2015 Corporate Governance Highlights
May 2015
Overview

We are reinventing Staples to accelerate long-term sales and earnings growth

The Compensation Committee has set a highly performance-based, long-term, equity-focused
executive compensation program with metrics tied directly to the success of our reinvention
strategy and the creation of long-term shareholder value

Our Board highly values dialogue with shareholders, and over the past year engaged with
shareholders owning over 40% of shares outstanding on our compensation and governance
practices which led to significant changes

We pledged to seek approval for proxy access rights next year at a 3%/3-year threshold

We strengthened the Lead Independent Director role as well as adopted a new policy to require,
whenever possible, that we have an independent chair of the Board once our current Chairman no
longer serves in this role

We have a rigorous Board succession process, and 2 of 10 outside members of our Board up for
election at this meeting are new
Staples’ Board has been responsive to shareholders and is committed to
implementing best in class governance practices
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Reinventing Staples to Accelerate Long-Term
Sales and Earnings Growth
We have a robust strategic plan to embrace the changing needs
of our customers and reinvent our company
Reinvention Highlights
Every product your business
needs to succeed.
Onward to online and boldly to BO$$
Leading
B2B player
Leading
Commercial player
 Announced plans to acquire Office Depot
which we believe will allow us to more
effectively compete against a wide set of
competitors
 Acquired PNI Digital Media to increase
personalized product offerings
World’s broadest
B2B assortment
Turbocharge
print
 Growing Copy & Print across all
channels
 Stabilized sales and earnings in
International
Reshape and improve our businesses
Optimize our retail
footprint
Fund the future
 Offering over 1 million products on
Staples.com
Evolve our supply
chain
Fix and grow
international
 Closed 169 stores in North America in
2014, on track to close 60 stores in 2015
Build enablers of our execution
Talent & culture
Evolve
brand
Price perception
 Coordinated retail and online offering
through omnichannel initiatives
Technology
Big data and
analytics
 On track for $500 million of cost
reductions in 2014 & 2015 combined
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Accelerating Our Reinvention with the
Acquisition of Office Depot
Transaction Overview

Announced the acquisition of Office Depot on
February 4 in a cash and stock transaction

Subject to customary closing conditions, antitrust
regulatory approval, and Office Depot shareholder
approval

Expected to close by the end of calendar year
2015
Acquisition Rationale

Combined company better positioned to serve the
changing needs of customers and compete
against a large and diverse set of competitors

Strategic combination expected to deliver more
than $1 billion of net synergies after investments
to provide increased value to Staples’ customers

Cost savings and operational efficiencies to
dramatically accelerate Staples' strategy of driving
growth in delivery businesses and categories
beyond office supplies

Provides ability to optimize retail footprint

Generates significant value for shareholders;
accretive to EPS in first year post-closing1
“This is a transformational acquisition which enables Staples to provide
more value to customers, and more effectively compete in a rapidly
evolving competitive environment” – Ron Sargent, CEO
1
Excluding integration and restructuring costs and purchase accounting adjustments
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2014 Executive Compensation Plan Design
100% of our short-term and long-term plans are tied to rigorous,
objective performance goals
Performance Metrics & Goals
CEO Pay Strongly Tied to Performance
= Reported Pay
$ USD Million
Short-Term Plan
100% PerformanceBased
Long-Term Plan
100% PerformanceBased
 EPS
 Sales Growth %
 Sales Beyond
Office Supply
Growth
 Return on Net
Assets %
 Total Company
Sales
= Realized Pay
Reported1 vs. Realized2 Pay
2012
2013
Changing metric
to Gross Margin
Dollars in 2015
and forward plans
2014
$6.5
$10.0
$10.8
$6.8
$12.4
$6.7
Staples is among the 11% of S&P 500 companies that tie 100% of LTI
compensation to achievement of performance goals3
Source: Staples’ DEF14A filed April 13, 2015 and DEFA14A filed May 6, 2015. 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 Source: Staples’ DEF14A filed April 13, 2015 and DEFA14A filed May 6, 2015. 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.
3 Source: Equilar Inc.
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Changes to Executive Compensation Program
We have engaged with holders of more than 40% of shares to
maintain an open dialogue and to better understand their concerns

Over the past year, the Board has received important shareholder feedback on our compensation
program and practices through direct dialogue with shareholders
–
–

Shareholders provided feedback on CEO compensation practices. In response to
shareholder input, the CEO has elected to:
•
Eliminate a legacy tax gross-up provision in his existing severance agreement
•
Not accept a 2.5% base salary increase for 2014 that had been approved by the
Board early in 2014
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, the Board
replaced the Total Sales metric in the 2015 Annual Cash Incentive Plan with Gross
Margin Dollars to place greater emphasis on driving profitability
The Board is committed to an ongoing review of Staples’ executive compensation program and
disclosure enhancements to ensure it aligns with evolving best practices
We ask for your SUPPORT this year on our advisory vote on compensation
and welcome any questions about our compensation practices
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Sound Compensation Governance Practices
We are committed to effective governance of our
compensation program and have implemented best practices
 Stock ownership guidelines
– (5x for CEO, 3x to 4x for other NEOs)
Long-Term Alignment
Transparency
Compensation Risk Oversight
 No employment agreements for NEOs
 Double trigger change in control provisions in severance
agreements
 3-year performance periods tied to TSR
 Rigorous, objective financial metrics on annual and longterm awards
 No excise tax gross-ups in executive severance
agreements
 Minimal, reasonable perquisites




Robust clawback policy
Policy prohibiting hedging
Predetermined stock grant dates
Independent compensation consultant hired by the
Committee performs no other services for the Company
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Highly Engaged and Independent Board
Governance Best Practices

Annual election of directors

Majority voting in uncontested elections

Robust Independent Lead Director position

Plan to appoint independent Chair once our
current Chairman no longer serves in this role

Commitment to 3%/3-year proxy access
management proposal at 2016 Annual Meeting

Highly Independent, Diverse Board1
CEO/Chair
Since 2007, we
have added or
announced nine
new directors,
including six that
enhanced our
diversity profile
Independent
Outsiders
91%
Balanced Blend of Perspectives1
Majority vote provisions for bylaw/charter
amendments and M&A

Shareholder right to call special meeting

Shareholder action by written consent

No stockholder rights plan

Transparent disclosures of political contributions

Robust annual shareholder outreach program
4 Directors
4 Directors
3 Directors
< 5 Years
6-10 Years
>10 Years
Board tenure data reflects Jan. 14, 2015 announcement of Robert Nakasone’s retirement and nomination of Paul-Henri Ferrand for election at the 2015 Annual
Meeting as well as April 10, 2015 announcement that Justin King has decided not to stand for re-election at 2015 Annual Meeting and nominating Kunal Kamlani for
election. Elizabeth Smith served on the board from 2008 – 2014.
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Recent Board Leadership Developments
Our Board is committed to transparency in corporate governance
and to strong communication with shareholders
In response to feedback from shareholders during the company’s ongoing investor
outreach program, the Board of Directors announced the following changes:
1. Will appoint Robert Sulentic as Lead Independent Director upon retirement of Lead
Independent Director Robert Nakasone at the 2015 Annual Meeting
2. Approval of an Independent Chair policy and a plan to appoint an Independent Chair once
our current Chairman no longer serves in this role
3. Nomination of Paul-Henri Ferrand, VP of US Sales & Operations at Google, for election to the
Board at the 2015 Annual Meeting
4. Nomination of Kunal Kamlani, former President and COO of Prestige Cruise Holdings, for
election to the Board at the 2015 Annual Meeting
– Mr. Kamlani was nominated pursuant to an agreement with Starboard Value. He met with the Staples’
Nominating and Corporate Governance Committee, which recommended that the full Board nominate him for
election. In connection with the agreement, Starboard has agreed to support all of Staples’ director nominees at
the upcoming 2015 Annual Meeting.
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Our Board Added Two Director Nominees in 2015

The Board seeks 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 regular and
rigorous Board and committee evaluations
Paul-Henri Ferrand
Skills & Experience:
 Consumer and
Business Sales
 Ecommerce and
Marketing
 Strategy
 International
Operations
 IT Management
and Security
Career Highlights:
 Serves as Vice President and Sector Lead, U.S.
Services and Distribution Sector, of Google, Inc.
– Leads performance-based advertising sales and
related analytics
– Leads targeted teams working on small company
performance solutions
 Former President, Dell North America where he led
Dell’s business across all of North America
– Restructured the North American unit, returning it to
growth and top position in key markets
Kunal Kamlani
Skills & Experience:
 Audit, Financial
Expertise
 Consumer Sales
 Marketing
 M&A / Integration
 Leadership and
Management
 Risk Oversight
Career Highlights:
 Served as President and COO of Prestige Cruise
Holdings, the parent company of Oceania Cruises and
Regent Seven Seas Cruises
– 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.
– Previously served as CFO
 Former head of the multi-billion dollar Global Investment
Solutions division of Bank of America/Merrill Lynch
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Robert Sulentic to be Appointed as
Independent Lead Director
Robert Sulentic
 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 our current Chairman and CEO retires or
no longer serves as Chairman of the Board
 Current Lead Independent Director Robert Nakasone will be retiring at the 2015 Annual Meeting and
the Board intends for Robert E. Sulentic to serve as Independent Lead Director
Independent Lead Director Responsibilities
 Authority to call meetings of Independent Directors
 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
 Presides at all meetings of the Board at which the Chair
meeting
is not present, including executive sessions of the
independent directors
 Ensures availability for consultation and direct
 Assures that meetings with the independent directors are communication, if requested by a major shareholder
held in executive sessions, typically after every Board
meeting, but in all circumstances at least twice a year
 Authority to retain independent advisors on behalf of the
Board
 Provides leadership to the Board if circumstances arise
in which the role of the Chair may be, or may be
 Assists the Nominating and Corporate Governance
perceived to be, in conflict with the interests of Staples
Committee in identifying any individual performance or
and its shareholders with regard to a particular matter
contribution issues
 Facilitates communications and serves as a liaison
between independent directors and the Chair
 Coordinates the annual performance review of the CEO
 Otherwise consults with the Chair of the Board on
matters relating to corporate governance and Board
performance
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Board Has Proactively Adopted a Policy
Requiring an Independent Chair
Current approach strikes the right balance to transition to a new Board
leadership structure while being responsive to shareholders

At 2014 Annual Meeting, a shareholder proposal for separate Independent Chairman and CEO
positions received 51% support, the Board sought feedback and considered the views of our
stockholders in responding to the proposal
– Shareholders were largely supportive of separating the Chairman and CEO positions, but
expressed concerns around unintended consequences or disruptions that may occur if the
Chairman and CEO roles were split and an independent chair was appointed now while the
company is in a transition period

On January 13, 2015, the 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

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
The Board urges shareholders to vote AGAINST the shareholder proposal
as it is not in the best interest of the company
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Track Record of Shareholder Responsiveness
2015
 Management Supported Proxy Access at 3%/3 years – We have committed to providing a management-supported proxy access
bylaw amendment at the 2016 Annual Meeting of Shareholders.
 Executive Compensation – Replaced the total company sales metric with gross margin dollars for our 2015 annual cash incentive
awards to place greater emphasis on driving profitability.
 Independent Chair Policy – Adopted a policy to require that we have an independent Chair of the Board, whenever possible. The
policy is prospective, and will apply when Ronald L. Sargent, our current Chairman and CEO, retires or no longer serves as
Chairman of the Board.
2014
2013
 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.
 Restructured our executive compensation program in response to shareholder feedback on compensation and to strengthen
alignment with reinvention strategy.
 Eliminated time-based restricted stock and options
 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 percentage. The program also included a three-year relative Total
Shareholder Return (TSR) modifier
 Changed annual performance metrics
2012
2009
2008
2007
1998
 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
 Shareholder right to call special meetings implemented
 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
 Declassified board to establish annual elections going forward
 Independent Lead Director – Staples was one of the early adopters of the role
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Forward-Looking Statements Safe Harbor
Certain remarks that we may make about management’s future
expectations, plans and prospects constitute forward-looking statements.
Actual results may differ materially from those indicated by such forwardlooking statements as a result of various important factors, including those
discussed or referenced under the heading “Risk Factors” and elsewhere in
our most recent annual and quarterly reports on file with the SEC.
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