Pottery Barn 2006 Annual Report Download - page 120

• The vesting schedule of the individual’s outstanding awards;
• The relative value of awards offered by comparable companies to executives in comparable positions; and
• Additional factors, including succession planning and retention of the company’s high potential
executives.
In addition to SSARs, we have also made grants of restricted stock units to certain key executives. The grants of
restricted stock units were designed to act as long-term, performance based, retention tools for key executive
officers. Our grants of restricted stock units to executive officers will vest only if the company achieves certain
earnings goals. Half of the award vests based on achievement of earnings goals over a four-year period, and the
remainder vests based on achievement of earnings goals over a five-year period. The following named executive
officers held restricted stock units as of January 28, 2007:
RSUs Outstanding Grant Date
Ms. Alber ........................................ 150,000 January 6, 2006
Mr. DeMattei ..................................... 150,000 January 6, 2006
Ms. McCollam .................................... 150,000 January 6, 2006
Although we typically make equity grants to executive officers during the first quarter of our fiscal year as part
of our annual evaluation process, we also grant or approve special additional equity awards from time to time to
executive officers in connection with promotions, assumption of additional responsibilities and other factors.
Ms. Alber, Mr. DeMattei and Ms. McCollam were not awarded additional equity awards during our first quarter
review of compensation, because each had recently been granted restricted stock units as described above.
However, each of these named executive officers was promoted during fiscal 2006, and we approved the
following equity awards at a scheduled Compensation Committee meeting in connection with these promotions:
Date of Award Type of award
Number of Shares
Covered by the Award
Ms. Alber ........................... 9/12/2006 SSAR 40,000
Mr. DeMattei ........................ 9/12/2006 SSAR 40,000
Ms. McCollam ....................... 9/12/2006 SSAR 40,000
Under the company’s existing equity compensation plans, the exercise price of any stock option or SSAR may
not be less than 100% of the fair market value of the stock (based on the price of the company’s common stock
on the date of the award). Equity awards granted pursuant to the company’s equity compensation plans generally
vest in five equal annual installments. It is the company’s policy not to reprice stock options or SSARs in the
event that the fair market value of the common stock falls below the exercise price of the stock options or SSARs
and not to engage in any exchange program relating to stock options or SSARs without obtaining prior
shareholder approval. Our 2001 Long-Term Incentive Plan prohibits such repricings or exchanges unless our
shareholders approve them in advance. We will only make future awards under our 2001 Long-Term Incentive
Plan.
When are equity awards made to executive officers?
Equity awards to executive officers are only made at scheduled Compensation Committee meetings. Executives
do not have any role in selecting the grant date of equity awards. The grant date of equity awards is generally the
date of the approval of the award, and the exercise price is always the closing price of the company’s common
stock on the trading day prior to the grant date. If a Compensation Committee meeting is scheduled for a date
during a company trading blackout period, the grant date of an equity award may be set for a date after the
trading blackout period has ended. As with all awards, the exercise price of these awards is the closing price of
the company’s common stock on the trading day prior to the grant date. In general, equity awards to executives
are made during our March meeting in which we review company performance over the past fiscal year and
determine base salaries and bonuses for all executives. We also make equity awards at other times during the
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