Pottery Barn 2006 Annual Report Download - page 113

reserves on the company’s books. Participant accounts are adjusted for phantom earnings based on the net returns of
investment funds chosen from a list by the participant. Accounts are generally distributed at termination of employment,
although a participant can make an election at the time of deferral to have the distribution occur at an earlier date. A
choice of quarterly installments over 5, 10 or 15 years, or a single lump sum, is available for terminations due to
retirement or disability, as defined in the plan, if the account is over $25,000. All other distributions are paid as a single
lump sum. The commencement of payments can be postponed, subject to advance election and minimum deferral
requirements. At death, the plan may provide a death benefit funded by a life insurance policy, in addition to payment of
the participant’s account.
Employment Contracts and Termination of Employment and Change-of-Control Arrangements
Laura J. Alber
We entered into an employment agreement with Laura J. Alber, effective as of March 19, 2001. She is currently
President. The initial term of the agreement expired March 19, 2004 and, per its terms, automatically extends for
one-year terms until Ms. Alber’s employment is terminated by her or by us. If we terminate Ms. Alber’s
employment without “cause” (as defined in the agreement), or if she terminates her employment with us for
“good reason” (as defined in the agreement), she will be entitled to receive (i) continuation of her base salary at
the time of termination for up to one year, and (ii) outplacement services at a level commensurate with her
position at no cost to her. In addition, we will pay the premiums for health coverage under COBRA for Ms. Alber
and her dependents until Ms. Alber either commences new employment or Ms. Alber or her dependents are no
longer eligible for COBRA coverage.
The following table describes the payments and/or benefits which would have been owed by us to Ms. Alber as
of January 28, 2007 if her employment had been terminated in the situations and for the reasons described below.
Compensation and
Benefits For Good Reason
Involuntary
Without Cause Change-in-Control Death Disability
Base Salary(1) ........... $800,000 $800,000 — Through date of death $ 200,000(2)
Restricted Stock Units(3) . . — — $5,136,000 $5,136,000 $5,136,000
Health Care Benefits ...... $ 22,392(4) $ 22,392(4) — — —
Other Perquisites ......... $150,000(5) $150,000(5) — — —
(1) Based on Ms. Alber’s base salary as of January 28, 2007 of $800,000.
(2) Payment of 13 weeks of salary.
(3) Acceleration of vesting of 150,000 restricted stock units. Value is based on a stock price of $34.24, the closing price of
our common stock on January 26, 2007.
(4) Based on a monthly health insurance premium of $1,244 to be paid by the company for 18 months, which is the period
provided under COBRA.
(5) Value of out-placement services based on current estimate of costs for these services.
Sharon L. McCollam
We entered into an employment agreement with Sharon L. McCollam, effective as of December 28, 2002. She is
currently Executive Vice President, Chief Operating and Chief Financial Officer. The initial term of
Ms. McCollam’s agreement expired December 28, 2005, and, per its terms, automatically extends for one-year
terms until Ms. McCollam’s employment is terminated by her or by us. If we terminate Ms. McCollam’s
employment without “cause” (as defined in the agreement), or if Ms. McCollam terminates her employment with
us for “good reason” (as defined in the agreement), she will be entitled to receive (i) continuation of her base
salary at the time of termination for a period of one year and her target bonus for that year, and (ii) outplacement
services at a level commensurate with her position at no cost to her. In addition, we will pay the premiums for
health care coverage under COBRA for Ms. McCollam’s dependents and Ms. McCollam until she either
commences new employment or she and her dependents are no longer eligible for COBRA coverage.
19
Proxy