Staples Inc. has adopted a policy that limits so-called golden parachutes and requires shareholder approval to exceed a severance benefits cap for senior executives, a stockholder proposal that won majority backing at the company's annual shareholder meeting in June, the company said.

Under the new policy, which the company said applies to existing agreements, severance benefits for senior executives are capped at 2.99 times the sum of the executive's base salary and target annual cash incentive award.

Staples had recommended against the proposal, submitted by the New York State Common Retirement Fund, saying its practice was "reasonable, appropriate and consistent with market practice, and is critical to our ability to attract and retain senior executives."

Chief Executive Ron Sargent, has already amended his severance agreement to reflect the change, the company said.

"This new policy is in the best interests of Staples' shareholders," Paul Walsh, who leads the board's compensation committee, said.

Framingham, Mass.-based Staples has made a $6.3 billion takeover bid for rival office-supply company Office Depot Inc., a deal that antitrust regulators are scrutinizing, particularly over its potential impact to business customers.

Write to Maria Armental at maria.armental@wsj.com

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(END) Dow Jones Newswires

October 13, 2015 21:25 ET (01:25 GMT)

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