Pottery Barn 2004 Annual Report Download - page 114

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5. Determination of Awards; Award Limits.
5.1 Performance Measures for Determination of Awards. The Committee in its
discretion shall establish, for each participant in this Plan and for each performance award period, a performance
award opportunity based upon the achievement of a specified goal relating to the following measures (singly or
in combination): annual revenue; earnings per share; earnings per share prior to accounting for payment of
annual bonuses (including annual bonuses paid outside of this Plan); earnings before interest, taxes, depreciation
and amortization; before-tax or after-tax net profits; cash position; operating cash flow; return on assets; return
on equity; return on sales or total shareholder return. The Committee may establish the goal (except with respect
to total shareholder return) relating to Company performance or to the performance of a business unit, product
lines or specific markets. The Committee shall appropriately adjust any evaluation of performance under a
performance goal to exclude (i) any extraordinary non-recurring items as described in Accounting Principles
Board Opinion No. 30 and/or in management’s discussion and analysis of financial conditions and results of
operations appearing in the Company’s annual report to shareholders for the applicable year, or (ii) the effect of
any changes in accounting principles affecting the Company’s or a business units’ reported results.
5.2 Award Limits. The maximum award under this Plan for each award period to any
participant shall not exceed the lesser of (i) $3,000,000 or (ii) 300% of such participant’s annual base salary in
effect on the first day of the first fiscal year of such award period, multiplied by the number of complete or
partial fiscal years in such award period. Each performance goal established under this Plan shall be established
by the Committee not later than the earlier of the date which is 90 days after the first day of the performance
award period, or the date on which 25% of the award period has elapsed.
5.3 Determination of Amount of Individual Awards. For each award period, each
participant who is or may be a Covered Employee for such award period shall receive an award equal to the
specific amount (subject to decrease as provided in this Section 5.3) determined strictly under the performance
goals established pursuant to Section 5.1. The Committee shall not have the discretion to increase, but shall have
the discretion to decrease, any award determined in accordance with this Plan. The reduction in any participant’s
award for any award period as a result of the Committee’s exercise of such discretion shall not increase the
amount of an award to any other participant (through reallocation of unutilized awards or otherwise) with respect
to such award period.
6. Award Periods; Payment of Awards.
6.1 Award Periods. All awards shall be made on the basis of an award period, which
shall consist of one or more fiscal years of the Company, or one or more quarters thereof. The award period may
be different for different awards.
6.2 Committee Certifications. As a condition precedent to the payment of any award,
the Committee shall certify, following the end of the award period, that the objective performance goal for the
award has been satisfied. The Committee shall make such determination by means of a written resolution or
certification of the Committee that is maintained in the minute book of the Company.
6.3 Payment of Awards. Awards under this Plan will be paid in cash, reasonably
promptly following the conclusion of the award period and the certification of the Committee as set forth in
Section 6.2, but in no event later than three months after the conclusion of the fiscal year of the Company in
which or with which the award period ends. All awards under this Plan will be subject to withholding for
applicable employment and income taxes.
6.4 Termination of Employment. An award that would otherwise be payable to a
participant who is not employed by the Company on the last day of an award period will not be paid (or will not
be granted, as the case may be), except that, on the grant of an award, the Committee may specify that the award
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