Pottery Barn 2008 Annual Report Download - page 105

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How are the directors compensated?
Directors do not presently receive any cash compensation for their service on our Board or Board committees. As
their exclusive compensation relating to Board and Board committee service, non-employee directors are
awarded equity grants. During fiscal 2008, these equity grants were made in the form of restricted stock units.
Directors receive dividend equivalent payments with respect to outstanding restricted stock unit awards. These
restricted stock units vest on the earlier of one year from the date of grant or the day before the next regularly
scheduled annual meeting. The number of restricted stock units granted will be determined by dividing the total
monetary value of each award, as identified in the following table, by the closing price of our common stock on
the trading day prior to the grant date:
Value of Restricted Stock Unit Awards
Initial Election to the Board ........................................ $184,000
Annual Grant for Board Service(1) .................................. $170,000
Annual Grant to Chairperson of the Audit and Finance Committee ......... $ 41,000
Annual Grant to Chairperson of the Compensation Committee ............ $ 16,500
Annual Grant to Chairperson of the Nominations and Corporate Governance
Committee ................................................... $ 16,500
(1) Awarded on the date of the Annual Meeting so long as the non-employee director has been serving on the
Board for at least three months.
Granting solely restricted stock units to our non-employee directors is a change from fiscal 2007, during which
non-employee directors received a combination of restricted stock units and stock-settled stock appreciation
rights. Compensation expense recognized with respect to the restricted stock units and stock-settled stock
appreciation rights granted in fiscal 2007 are reported in the Non-Employee Director Compensation During
Fiscal 2008 table below under “Stock Awards” and “Option Awards,” respectively.
In addition to the equity awards described above, we reimburse travel expenses related to attending Board,
committee or our business meetings and offer discounts on our merchandise to all non-employee directors and
their spouses.
The Compensation Committee has also approved a share ownership policy for non-employee directors. Each
non-employee director must hold, within five years of the 2007 Annual Meeting (or within five years of joining
the Board for directors elected after the 2007 Annual Meeting), a number of shares of company stock equal to at
least one and one half times the number of restricted stock units that the director receives annually, excluding any
restricted stock units received for service on a Board committee. The share ownership requirement may be filled
by shares held outright by the director (or immediate family member in the household), shares held in trust for
the benefit of the director (or immediate family member in the household), or restricted stock units held by the
director.
7
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