Pottery Barn 2008 Annual Report Download - page 132

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Individual performance is assessed by the Chief Executive Officer and takes into account achievement of
individual goals and objectives. Achievement of objectives that increase shareholder return or that are
determined by the Chief Executive Officer to significantly impact future shareholder return are significant factors
in the Chief Executive Officer’s subjective performance assessment. The Compensation Committee believes that
achieving individual goals and objectives is important to the overall success of the company and will adjust
bonuses paid to reflect performance in these areas. For example, if the company or the executive officer fails to
fully meet some or all of the company or individual objectives, the award may be significantly reduced or even
eliminated. Conversely, if the objectives are overachieved, awards may be subject to lesser or no reduction.
In determining final bonus amounts, if any, the Compensation Committee verifies the company’s actual earnings
for each performance period, reviews management’s recommendation for the resulting aggregate bonus awards
and approves an aggregate award amount. The Compensation Committee also reviews and approves the
individual bonuses payable, if any, to each of the company’s executive officers. The Chief Executive Officer
approves the bonuses for all other eligible employees below the executive officer level. The Compensation
Committee decides the bonus amount, if any, for the Chief Executive Officer in an executive session.
Is the primary performance goal for fiscal 2009 also related to earnings?
Yes, the primary performance goal for fiscal 2009 under the Bonus Plan also relates to an earnings goal. Even in
difficult and challenging economic times, the Compensation Committee believes that earnings remain a key
indicator of overall performance. The Compensation Committee also set supplemental performance goals to
guide its use of negative discretion.
What were the target bonus amounts for fiscal 2008 and fiscal 2009?
At its March 11, 2008 meeting, the Compensation Committee established the incentive targets under the Bonus
Plan for each named executive officer for fiscal 2008. The target bonuses were set after a review of the respective
responsibilities of the named executive officers, the bonus targets set by our comparable companies, the current
combinations of pay elements for each named executive officer and whether such combinations were appropriate
to provide incentives for achievement of desired results for the company. In light of the expected continued
weakness of the retail industry, the Compensation Committee did not raise target bonuses as a percentage of base
salaries for the named executive officers over the levels that had been in effect for fiscal 2007. The base salary,
together with the target bonus (together, “total cash compensation”), for the named executive officers, was
relatively close to the 50th percentile of target total cash compensation for similarly situated executive officers at
comparable companies.
In March 2009, a similar process was undertaken by the Compensation Committee to establish fiscal 2009 target
bonuses for all of the named executive officers, including the Chief Executive Officer. After a review of the
respective responsibilities of the named executive officers, the current combinations of pay elements for each
named executive officer and whether such combinations were appropriate to create incentives to achieve desired
results for the company, the Compensation Committee determined that target bonuses as a percentage of base
salary would remain the same for the named executive officers, including our Chief Executive Officer, in fiscal
2009 as in fiscal 2008.
The target bonuses under the Bonus Plan for fiscal 2008 and fiscal 2009 are listed below for each named
executive officer:
Named Executive
Officer
Fiscal 2008 Target
Bonus (as a Percentage
of Base Salary)
Fiscal 2009 Target
Bonus (as a Percentage
of Base Salary)
Actual Fiscal 2008
Bonus (as a Percentage
of Base Salary)
W. Howard Lester ............ 100% 100% 0%
Sharon L. McCollam ......... 50% 50% 0%
Laura J. Alber ............... 50% 50% 0%
Patrick J. Connolly ........... 50% 50% 0%
David M. DeMattei ........... 50% 50% 0%
34