |
344,440 |
|
1,143,724 |
|
1,488,164 |
|
* |
Drew G. Faust |
48,047 |
|
|
|
48,047 |
|
* |
Paul-Henri Ferand |
|
|
|
|
|
|
|
Kunal S. Kamlani |
350 |
|
|
|
|
|
* |
Justin King |
51,160 |
|
82,367 |
|
133,527 |
|
* |
Christine T. Komola (9) |
104,804 |
|
187,054 |
|
291,858 |
|
* |
Carol Meyrowitz |
71,130 |
|
77,867 |
|
148,997 |
|
* |
Rowland T. Moriarty (10) |
284,703 |
|
109,367 |
|
394,070 |
|
* |
Robert C. Nakasone (11) |
325,124 |
|
109,367 |
|
434,491 |
|
* |
Demos Parneros (12) |
442,025 |
|
1,143,724 |
|
1,585,749 |
|
* |
Ronald L. Sargent (13) |
2,110,257 |
|
4,472,135 |
|
6,582,392 |
|
1.02% |
Robert E. Sulentic (14) |
115,293 |
|
82,367 |
|
197,660 |
|
* |
Raul Vazquez |
21,418 |
|
|
|
21,418 |
|
* |
Vijay Vishwanath |
77,541 |
|
86,867 |
|
164,408 |
|
* |
Paul F. Walsh (15) |
206,488 |
|
109,367 |
|
315,855 |
|
* |
John Wilson |
74,547 |
|
213,406 |
|
287,953 |
|
|
All current directors and executive officers
as a group (19 persons) |
4,493,082 |
|
7,908,979 |
|
12,402,061 |
|
1.91% |
* |
Less than 1% |
|
|
(1) |
Each person listed has sole
investment and/or voting power with respect to the shares indicated,
except as otherwise noted. |
|
(2) |
Reflects shares issuable upon the
exercise of stock options exercisable on April 6, 2015 or within 60 days
thereafter, including options with an exercise price in excess of the
stock price on that date. |
|
(3) |
Reflects shares (i) directly or
indirectly owned and (ii) shares acquirable within 60 days after April 6, 2015. The inclusion
herein of any shares as beneficially owned does not constitute an
admission of beneficial ownership. |
|
(4) |
Number of shares deemed
outstanding includes 640,641,660 shares of our common stock outstanding as
of April 6, 2015 and any options for shares that are exercisable by such
beneficial owner on April 6, 2015 or within 60 days
thereafter. |
|
(5) |
Reflects shares beneficially
owned as of December 31, 2014, as set forth in a Schedule 13G filed on
February 11, 2015. Of these shares, Vanguard Group reported to have sole
dispositive power with respect to 47,956,656 shares and sole voting power
with respect to 1,097,990 shares. |
|
(6) |
Reflects shares beneficially
owned as of December 31, 2014, as set forth in a Schedule 13G filed on
February 9, 2015. Of these shares, BlackRock, Inc. reported to have sole
dispositive power with respect to 37,800,765 shares and sole voting power
with respect to 31,654,140 shares. |
|
(7) |
Reflects shares beneficially
owned as of December 31, 2014, as set forth in a Schedule 13G filed on
February 13, 2015. Of these shares, FMR, LLC reported to have sole
dispositive power with respect to 34,127,551 shares and sole voting power
with respect to 1,137,316 shares. |
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of Annual Meeting of Stockholders |
Table of Contents
BENEFICIAL OWNERSHIP OF COMMON STOCK
(8) |
Includes 12,624 shares owned by
Mr. Andersons wife, 102,412 shares owned by the Basil Anderson Revocable
Trust and 92,255 shares owned by the Basil L. Anderson GRAT
2014. |
|
(9) |
Includes 14,208 shares owned by
the John A. Komola Trust and 83,822 shares owned by the Christine T.
Komola Trust. |
|
(10) |
Includes 100,000 shares owned by
Movex, LLC, which is owned by two Moriarty family trusts. |
|
(11) |
Includes 176,020 shares owned by
the Robert C. Nakasone Trust and 98,814 shares owned by Nakasone Capital
LLC. |
|
(12) |
Includes 399,143 shares owned by
the Demos Parneros Revocable Trust and 2,717 shares that may be
distributed from a 401(k) plan account. |
|
(13) |
Includes 52,077 shares owned by
Sargent Family LLC, 1,279,768 shares owned by the Ronald L. Sargent
Revocable Trust, 19,313 shares owned by the Jill Sargent Irrevocable
Trust, 619,174 shares owned by Sargent Partners LLC and 42,269 shares owned by
Ronald L. Sargent 2011 Grantor Retained Annuity Trust. Also includes 2,969
shares that may be distributed from a 401(k) plan account. |
|
(14) |
Includes 302 shares held by Mr.
Sulentics daughter. |
|
(15) |
Includes 247 shares held by Paul
F. Walsh, IRA and 206,241 shares held by the Walsh Family
Trust. |
www.staplesannualmeeting.com |
|
73 |
Table of Contents
❯ INFORMATION ABOUT THE ANNUAL MEETING, VOTING AND
OTHER SHAREHOLDERS MATTERS
How does the Board recommend that I vote and what is the requirement to
approve each matter?
|
Board |
Voting
Approval |
Effect of |
Effect of
Broker |
Matter |
Recommendation |
Standard* |
Abstention |
Non-Vote |
Election of Eleven
Directors |
FOR
each director nominee |
Plurality** |
Not applicable |
No
effect |
Amendment to the 2012
Employee Stock
Purchase Plan |
FOR |
Majority of votes cast |
No
effect |
No
effect |
Approval (on an advisory basis) of Named Executive
Officer Compensation |
FOR |
Majority of votes cast*** |
No
effect |
No
effect |
Ratification of Ernst & Young LLP |
FOR |
Majority of votes cast*** |
No
effect |
Not applicable |
Shareholder proposal regarding Senior Executive
severance
agreements |
AGAINST |
Majority of votes cast*** |
No
effect |
No
effect |
Shareholder proposal regarding Independent
Board
Chairman |
AGAINST |
Majority of votes cast*** |
No
effect |
No
effect |
*A quorum must be present at the meeting in order for the matters to be acted upon.
**Under our by-laws, directors are elected by a plurality of votes cast if a stockholder has nominated a candidate for election as a director and has not withdrawn the nomination on or before the tenth business day before the Company first mails its notice of meeting to its stockholders. Because Starboard withdrew its nomination less than ten business days before the mailing date of this proxy statement, the election of directors at the Annual Meeting will be by a plurality vote. This means that the eleven candidates receiving the largest number of FOR votes will be elected as directors. Stockholders may withhold votes from any of the nominees.
***This vote is non-binding.
What is a proxy and proxy statement?
A proxy is your legal designation of another person to vote the
shares you own. The person you designate is called a proxy
or proxy holder. If you designate someone as your proxy in a
written document, that document also is called a proxy or a
proxy card. A proxy statement is the document that contains
the information the Securities and Exchange Commission
(SEC) rules require us to provide when we ask you to sign a
proxy designating individuals to vote on your behalf.
Who is entitled to
vote?
Shareholders of record at the close of
business on the record date, April 6, 2015, are entitled to receive notice of
the Annual Meeting and to vote their shares of our common stock at the meeting,
or any postponement or adjournment of the meeting. Holders of shares of our
common stock are entitled to one vote per share and individual votes will be
kept confidential, except as appropriate to meet legal requirements.
Who can attend the
meeting?
All shareholders as of the record date,
or their duly appointed proxies, may attend the meeting. A government-issued
photo identification such as a drivers license, state-issued ID card or
passport, will be required. Please note that if you are a beneficial owner, you
will also need to bring a copy of a brokerage statement reflecting your stock
ownership in Staples as of the record date to be allowed into the meeting. You
may obtain directions to the location of our Annual Meeting by writing, emailing
or calling our Investor Relations department at 500 Staples Drive, Framingham,
Massachusetts 01702, email: investor@staples.
com, or telephone: (800) 468-7751.
What is the difference between a
shareholder of record and a beneficial owner?
These terms describe the manner in
which your shares are held. If your shares are registered directly in your name
through Computer Shareholder Services, our transfer agent, you are a
shareholder of record or registered shareholder. If your shares are held in street name through a
bank, broker, nominee or other shareholder of record, you are considered the
beneficial owner of those shares.
What constitutes a
quorum?
The presence at the meeting, in
person or by proxy, of a majority of the shares of our common stock outstanding
on the record date will constitute a quorum, permitting business to be conducted
at the meeting. As of the record date, 640,641,660 shares of our common stock were
outstanding and entitled to vote. Proxies that are received and marked as
abstentions or left blank will be included in the calculation of the number of
shares considered to be represented at the meeting for quorum
purposes.
How do I
vote?
If you received a paper copy of these proxy materials, included with such copy is a proxy card or a voting instruction card from your bank, broker or other nominee for the Annual Meeting. If you received a notice of Internet availability of proxy materials, the notice will contain instructions on how to access and review the proxy materials online and how to obtain a paper or electronic copy of the materials, which will include the proxy statement, the 2014 Annual Report and a proxy card or voting instruction card, as well as instructions on how to vote.
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Table of Contents
INFORMATION ABOUT THE ANNUAL MEETING |
You may vote using any of the
following methods:
If you are a registered
shareholder, you may vote in person at the meeting or by proxy. If you decide to
vote by proxy, you may do so over the Internet, by telephone or by mail.
● |
Over the
Internet. After reading the proxy
materials, you may use a
computer to access the website www.proxyvote.com. You will
be prompted to enter your control number from your proxy card. This
number will identify you as a shareholder of record. Follow the instructions that will be given to you to record your
vote. |
● |
By
telephone. After reading the proxy
materials, you may call
(800) 690-6903 using a touch-tone telephone. You will be prompted to enter
your control number from your proxy card. This number will identify
you as a shareholder of record. Follow the instructions that will
be given to you to record your vote. |
● |
By mail. If you received a paper copy of the proxy
card by mail, after reading the proxy materials, you may sign, date and
mark your proxy card and return it in the prepaid and addressed
envelope provided. |
If you are a beneficial owner and you own shares that are held in street name by a bank, broker or other nominee, you will need to contact your bank, broker or other nominee to determine whether you will be able to submit a proxy over the Internet or by telephone.
If you are a registered shareholder as of the
record date and attend the meeting, you may personally deliver your completed
proxy card or vote in person at the meeting. If you complete, sign and return
your proxy card, it will be voted as you direct.
If you are a beneficial owner, your bank, broker or other nominee, as the record holder of your shares, is required to vote our shares according to your instructions. Your bank, broker or other nominee will send you directions on how to vote those shares. If you hold your shares in street name, you must request a legal proxy from your bank, broker or nominee if you would like to vote in person at the Annual Meeting.
What is a Broker
Non-Vote?
A
broker is entitled to vote shares held for a shareholder on discretionary matters
without instructions from the shareholder of those shares. However, if a
shareholder does not provide timely instructions, the broker does not have the
authority to vote on any non-discretionary proposals at the Annual Meeting and a
broker non-vote would occur.
The only matter at the 2015 Annual Meeting that is
discretionary is the ratification of our independent
registered public accounting firm. The other matters are
non-discretionary.
Please instruct your broker how to
vote your shares using the voting instruction form provided by your broker or
following any instructions provided by your broker for voting your shares over
the Internet or telephonically, if available.
What if I sign and return my
proxy or instruction form but do not provide voting
instructions?
If no choice is specified on a signed proxy card, the persons named as
proxies will vote in accordance with the recommendations of the Board.
Can I change or revoke my
proxy after I return my proxy card?
Yes. Any proxy may be changed or
revoked by a shareholder at any time before it is exercised at the Annual
Meeting by:
● |
Submitting a properly signed
proxy card with a later date that is received at or prior to the Annual Meeting; |
● |
Submitting a vote at a later
time via the Internet or telephone; |
● |
Attending the Annual Meeting and
voting in person; or |
● |
Delivering to our Corporate
Secretary a written notice of revocation, provided such statement is received at
or prior to the Annual Meeting. |
If you are a beneficial owner and hold shares in street name,
you may submit new voting instructions or revoke your voting instructions by
contacting your bank, broker or other nominee. You may also change your vote or
revoke your voting instructions in person at the Annual Meeting if you obtain a
legal proxy from the record holder (bank, broker or other nominee) giving you
the right to vote the shares.
Are there other matters to
be voted on at the meeting?
As of the date of this proxy
statement, our Board does not know of any other matters which may come before
the meeting, other than the matters described in this proxy statement and the
deadline under our bylaws for submission of matters by shareholders has passed.
Should any other matter requiring a vote of our shareholders arise and be
properly presented at the Annual Meeting, the proxy for the Annual Meeting
confers upon the persons named in the proxy and designated to vote the shares
discretionary authority to vote, or otherwise act, with respect to any such
matter in accordance with their best judgment.
Our Board encourages
shareholders to attend the Annual Meeting. Whether or not you plan to attend,
you are urged to submit your proxy. Prompt response will greatly facilitate
arrangements for the meeting and your cooperation is appreciated. Shareholders
who attend the Annual Meeting may vote their stock personally even though they
have sent in their proxies. If you are a beneficial owner, you must request a
legal proxy from your bank, broker or nominee if you would like to vote in person at the
Annual Meeting.
www.staplesannualmeeting.com |
|
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Table of Contents
INFORMATION ABOUT THE ANNUAL MEETING |
All costs associated with
preparing, assembling, printing, mailing, and distributing these proxy materials
will be borne by Staples. Staples will also bear the cost of soliciting proxies
on behalf of our Board. Staples will provide copies of these proxy materials to
banks, brokerage houses, fiduciaries, and custodians holding in their names
shares of our common stock beneficially owned by others so that they may forward
these proxy materials to the beneficial owners. Staples has retained the
services of D.F. King & Co., Inc., a professional proxy solicitation firm,
to aid in the solicitation of proxies.
Staples expects that it will pay D.F. King its customary fees, estimated not to
exceed approximately $13,000 in the aggregate, plus reasonable out-of-pocket
expenses incurred in the process of soliciting proxies. In addition, Staples may
reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owner.
Solicitations may also be made by
personal interview, mail, telephone, facsimile, email, Twitter, other electronic
channels of communication, in particular LinkedIn, Staples investor relations
website, Staples Annual Meeting website, located at
https://staplesannualmeeting.com, other Staples-hosted websites and blogs, or
otherwise by directors, officers, and other employees of Staples, but Staples
will not additionally compensate its directors, officers, or other employees for
these services.
Other than the shareholder
proposals set forth in this proxy statement, we did not receive any other
shareholder proposals or nominations for director candidates that must be
presented at our 2015 Annual Meeting. The proposals were received prior to
December 24, 2014, the deadline for shareholders who wished to present proposals
and wanted such proposals to be included in the proxy materials. In accordance
with our by-laws, in order for a shareholder to present a proposal or nominate a
director candidate for election at our 2015 Annual Meeting but not have such
proposal included in the proxy materials, the shareholder must have provided us
with advance written notice by March 4, 2015. If a shareholder gives us notice
of a proposal or nomination after the March 4, 2015 deadline, the shareholder
will not be permitted to present the proposal or nomination to the shareholders
for a vote at the 2015 Annual Meeting.
Shareholders who intend to present proposals at our 2016 Annual Meeting and
want us to include such proposals in our proxy materials relating to that meeting should contact our Corporate Secretary.
Such proposals must be received at our principal corporate offices at 500 Staples Drive, Framingham, Massachusetts 01702 not
later than December 22, 2015 and must be in compliance with applicable laws and Rule 14a-8 under the Securities Exchange Act of
1934 (the Exchange Act) in order to be considered for possible inclusion in the proxy statement and form of
proxy for our 2016 Annual Meeting.
If a shareholder wishes to present
a proposal or nominate a director candidate for election at our 2016 Annual
Meeting and the proposal or nomination is not intended to be included in our
proxy statement for such meeting, the shareholder must give us advance notice
and provide the information required by our by-laws, including but not limited
to, information regarding the identity of the shareholder or beneficial owner,
their holdings in Staples securities, agreements or compensation relating to
such nomination or matter, and any derivatives or other arrangements to mitigate
risk or change voting power. If a shareholder gives notice of such a proposal or
nomination after the applicable deadline, the shareholder will not be permitted
to present the proposal or nomination to the shareholders for a vote at the
meeting. For our 2016 Annual Meeting, our Corporate Secretary generally must
receive such a notice at 500 Staples Drive, Framingham, Massachusetts 01702 not
later than 90 days and no earlier than 120 days prior to the first anniversary
of our 2015 Annual Meeting. However, if the date of our 2016 Annual Meeting is
more than 30 days before or more than 70 days after such anniversary date,
notice by the shareholder must be received no earlier than 120 days prior to the
2016 Annual Meeting and not later than the later of (i) the 90th day prior to the
2016 Annual Meeting and (ii) the tenth day following the day on which public
announcement of the date of the 2016 Annual Meeting is made or notice for the
2016 Annual Meeting was mailed, whichever occurs first.
Householding of Annual Meeting
Materials |
Some banks, brokers and other nominee
record holders may be participating in the practice of householding proxy
statements, annual reports and notices of Internet availability of proxy
materials. This means that only one copy of our proxy statement, annual report
or notice of Internet availability of proxy materials may be sent to multiple
shareholders in a household, which helps us reduce our printing costs and
postage fees and helps the environment by conserving natural resources. However,
we will promptly deliver a separate copy of these documents to you if you write,
email or call our Investor Relations department
at 500 Staples Drive, Framingham, Massachusetts 01702, email: investor@staples.com, or
telephone: (800) 468-7751. If you want to receive separate copies of the proxy
statement, annual report or notice of Internet availability of proxy materials
in the future, or if you are receiving multiple copies and would like to receive
only one copy for your household, you should contact your bank, broker, or other
nominee record holder, or you may contact us at the above address, email or
phone number.
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INFORMATION ABOUT THE ANNUAL MEETING
Electronic Delivery of Shareholder
Communications |
If you received a hard copy of your Annual
Meeting materials by mail, we encourage you to conserve natural resources, as
well as help us reduce our printing and mailing costs, by signing up to receive or access your shareholder
communications via e-mail. To sign up for
electronic delivery or access, visit www.proxyvote.com. Your electronic
delivery or access enrollment will be effective until you cancel it, which you
may do at any time by following the procedures
described at the website listed above. If you have questions about electronic
delivery or access, please write, email or call our Investor Relations
department at 500 Staples Drive, Framingham, Massachusetts 01702, email:
investor@staples.com, or telephone: (800) 468-7751.
Securities and Exchange Commission
Filings |
We file annual, quarterly and current
reports, as well as other information with the Securities and Exchange
Commission (SEC). You may read and copy any document that we file with the SEC
at its Internet website at www.sec.gov or at its Public Reference Room at 100 F
Street, N.E., Washington, DC 20549. If you would like to receive a copy of our
Annual Report on Form 10-K for our 2014 fiscal
year, or any of the exhibits listed therein, please write, email or call our
Investor Relations department at 500 Staples Drive, Framingham, Massachusetts
01702, email: investor@staples.com, or telephone:
(800) 468-7751, and we will provide you with the Annual Report or any requested exhibits without
charge.
Forward-Looking Statements |
Certain information contained in this
proxy statement constitutes forward-looking statements for purposes of the safe
harbor provisions of The Private Securities Litigation Reform Act of 1995. Any
statements contained in this proxy statement that are not statements of
historical fact should be considered forward-looking statements. You can
identify forward-looking statements by the use of the words believes,
expects, anticipates, plans, may, will, would, intends,
estimates, and other similar expressions, whether in the negative or
affirmative, although not all forward-looking statements include such words. Forward-looking statements are based on a
series of expectations, assumptions, estimates and projections which involve
substantial uncertainty and risk, including the review of our assessments by our
outside auditor and changes in managements assumptions and projections. Actual
results may differ materially from those indicated by such forward-looking
statements as a result of risks and uncertainties, including those factors
discussed or referenced in our most recent annual report on Form 10-K filed with
the SEC, under the heading Risk Factors, a copy of which accompanies this proxy statement.
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❯ APPENDIX A
STAPLES, INC.
2012 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
(a) The purpose of the Plan is to
provide employees of the Company and its Designated Subsidiaries and Designated
Affiliates with an opportunity to purchase Common Stock through accumulated
Contributions.
(b) This Plan includes two components:
a Code Section 423 Component (the 423 Component) and a non-Code Section 423
Component (the Non-423 Component). It is the intention of the Company to have
the 423 Component qualify as an employee stock purchase plan under Section 423
of the Code. The provisions of the 423 Component, accordingly, shall be
construed so as to extend and limit participation in a uniform and
nondiscriminatory basis consistent with the requirements of Section 423 of the
Code. In addition, this Plan authorizes the grant of options under the Non-423
Component, which does not qualify as an employee stock purchase plan under
Section 423 of the Code; such options granted under the Non-423 Component shall
be granted pursuant to rules, procedures or sub-plans adopted by the
Administrator designed to achieve tax, securities laws or other objectives for
Eligible Employees and the Company. Except as otherwise provided herein, the
Non-423 Component will operate and be administered in the same manner as the 423
Component. Offerings intended to be made under the Non-423 Component will be
designated as such by the Administrator at or prior to the time of such
Offering.
(c) If a Participant transfers
employment from the Company or any Designated Subsidiary participating in the
423 Component to a Designated Affiliate participating in the Non-423 Component,
he or she shall immediately cease to participate in the 423 Component; however,
any Contributions made for the Purchase Period in which such transfer occurs
shall be transferred to the Non-423 Component, and such Participant shall
immediately join the then current Offering under the Non-423 Component upon the
same terms and conditions in effect for his or her participation in the Plan,
except for such modifications as may be required by applicable law or otherwise
applicable for Participants in such Designated Affiliates. A Participant who
transfers employment from a Designated Affiliate participating in the Non-423
Component to the Company or any Designated Subsidiary participating in the 423
Component shall remain a Participant in the Non-423 Component until the earlier
of (i) the end of the current Offering Period under the Non-423 Component, or
(ii) the Enrollment Date of the first Offering Period in which he or she
participates following such transfer. Notwithstanding the foregoing, the
Administrator may establish different rules to govern transfers of employment
between companies participating in the 423 Component and the Non-423 Component,
consistent with the applicable requirements of Section 423 of the
Code.
2. Definitions.
(a) Administrator means the
Board or the Committee designated by the Board to administer the Plan pursuant
to Section 14.
(b) Affiliate means (i) any
entity that, directly or indirectly, is controlled by, controls or is under
common control with, the Company or (ii) any entity in which the Company has a
significant equity interest, in either case as determined by the Administrator,
whether now or hereafter existing (which, for avoidance of doubt, shall include
any Subsidiary).
(c) Applicable Laws means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction where options
are, or will be, granted under the Plan.
(d) Board means the Board of
Directors of the Company.
(e) Change in Control means
the occurrence of any of the following events:
(i) any person, as such term is used
in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportion as their ownership of the
Companys stock), is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Companys then outstanding securities (other than pursuant to a merger or
consolidation described in clause (1) or (2) of subsection (iii) below);
(ii) individuals who, as of the date
hereof, constitute the Board (as of the date hereof, the Incumbent Board)
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Companys stockholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board;
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(iii) the Companys stockholders
approve a merger or consolidation of the Company with any other corporation, and
such merger or consolidation is consummated, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than seventy-five percent (75%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (as defined above) acquires more than
thirty percent (30%) of the combined voting power of the Companys then
outstanding securities; or
(iv) the Companys stockholders approve
an agreement for the sale or disposition by the Company of all or substantially
all of the Companys assets, and such sale or disposition is
consummated.
For the avoidance of doubt, a
transaction will not constitute a Change in Control if its sole purpose is
either to change the state of the Companys incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Companys securities immediately before such transaction.
(f) Code means the U.S.
Internal Revenue Code of 1986, as amended. Reference to a specific section of
the Code or U.S. Treasury Regulation thereunder will include such section or
regulation and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.
(g) Committee means the
Compensation Committee of the Board, or to the extent permitted by Applicable
Laws, the Committee on Employee Benefit Plans as constituted pursuant to the
terms of the Companys 401(k) Plan, in each case unless otherwise determined by
the Board.
(h) Common Stock means the
common stock of the Company.
(i) Company means Staples,
Inc, a Delaware corporation, or any successor thereto.
(j) Compensation means an
Eligible Employees regular base straight time gross earnings (including
payments for piece work in the case of employees of the American Identity
division), commissions, sales rewards and other sales-related payments,
exclusive of any other form of compensation including payments for incentive
compensation, bonuses, overtime, shift premium, 13th/14th month payments or
similar concepts under local law or any other similar compensation. The
Administrator, in its discretion, may, on a uniform and nondiscriminatory basis
for each Offering, establish a different definition of Compensation for a
subsequent Offering Period. Further, the Administrator shall have discretion to
determine the application of this definition to Participants outside the United
States.
(k) Contributions means the
payroll deductions, any other additional payments that the Administrator may
permit to be made by a Participant and any alternative forms of contributions
permitted under Section 6(f) to fund the exercise of options granted pursuant to
the Plan.
(l) Designated Affiliate means
any Affiliate that has been designated by the Administrator from time to time in
its sole discretion as eligible to participate in the Non-423
Component.
(m) Designated Subsidiary
means any Subsidiary that has been designated by the Administrator from time to
time in its sole discretion as eligible to participate in the 423 Component.
(n) Director means a member of
the Board.
(o) Eligible Employee means a
person treated as an employee of the Company or a Designated Subsidiary or
Designated Affiliate for purposes of Section 423 of the Code. For purposes of
the Plan, the employment relationship will be treated as continuing intact where
a Participant transfers employment between the Company, Designated Subsidiaries
and/or Designated Affiliates and while an individual is on sick leave or other
leave of absence that the Employer approves or is legally protected under
Applicable Laws. Where a period of leave of absence exceeds three (3) months and
the individuals right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated three
(3) months and one (1) day following the commencement of such leave. The
Administrator, in its discretion, from time to time may, prior to an Enrollment
Date for all options to be granted on such Enrollment Date in an Offering,
determine (on a uniform and nondiscriminatory basis or as otherwise permitted by
Treasury Regulation Section 1.423-2 for options granted under the 423
Component) that the definition of Eligible Employee will or will not include an
individual if he or she: (i) has not completed at least two (2) years of service
since his or her last hire date (or such lesser period of time as may be
determined by the Administrator in its discretion), (ii) customarily works not
more than twenty (20) hours per week (or such lesser period of time as may be
determined by the Administrator in its discretion), (iii) customarily works not
more than five (5) months per calendar year (or such lesser period of time as
may be determined by the Administrator in its discretion), (iv) is a highly
compensated employee within the meaning of Section 414(q) of the Code, or (v) is
a highly compensated employee within the meaning of Section 414(q) of the Code
with compensation above a certain level or is an officer or subject to the
disclosure requirements of Section 16(a) of the Exchange Act. Under the 423
Component, each exclusion shall be applied with respect to an Offering in a
manner complying with U.S. Treasury Regulation Section 1.423-2(e)(2)(ii). A
Participant shall be deemed to have ceased to be an Eligible Employee either
upon an actual termination of employment or upon the corporation employing the
Participant during an Offering Period ceasing to be an Affiliate of the Company,
or if the Participant transfers to an Affiliate that is not a Designated
Subsidiary or Designated Affiliate.
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(p) Employer means the
Designated Subsidiary or Designated Affiliate that is the employer of the
applicable Eligible Employee in accordance with the definition in subsection
2(o) above.
(q) Enrollment Date means the
first Trading Day of each Offering Period.
(r) Exchange Act means the
Securities Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder.
(s) Exercise Date means the
last Trading Day of each Purchase Period.
(t) Fair Market Value means,
as of any date and unless the Administrator determines otherwise, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on
any established stock exchange or a national market system, including without
limitation the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market of the NASDAQ Stock Market or the New York Stock Exchange, its
Fair Market Value will be the closing sales price for such stock as quoted on
such exchange or system on the date of determination (or if no sales were
reported on that date, on the last Trading Day such sales were reported), as
reported in The Wall Street
Journal or such other source as the
Administrator deems reliable;
(ii) If the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported,
its Fair Market Value will be the mean between the high bid and low asked prices
for the Common Stock on the date of determination (or if no bids and asks were
reported on that date, as applicable, on the last Trading Day such bids and asks
were reported), as reported in The Wall Street
Journal or such other source as the
Administrator deems reliable; or
(iii) In the absence of an established
market for the Common Stock, the Fair Market Value thereof will be determined in
good faith by the Administrator.
(u) New Exercise Date means a
new Exercise Date if the Administrator shortens any Offering Period then in
progress.
(v) Offering means an offer
under the Plan of an option that may be exercised during an Offering Period as
further described in Section 4. Unless otherwise specified by the Administrator,
each Offering to the Eligible Employees of the Company, a Designated Subsidiary
or a Designated Affiliate shall be deemed a separate Offering (the terms of
which Offering under the Non-423 Component need not be identical), even if the
dates and other terms of the applicable Offering Periods of each such Offering
are identical and the provisions of the Plan will separately apply to each
Offering. To the extent permitted by U.S. Treasury Regulation Section 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component
need not be identical, provided that the terms of the Plan and an Offering
together satisfy U.S. Treasury Regulation Section 1.423-2(a)(2) and (a)(3).
(w) Offering Periods means the
periods established in accordance with Section 4 during which an option granted
pursuant to the Plan may be exercised on one or more Exercise Dates. The
duration and timing of Offering Periods may be changed pursuant to Sections 4
and 21.
(x) Parent means a parent
corporation, whether now or hereafter existing, as defined in Section 424(e) of
the Code.
(y) Participant means an
Eligible Employee that participates in the Plan.
(z) Plan means this Staples,
Inc. 2012 Employee Stock Purchase Plan, including both the 423 and Non-423
Components, as amended from time to time.
(aa) Purchase Period means a
period of time within an Offering Period, as may be specified by the
Administrator in accordance with Section 4, generally beginning on the
Enrollment Date and ending on an Exercise Date. An Offering Period may consist
of one or more Purchase Periods.
(bb) Purchase Price means an
amount equal to eighty-five percent (85%) of the Fair Market Value of a share of
Common Stock on the Exercise Date; provided however, that the Purchase Price may
be determined for subsequent Offering Periods by the Administrator subject to
compliance with Section 423 of the Code or any successor rule or provision or
any other applicable law, regulation or stock exchange rule) or pursuant to
Section 21.
(cc) Subsidiary means a
subsidiary corporation, whether now or hereafter existing, as defined in
Section 424(f) of the Code.
(dd) Trading Day means a day
on which the national stock exchange upon which the Common Stock is listed is
open for trading.
(ee) U.S. Treasury Regulations
means Treasury regulations issued by the Department of Treasury under the Code.
Reference to a specific Treasury Regulation or Section of the Code shall include
such Treasury Regulation or Section and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such Section or
regulation.
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3. Eligibility.
(a) General. Unless otherwise
provided in this Section 3 and subject to the requirements of Section 5, any
Eligible Employee on a given Enrollment Date shall be eligible to participate in
the Plan.
(b) Non-U.S. Employees.
Employees who are citizens or residents of a non-U.S. jurisdiction (without
regard to whether they also are citizens or residents of the United States or
resident aliens within the meaning of Section 7701(b)(1)(A) of the Code) may be
excluded from participation in the Plan or an Offering if the participation of
such Employees is prohibited under the laws of the applicable jurisdiction or if
complying with the laws of the applicable jurisdiction would cause the Plan or
an Offering to violate Section 423 of the Code. Further, in the case of the
Non-423 Component, Eligible Employees may be excluded from participation in the
Plan or an Offering if the Administrator has determined that participation of
such Eligible Employees is not advisable or practicable.
(c) Limitations. Notwithstanding
any provisions of the Plan to the contrary, no Eligible Employee will be granted
an option under the Plan (i) to the extent that, immediately after the grant,
such Eligible Employee (or any other person whose stock would be attributed to
such Eligible Employee pursuant to Section 424(d) of the Code) would own capital
stock of the Company or any Parent or Subsidiary of the Company and/or hold
outstanding options to purchase such stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of the capital stock
of the Company or of any Parent or Subsidiary of the Company, or (ii) to the
extent that his or her rights to purchase stock under all employee stock
purchase plans (as defined in Section 423 of the Code) of the Company or any
Parent or Subsidiary of the Company accrues at a rate, which exceeds twenty-five
thousand dollars ($25,000) worth of stock (determined at the Fair Market Value
of the stock at the time such option is granted) for each calendar year in which
such option is outstanding at any time, as determined in accordance with Section
423 of the Code and the regulations thereunder.
4. Offering Periods. The Plan
will be implemented by consecutive Offering Periods with a new Offering Period
commencing on the first Trading Day on or after January 1 and July 1 of each
year, and terminating, respectively, on the last Trading Day on or before June
30 and December 31 of each year, or on such other dates as the Administrator
will determine. Unless and until the Administrator determines otherwise in its
discretion, each Offering Period shall consist of one six (6) month Purchase
Period, which shall run simultaneously with the Offering Period. The
Administrator will have the authority to establish additional or alternative
sequential or overlapping Offering Periods, a different duration for one or more
Offerings or Offering Periods or different commencement or ending dates for such
Offering Periods with respect to future offerings without stockholder approval
if such change is announced prior to the scheduled beginning of the first
Offering Period to be affected thereafter, provided, however, that no Offering
Period may have a duration exceeding twenty-seven (27) months. In addition, to
the extent that the Administrator establishes overlapping Offering Periods with
more than one Purchase Period in each Offering Period, the Administrator will
have the discretion to structure an Offering Period so that if the Fair Market
Value of the shares of Common Stock on the first Trading Day of a new Purchase
Period within that Offering Period is less than or equal to the Fair Market
Value of the shares of Common Stock on the Enrollment Date, then (i) that
Offering Period will terminate immediately as of that first Trading Day, and
(ii) the Participants in such terminated Offering Period will be automatically
enrolled in a new Offering Period beginning on the first Trading Day of such new
Purchase Period.
5. Participation. An Eligible
Employee may participate in the Plan by (i) submitting to the Companys
designated Human Resources representative, on or before
a date determined by the Administrator prior to an applicable Enrollment Date, a
properly completed subscription agreement authorizing Contributions in the form
provided by the Administrator for such purpose, or (ii) following an electronic
or other enrollment procedure determined by the Administrator, and in either
case completing any other forms and following any procedures for enrollment in
the Plan as may be established by the Administrator from time to time.
6. Contributions.
(a) At the time a Participant enrolls
in the Plan pursuant to Section 5, he or she will elect to have payroll
deductions made on each pay day or other Contributions (to the extent permitted
by the Administrator) made during the Offering Period in an amount not exceeding
ten percent (10%) of the Compensation which he or she receives on each pay day
during the Offering Period, or such different maximum percentage as may be
determined by the Administrator prior to any Offering Period; should a pay day
occur on an Exercise Date, a Participant shall have the payroll deductions made
on such day applied to his or her account under the current Purchase Period,
unless otherwise provided by the Administrator. The Administrator, in its sole
discretion, may permit all Participants in a specified Offering to contribute
amounts to the Plan through payment by cash, check or other means set forth in
the subscription agreement prior to each Exercise Date of each Offering Period.
A Participants subscription agreement will remain in effect for successive
Offering Periods unless terminated as provided in Section 10 hereof.
(b) Payroll deductions for a
Participant will commence on the first pay day following the Enrollment Date and
will end on the last pay day of the Offering Period to which such authorization
is applicable, unless sooner terminated by the Participant as provided in
Section 10 hereof.
(c) All Contributions made for a
Participant will be credited to his or her account under the Plan and payroll
deductions will be made in whole percentages only. A Participant may not make
any additional payments into such account.
(d) A Participant may discontinue his
or her participation in the Plan as provided in Section 10. If permitted by the
Administrator, as determined in its sole discretion, for an Offering Period, a
Participant may increase or decrease the rate of his or her Contributions during
the Offering Period or Purchase Period by (i) properly completing and submitting
to the Companys
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designated Human Resources
representative, on or before a date determined by the Administrator prior to an
applicable Exercise Date, a new subscription agreement authorizing the change in
Contribution rate in the form provided by the Administrator for such purpose, or
(ii) following an electronic or other procedure prescribed by the Administrator.
If a Participant has not followed such procedures to change the rate of
Contributions, the rate of his or her Contributions will continue at the
originally elected rate throughout the Offering Period and future Offering
Periods (unless terminated as provided in Section 10). The Administrator may, in
its sole discretion, limit the nature and/or number of Contribution rate changes
that may be made by Participants during any Offering Period or Purchase Period,
and may establish such other conditions or limitations as it deems appropriate
for Plan administration. Any change in payroll deduction rate made pursuant to
this Section 6(d) will be effective as soon as administratively practicable
after the date on which the change is made by the Participant. Notwithstanding
the foregoing, unless and until otherwise determined by the Administrator, a
Participant shall not be permitted to increase or decrease his or her rate of
Contributions during an Offering Period, with the exception that a Participant
may withdraw from the Plan and receive a refund of Contributions in accordance
with Section 10.
(e) Notwithstanding the foregoing
provisions of this Section 6, to the extent necessary to comply with Section
423(b)(8) of the Code and Section 3(c)(ii), a Participants Contributions may be
decreased to zero percent (0%) at any time during an Offering Period. Subject to
Section 423(b)(8) of the Code and Section 3(c)(ii) hereof, Contributions will
recommence at the rate originally elected by the Participant effective as of the
beginning of the first Offering Period scheduled to end in the following
calendar year, unless terminated by the Participant as provided in Section 10.
(f) Notwithstanding any provisions to
the contrary in the Plan, the Administrator may allow Eligible Employees to
participate in the Plan via cash, check or other means instead of payroll
deductions if payroll deductions are not permitted under applicable local law
and, for any Offering under the 423 Component, the Administrator determines that
cash contributions are permissible under Section 423 of the Code.
7. Grant of Option. On the
Enrollment Date of each Offering Period, each Participant in such Offering
Period will be granted an option to purchase on each Exercise Date during such
Offering Period (at the applicable Purchase Price) up to a number of shares of
Common Stock determined by dividing such Participants Contributions accumulated
prior to such Exercise Date and retained in the Participants account as of the
Exercise Date by the applicable Purchase Price; provided that in no event will a
Participant be permitted to purchase during each Purchase Period more than that
number of whole shares of Stock determined by dividing Twelve Thousand Five
Hundred Dollars ($12,500) by the Fair Market Value of a share of Common Stock on
the Enrollment Date of such Offering Period and further provided that, if the
Purchase Period is any period other than six (6) months, then the foregoing
limit shall be adjusted proportionately to reflect the length of the Purchase
Period. The Administrator may, in its discretion and prior to the Enrollment
Date of any Offering Period, (i) change the maximum number of shares of Common
Stock that may be purchased by a Participant in such Offering Period or on any
Exercise Date within an Offering Period, including the method for determining
such maximum, or (ii) specify a maximum aggregate number of shares of Common
Stock that may be purchased by all Participants in an Offering Period or on any
Exercise Date within an Offering Period. Further, the Board may limit the number
or value of the shares of Common Stock made available for purchase in a
qualified period (e.g., twelve (12) month period) by Participants in specified
countries or working for specified Employers, if necessary to avoid securities
law filings, achieve tax objectives or to meet other Company compliance
objectives in particular locations outside the United States, provided that any
such limitation is imposed under the Non-423 Component or, with respect to any
Offering under the 423 Component, is imposed on an equal basis to all
Participants under such Offering or as otherwise permitted in accordance with
Section 423 of the Code and the U.S. Treasury Regulations thereunder. Exercise
of the option will occur as provided in Section 8, unless the Participant has
withdrawn pursuant to Section 10. The option will expire on the last day of the
Offering Period.
8. Exercise of Option.
(a) Unless a Participant withdraws from
the Plan as provided in Section 10, his or her option for the purchase of shares
of Common Stock will be exercised automatically on the Exercise Date, and the
maximum number of full shares subject to the option will be purchased for such
Participant at the applicable Purchase Price with the accumulated Contributions
from his or her account. Unless otherwise determined by the Administrator prior
to the Enrollment Date of any Offering Period, fractional shares calculated up
to five (5) decimal places will be purchased. In the event that the
Administrator determines not to allow the purchase of fractional shares, any
Contributions accumulated in a Participants account which are not sufficient to
purchase a full share may be retained in the Participants account for the
subsequent Offering Period or Purchase Period, subject to earlier withdrawal by
the Participant as provided in Section 10. Any other funds left over in a
Participants account after the Exercise Date will be returned to the
Participant. During a Participants lifetime, a Participants option to purchase
shares hereunder is exercisable only by him or her.
(b) If the Administrator determines
that, on a given Exercise Date, the number of shares of Common Stock with
respect to which options are to be exercised may exceed (i) the number of shares
of Common Stock that were available for sale under the Plan on the Enrollment
Date of the applicable Offering Period, or (ii) the number of shares of Common
Stock available for sale under the Plan on such Exercise Date, the Administrator
may in its sole discretion (x) provide that the Company will make a pro rata
allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will
be practicable and as it will determine in its sole discretion to be equitable
among all Participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect or (y) provide
that the Company will make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as will be practicable and as it will determine in its sole discretion
to be equitable among all Participants exercising options to purchase Common
Stock on such Exercise Date, and terminate any or all Offering Periods then in
effect pursuant to Section 21. The Company may make a pro rata allocation of the
shares available on the Enrollment Date of any applicable Offering Period
pursuant to the preceding sentence, notwithstanding any authorization of
additional shares for issuance under the Plan by the Companys stockholders
subsequent to such Enrollment Date.
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(c) Tax Withholding. At the time
the option is exercised, in whole or in part, or at the time some or all of the
Common Stock issued under the Plan is disposed of (or any other time that a
taxable event related to the Plan occurs), the Participant must make adequate
provision for the Companys or Employers federal, state, local or any other tax
liability payable to any authority including taxes imposed by jurisdictions
outside of the U.S., national insurance, social security or other tax
withholding obligations, if any, which arise upon the exercise of the option or
the disposition of the Common Stock (or any other time that a taxable event
related to the Plan occurs), including, for the avoidance of doubt, any
liability to pay an employer tax or social insurance contribution which has been
shifted from the Company or any Employer to the Participant as a matter of law
or contract. At any time, the Company or the Employer may, but will not be
obligated to, withhold from the Participants compensation the amount necessary
for the Company or the Employer to meet applicable withholding obligations,
including any withholding required to make available to the Company or the
Employer any tax deductions or benefits attributable to sale or early
disposition of Common Stock by the Eligible Employee. In addition, the Company
or the Employer may, but will not be obligated to, withhold from the proceeds of
the sale of Common Stock or any other method of withholding the Company or the
Employer deems appropriate.
9. Delivery. As soon as
reasonably practicable after each Exercise Date on which a purchase of shares of
Common Stock occurs, the Company will arrange
the delivery to each Participant of the shares purchased upon exercise of his or
her option in a form determined by the Administrator (in its sole discretion)
and pursuant to rules established by the Administrator. The Company may permit
or require that shares be deposited directly with a broker designated by the
Company or to a designated agent of the Company, and the Company may utilize
electronic or automated methods of share transfer. The Company may require that
shares be retained with such broker or agent for a designated period of time,
and/or may establish procedures to permit tracking of dispositions of shares.
10. Withdrawal.
(a) A Participant may withdraw all but
not less than all the Contributions credited to his or her account and not yet
used to exercise his or her option under the Plan at any time by (i) submitting
to the Companys designated Human Resources representative a written notice of
withdrawal in the form determined by the Administrator for such purpose, or (ii)
following an electronic or other withdrawal procedure determined by the
Administrator. Further, unless otherwise determined by the Administrator, any
Participant who elects to decrease the rate of his or her Contributions to zero
percent (0%) during an Offering Period shall be deemed to withdraw from
participation in the Plan. The Administrator may impose, from time to time, a
requirement that the applicable notice of withdrawal from the Plan be on file
with the Company for a reasonable period prior to the effectiveness of the
Participants withdrawal. All of the Participants Contributions credited to his
or her account will be paid to such Participant promptly after receipt of notice
of withdrawal and such Participants option for the Offering Period will be
automatically terminated, and no further Contributions for the purchase of
shares will be made for such Offering Period. If a Participant withdraws from an
Offering Period, Contributions will not resume at the beginning of the
succeeding Offering Period, unless the Participant re-enrolls in the Plan in
accordance with the provisions of Section 5.
(b) A Participants withdrawal from an
Offering Period will not have any effect upon his or her eligibility to
participate in any similar plan that may hereafter be adopted by the Company or
in succeeding Offering Periods that commence after the termination of the
Offering Period from which the Participant withdraws.
11. Termination of Eligible Employee
Status. Upon a Participants ceasing to be an Eligible Employee, for any
reason, he or she will be deemed to have elected to withdraw from the Plan and
the Contributions credited to such Participants account during the Offering
Period but not yet used to purchase shares of Common Stock under the Plan will
be returned to such Participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 15, and such Participants
option will be automatically terminated.
12. Interest. No interest will
accrue on the Contributions of a Participant in the Plan, except as may be
required by applicable law, as determined by the Company, and if so required by
the laws of a particular jurisdiction, shall apply to all Participants in the
relevant Offering except to the extent otherwise permitted by U.S. Treasury
Regulation Section 1.423-2(f), or with respect to any Offering under the
Non-423 Component, the payment of interest shall apply as determined by the
Administrator.
13. Stock.
(a) Basic Limitation. Subject to
adjustment upon changes in capitalization of the Company as provided in Section
20 hereof, a maximum of Fifteen Million (15,000,000) shares of Common Stock will
be made available for sale under the Plan. All or any portion of such maximum
number of shares may be issued under the Section 423 Component.
(b) Rights as an Unsecured
Creditor. Until the shares are issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of or broker
selected by the Company), a Participant will only have the rights of an
unsecured creditor with respect to such shares, and no right to vote or receive
dividends or any other rights as a stockholder will exist with respect to such
shares.
(c) Source of Shares. Any shares
of Common Stock issued upon exercise may consist, in whole or in part, of
authorized and unissued shares or of treasury shares.
14. Administration. The Plan
will be administered by the Board or the Committee. Unless otherwise determined
by the Board, in connection with the administration of the Plan, any two of the
Chief Executive Officer, President, Chief Financial Officer, Treasurer,
Secretary or Executive Vice PresidentHuman Resources of the Company, acting
jointly, by and behalf of the Company, shall have the authority (a) to
negotiate, fix and vary the terms of, and to execute and deliver, contracts,
agreements, assignments,
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concessions, licenses, options and all
other similar instruments, (b) to engage any agents or contractors, including
banks, stock brokers and attorneys, (c) to amend the Plan, and (d) to otherwise
do all acts and things necessary or suitable in connection with the exercise of
any of the aforementioned powers; provided, that no such authorization shall
extend to any amendment of the Plan that increases the number of shares of
Common Stock available for purchase under the Plan or otherwise requires
stockholder approval under applicable tax or stock exchange rules.
Notwithstanding the foregoing, the Board or the Compensation Committee of the
Board shall administer the Plan to the extent necessary to comply with
Applicable Laws.
Unless otherwise determined by the
Board (within the constraints of Applicable Laws), the Administrator will have
full and exclusive discretionary authority to construe, interpret and apply the
terms of the Plan, to designate separate Offerings under the Plan, to determine
which entities shall be Designated Subsidiaries or Designated Affiliates, to
determine eligibility, to adjudicate all disputed claims filed under the Plan
(including making factual determinations), to change the Offering Periods and
Purchase Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period or Purchase Period, permit payroll
withholding in excess of the amount designated by a Participant in order to
adjust for delays or mistakes in the Companys processing of properly completed
subscription agreements, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each Participant properly correspond with
Contribution amounts, and establish such other limitations or procedures as the
Administrator determines in its sole discretion advisable that are consistent
with the Plan, including adopting amendments to the Plan and/or outstanding
options as permitted by Section 21 below.
Further, the Administrator, or its
delegee to the extent permitted by Applicable Laws, may adopt such rules,
procedures and sub-plans as are necessary or appropriate to permit the
participation in the Plan by employees who are foreign nationals or employed
outside the United States, the terms of which sub-plans may take precedence over
other provisions of this Plan, with the exception of Section 13(a) hereof, but
unless otherwise superseded by the terms of such sub-plan, the provisions of
this Plan shall govern the operation of such sub-plan. To the extent
inconsistent with the requirements of Section 423, any such sub-plan shall be
considered part of the Non-423 Component, and rights granted thereunder shall
not be required by the terms of the Plan to comply with Section 423 of the Code.
Without limiting the generality of the foregoing, the Administrator is
specifically authorized to adopt rules and procedures regarding eligibility to
participate, the definition of Compensation, handling of Contributions, making
of Contributions to the Plan (including, without limitation, in forms other than
payroll deductions), establishment of bank or trust accounts to hold
Contributions, payment of interest, establishment of the exchange ratio
applicable to Contributions withheld in a currency other than U.S. dollars,
obligations to pay payroll tax, determination of beneficiary designation
requirements, withholding procedures and handling of stock certificates that
vary with applicable local requirements. The Administrator also is authorized to
determine that, to the extent permitted by U.S. Treasury Regulation Section
1.423-2(f), the terms of an option granted under the Plan or an Offering to
citizens or residents of a non-U.S. jurisdiction will be less favorable than the
terms of options granted under the Plan or the same Offering to employees
resident solely in the U.S. Every finding, decision and determination made by
the Administrator will be final and binding upon all parties.
15. Death of Participant. In the
event of the death of a Participant, any shares of Common Stock and cash, if
any, from the Participants account under the Plan will be delivered to the
executor, administrator or personal representative of the estate of the
Participant, or such other individual as may be prescribed by applicable
law.
16. Transferability. Neither
Contributions credited to a Participants account nor any rights with regard to
the exercise of an option or to receive shares of Common Stock under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way (other
than by will, the laws of descent and distribution or as provided in Section 15
hereof) by the Participant. Any such attempt at assignment, transfer, pledge or
other disposition will be without effect, except that the Company may treat such
act as an election to withdraw funds from an Offering Period in accordance with
Section 10 hereof.
17. Use of Funds. The Company
may use all Contributions received or held by it under the Plan for any
corporate purpose, and the Company will not be obligated to segregate such
Contributions except under Offerings in which applicable local law requires that
Contributions to the Plan by Participants be segregated from the Companys
general corporate funds and/ or deposited with an independent third party for
Participants in non-U.S. jurisdictions. Until shares of Common Stock are issued,
Participants will only have the rights of an unsecured creditor with respect to
such shares.
18. Reports. Individual accounts
will be maintained for each Participant in the Plan. Statements of account will
be given to participating Eligible Employees at least annually, which statements
will set forth the amounts of Contributions, the Purchase Price, the number of
shares of Common Stock purchased and the remaining cash balance, if any.
19. No Right to Employment.
Participation in the Plan by a Participant shall not be construed as giving a
Participant the right to be retained as an employee of the Company or a
Subsidiary or Affiliate, as applicable. Furthermore, the Company or a Subsidiary
or Affiliate may dismiss a Participant from employment at any time, free from
any liability or any claim under the Plan.
20. Adjustments, Dissolution,
Liquidation or Change in Control.
(a) Adjustments. In the event
that any dividend or other distribution (whether in the form of cash, Common
Stock, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Common Stock or other securities of the
Company, or other change in the corporate structure of the Company affecting the
Common Stock occurs, the Administrator, in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, will, in such manner as it may deem equitable, adjust the number
and class of Common Stock that may be delivered under the Plan, the Purchase
Price per share and the number of shares of Common Stock covered by each option
under the Plan that has not yet been exercised, and the numerical limits of
Section 7.
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(b) Dissolution or Liquidation.
In the event of the proposed dissolution or liquidation of the Company, any
Offering Period then in progress will be shortened by setting a New Exercise
Date, and will terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Administrator. The
New Exercise Date will be before the date of the Companys proposed dissolution
or liquidation. The Administrator will notify each Participant in writing or
electronically, prior to the New Exercise Date, that the Exercise Date for the
Participants option has been changed to the New Exercise Date and that the
Participants option will be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Change in Control. In the
event of a Change in Control, each outstanding option will be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, then, in the sole
discretion of the Administrator, either (i) all outstanding options will be
cancelled by the Administrator as of a date prior to the effective date of the
Change in Control and all Contributions shall be refunded to the Participants;
or (ii) the Offering Period with respect to which such option relates will be
shortened by setting a New Exercise Date on which such Offering Period shall
end. The New Exercise Date will occur before the date of the Companys proposed
Change in Control. The Administrator will notify each Participant in writing or
electronically prior to the New Exercise Date, that the Exercise Date for the
Participants option has been changed to the New Exercise Date and that the
Participants option will be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offering Period
as provided in Section 10 hereof. Notwithstanding the foregoing, if the Company
shall at any time merge or consolidate with another corporation and the holders
of the capital stock of the Company immediately prior to such merger or
consolidation continue to hold at least seventy-five percent (75%) by voting
power of the capital stock of the surviving corporation, the holder of each
option then outstanding will thereafter be entitled to receive at the next
Exercise Date upon the exercise of such option for each share of Common Stock as
to which such option shall be exercised the securities or property which a
holder of such shares of Common Stock was entitled to upon and at the time of
such merger or consolidation, and the Administrator shall take such steps in
connection with such merger or consolidation as the Administrator shall deem
necessary to assure that the provisions of Section 20(a) shall thereafter be
applicable, as nearly as reasonably may be, in relation to the said securities
or property as to which such holder of such option might thereafter be entitled
to receive thereunder.
21. Amendment or Termination.
(a) The Administrator, in its sole
discretion (except as provided in Section 14), may amend, suspend, or terminate
the Plan, or any part thereof, at any time and for any reason. If the Plan is
terminated, the Administrator, in its discretion, may elect to terminate all
outstanding Offering Periods either immediately or upon completion of the
purchase of shares of Common Stock on the next Exercise Date (which may be
sooner than originally scheduled, if determined by the Administrator in its
discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to Section 20). If the
Offering Periods are terminated prior to expiration, all amounts then credited
to Participants accounts that have not been used to purchase shares of Common
Stock will be returned to the Participants (without interest thereon, except as
otherwise required under local laws, as further set forth in Section 12 hereof)
as soon as administratively practicable. In addition, an amendment to the Plan
must be approved by the stockholders of the Company within twelve (12) months of
the adoption of such amendment if such amendment would authorize the sale of
more shares than are then authorized for issuance under the Plan or would change
the definition of the corporations that may be designated by the Administrator
as participating companies under the Plan.
(b) In the event the Administrator
determines that the ongoing operation of the Plan may result in unfavorable
financial accounting consequences, the Administrator may, in its discretion and,
to the extent necessary or desirable, modify, amend or terminate the Plan to
reduce or eliminate such accounting consequence including, but not limited to:
(i) amending the Plan to conform with
the safe harbor definition under the Financial Accounting Standards Board
Accounting Standards Codification Topic 718 (or any successor thereto),
including with respect to an Offering Period underway at the time;
(ii) altering the Purchase Price for
any Purchase Period or Offering Period including a Purchase Period or Offering
Period underway at the time of the change in Purchase Price;
(iii) shortening any Offering Period by
setting a New Exercise Date, including an Offering Period underway at the time
of the Administrator action;
(iv) reducing the maximum percentage of
Compensation a Participant may elect to set aside as Contributions; and
(v) reducing the maximum number of
shares of Common Stock a Participant may purchase during any Offering Period.
Such modifications or amendments will
not require stockholder approval or the consent of any Plan Participants.
(c) The Administrator may amend an
outstanding option or grant a replacement option for a option previously granted
under the Plan if, in the Administrators discretion, it determines that (i) the
tax consequences of such option to the Company or the Participant differ from
those consequences that were expected to occur on the date the option was
granted, (ii) clarifications or interpretations of, or changes to, tax law or
regulations permit options to be granted that have more favorable tax
consequences than initially anticipated, or (iii) such amendment is necessary or
advisable to comply with applicable local laws.
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22. Notices. All notices or
other communications by a Participant to the Company under or in connection with
the Plan will be deemed to have been duly given when received in the form and
manner specified by the Company at the location, or by the person, designated by
the Company for the receipt thereof.
23. Notification Of Disposition Of
Shares. As a condition of participation in the Plan, the Company requires
Participants in an Offering under the 423 Component to give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an
option. The Company may further require that until such time as a Participant in
an Offering under the 423 Component disposes of shares acquired upon exercise of
an option, the Participant shall hold all such shares in the Participants name
(or, if elected by the Participant, in the name of the Participant and his or
her spouse but not in the name of any nominee) until the later of two years
after the date of grant of such option or one year after the date of exercise of
such option. The Company may direct that the certificates evidencing shares
acquired by exercise of an option refer to such requirement to give prompt
notice of disposition.
24. Conditions Upon Issuance of
Shares. Shares of Common Stock will not be issued with respect to an option
unless the exercise of such option and the issuance and delivery of such shares
pursuant thereto will comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
will be further subject to the approval of counsel for the Company with respect
to such compliance. The inability or impracticability of the Company to obtain
from any regulatory body having jurisdiction the authority, if any, deemed by
the Companys legal counsel to be necessary to the lawful issuance and sale of
any shares under the Plan, or the approval of any securities exchange or market
system upon which the Common Stock may then be listed, if any, deemed by the
Companys legal counsel to be necessary to the issuance and sale of any shares
under the Plan in compliance with the requirements of such securities exchange
or market system, shall relieve the Company of any liability in respect of the
failure to issue or sell such shares as to which such requisite authority or
approval shall not have been obtained. As a condition to the exercise of an
option, the Company may require the Participant to satisfy any qualifications
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation, and to make any representation or warranty with respect
thereto as may be requested by the Company.
25. Code Section 409A. The Plan
is exempt from the application of Code Section 409A and any ambiguities herein
will be interpreted to so be exempt from Code Section 409A. The Non-423
Component is intended to be exempt from the application of Section 409A of the
Code under the short-term deferral exception and any ambiguities shall be
construed and interpreted in accordance with such intent. In furtherance of the
foregoing and notwithstanding any provision in the Plan to the contrary, if the
Administrator determines that an option granted under the Plan may be subject to
Code Section 409A or that any provision in the Plan would cause an option under
the Plan to be subject to Code Section 409A, the Administrator may amend the
terms of the Plan and/or of an outstanding option granted under the Plan, or
take such other action the Administrator determines is necessary or appropriate,
in each case, without the Participants consent, to exempt any outstanding
option or future option that may be granted under the Plan from or to allow any
such options to comply with Code Section 409A, but only to the extent any such
amendments or action by the Administrator would not violate Code Section 409A.
Notwithstanding the foregoing, the Company shall have no liability to a
Participant or any other party if the option to purchase Common Stock under the
Plan that is intended to be exempt from or compliant with Code Section 409A is
not so exempt or compliant or for any action taken by the Administrator with
respect thereto.
26. Tax-Qualification. Although
the Company may endeavor to (i) qualify an option for favorable tax treatment
under the laws of the United States or jurisdictions outside of the United
States or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code),
the Company makes no representation to that effect and expressly disavows any
covenant to maintain favorable or avoid unfavorable tax treatment,
notwithstanding anything to the contrary in this Plan, including Section 25. The
Company shall be unconstrained in its corporate activities without regard to the
potential negative tax impact on Participants under the Plan.
27. Term of Plan. Subject to
Section 28 of the Plan, the Plan will become effective upon its adoption by the
Board. It will continue in effect until terminated under Section 21.
28. Stockholder Approval. The
Plan will be subject to approval by the stockholders of the Company within
twelve (12) months after the date the Plan is adopted by the Board. Such
stockholder approval will be obtained in the manner and to the degree required
under Applicable Laws.
29. Governing Law. The Plan
shall be governed by, and construed in accordance with, the laws of the State of
Massachusetts (except its choice-of-law provisions). Unless otherwise determined
by the Administrator in its discretion, Participants are deemed to submit to the
exclusive jurisdiction and venue of the competent federal or state courts of the
State of Massachusetts to resolve any and all issues that may arise out of or
relate to the Plan or the subscription agreement.
30. Severability. If any
provision of the Plan is or becomes or is deemed to be invalid, illegal, or
unenforceable for any reason in any jurisdiction or as to any Participant, such
invalidity, illegality or unenforceability shall not affect the remaining parts
of the Plan, and the Plan shall be construed and enforced as to such
jurisdiction or Participant as if the invalid, illegal or unenforceable
provision had not been included.
31. Dividends on Shares Purchased
under the Plan. Unless otherwise determined by the Administrator, each
Participant agrees, for so long as shares of Common Stock purchased by the
Participant at any time under the Plan (the Purchased Shares)
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are held by the individual in an
account with a bank, transfer agent, or other financial institution designated
by the Company to hold the Purchased Shares (the Financial
Institution), to (a) participate in the Staples, Inc. dividend reinvestment
program maintained by the Financial Institution (the DRIP) such that
the individual shall receive, in lieu of any cash dividend paid or payable by
the Company with respect to the individuals Purchased Shares that are held in
an account with the Financial Institution (the Captive Shares), shares of
Common Stock (including any fractional shares) pursuant to the terms of the
DRIP, and (b) allow the Company to take all reasonably necessary and appropriate
actions to ensure that the amount of any cash dividend paid or payable by the
Company with respect to the employees Captive Shares is paid in the form of
Common Stock instead of cash.
32. Headings. Headings are given
to the sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan.
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ATTN: INVESTOR RELATIONS 500 STAPLES DRIVE FRAMINGHAM, MA
01702 |
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ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by
Staples, Inc. in mailing proxy materials and help the environment by
allowing us to print fewer paper copies, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery or access,
please follow the instructions below to vote using the Internet and, when
prompted, indicate that you agree to receive or access stockholder
communications electronically in future years.
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VOTE BY INTERNET -
www.proxyvote.com Use
the Internet to transmit your voting instructions and for electronic
delivery of information until 11:59 P.M. Eastern Time the day before the
meeting date. Have your proxy card in hand when you access the website and
follow the instructions to obtain your records and to create an electronic
voting instruction form. |
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VOTE BY PHONE -
1-800-690-6903 Use any
touch-tone telephone to transmit your voting instructions until 11:59 P.M.
Eastern Time the day before the meeting date. Have your proxy card in hand
when you call and then follow the instructions. |
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VOTE BY
MAIL Mark, sign and date your proxy
card and return it in the postage-paid envelope we have provided or return
it to Staples, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717. |
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Your Internet or telephone vote
is valid under Delaware law and authorizes the named proxies to vote the
shares in the same manner as if you marked, signed and returned your proxy
card. |
TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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M91191-P64182 |
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KEEP THIS PORTION FOR YOUR
RECORDS |
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DETACH AND
RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
STAPLES,
INC.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" ALL DIRECTOR NOMINEES LISTED BELOW IN ITEM 1
AND "FOR" ITEMS 2, 3 AND 4.
1. |
Election of eleven directors to serve for a one-year term expiring
at the 2016 Annual Meeting of Stockholders |
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Nominees: |
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For |
Withhold |
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1a. |
Basil L. Anderson |
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1b. |
Drew G. Faust |
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1c. |
Paul-Henri Ferrand |
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1d. |
Kunal S. Kamlani |
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☐ |
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1e. |
Carol Meyrowitz |
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1f. |
Rowland T. Moriarty |
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1g. |
Ronald L. Sargent |
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1h. |
Robert E. Sulentic |
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1i. |
Raul Vazquez |
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☐ |
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For address changes and/or
comments, please check this box and write them on the back where
indicated. |
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Please indicate if you plan to
attend this meeting. |
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☐ |
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Yes |
No |
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For |
Withhold |
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1j. |
Vijay Vishwanath |
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☐ |
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1k. |
Paul F. Walsh |
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☐ |
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For |
Against |
Abstain |
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2. |
Approval of an amendment to the
2012 Employee Stock Purchase Plan. |
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3. |
Approval, on an advisory basis, of named
executive officer compensation. |
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4. |
Ratification of the selection by
the Audit Committee of Ernst & Young LLP as Staples' independent
registered public accounting firm for the current fiscal
year. |
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THE BOARD OF DIRECTORS
RECOMMENDS YOU VOTE "AGAINST" ITEMS 5 AND 6. |
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5. |
Non-binding stockholder proposal
regarding senior executive severance agreements. |
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6. |
Non-binding stockholder proposal
regarding Independent Board Chairman. |
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The shares represented by this proxy
when properly executed will be voted in the manner directed herein by the
undersigned Stockholder(s). If no direction is
made, this proxy will be voted (A) "FOR" all director nominees listed above in
item 1, (B) in accordance with the recommendations of the Board of Directors on
the other matters referred to above, and (C) in the discretion of the proxies
upon such other matters as may properly come before the annual
meeting.
(NOTE: Please sign exactly as your
name(s) appear(s) hereon. All holders must sign. When signing as attorney,
executor, administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. If a corporation, please sign in full
corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.)
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Signature
[PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint
Owners) |
Date |
Table of
Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice, Proxy Statement and Annual Report (Including the
Form 10-K) are available at www.proxyvote.com.
STAPLES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
JUNE 1, 2015
The stockholder(s), revoking all prior
proxies, hereby appoint(s) Ronald L. Sargent, Christine T. Komola and Michael T.
Williams, and each of them individually, as proxies, each with the power to
appoint his or her substitute, and hereby authorize(s) them to represent and to
vote, as designated on the reverse side of this ballot, all of the shares of
Common Stock of Staples, Inc. that the stockholder(s) is/are entitled to vote at
the Annual Meeting of Stockholders to be held at 4:00 p.m., local time, on June
1, 2015, at the Umstead Hotel, 100 Woodland Pond Drive, Cary, North Carolina
27513, and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE,
THIS PROXY WILL BE VOTED (A) "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED
ON THE REVERSE SIDE FOR ITEM 1, (B) IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS ON THE MATTERS REFERRED TO ON THE REVERSE SIDE, AND (C)
IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
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Address
Changes/Comments: |
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(If you noted
any Address Changes/Comments above, please mark corresponding box on the reverse
side.)
CONTINUED AND TO BE SIGNED ON REVERSE
SIDE
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