Staples board limits senior exec severance packages

Staples is limiting the severance pay of top executives as the resolution of a deal with Office Depot draws near.

Staples announced that its board of directors has adopted a new policy stipulating that the company will not pay any severance benefits that exceed three times the sum of an executive’s base salary plus target annual cash incentive award, without seeking shareholder approval.

In addition, CEO Ron Sargent has elected to amend his severance agreement to align with the terms of the new policy.

“Our board is committed to responding to shareholder feedback and ensuring that the company’s executive compensation program aligns with best practices,” said Paul Walsh, chair of the compensation committee. “This new policy is in the best interests of Staples’ shareholders.”

At the company’s meeting of shareholders in June, a shareholder proposal regarding future senior executive severance agreements received support from a majority of votes cast.

Earlier this week Staples and Office Depot announced they agreed to a Federal Trade Commission decision to extend the review period for a possible $6.3 billion merger of the two companies to mid-December.