Pottery Barn 2008 Annual Report Download - page 138

The Compensation Committee does not intend to make further equity grants to Mr. Lester in fiscal 2009.
At its March 18, 2009 meeting, the Compensation Committee discussed bonuses for fiscal 2008. No bonuses
were payable to any of the named executive officers, including Mr. Lester under the Bonus Plan, but the
Compensation Committee analyzed whether a discretionary bonus was appropriate. During that meeting, the
Compensation Committee met in executive session to discuss Mr. Lester’s performance for fiscal 2008.
Mr. Lester’s performance was assessed against objectives delivered to the Board of Directors at the beginning of
fiscal 2008. The objectives against which Mr. Lester’s performance was judged included: his successful
management of the company and its financial performance, particularly under difficult economic conditions;
improvements to the supply chain operations of the company; the further development of a succession plan; the
revitalization of the Pottery Barn brand; the success of cost reduction initiatives; the development of the
company’s international strategies; and improvements to the company’s e-commerce capabilities. Using the same
analysis of business conditions and review process of company and individual performance that it applied to the
other named executives, the Compensation Committee determined that, although Mr. Lester’s performance was
strong in an extremely challenging economic period, he would not receive a discretionary bonus for fiscal 2008.
Mr. Lester also makes personal use of our company aircraft as described in the “Other Annual Compensation
from Summary Compensation Table” on page 20. Mr. Lester received no other additional material compensation
or benefits not provided to all executives during fiscal 2008.
Are there any other benefits considerations?
The company believes that benefits should provide our employees with protection and security through health
and welfare, retirement, disability insurance and life insurance programs. The named executive officers do not, in
general, receive benefits in excess of those provided to other employees. However, the Compensation Committee
may recommend additional benefits for certain individuals from time to time if the Compensation Committee
determines that the category and amount of such benefits are reasonable and necessary to provide additional
incentives to attract or retain key executives.
Do the executive officers have change of control arrangements?
The named executive officers who received restricted stock unit grants on January 6, 2006, Ms. Alber,
Ms. McCollam, and Mr. DeMattei, will receive accelerated vesting of such awards in the event of a change of
control pursuant to the terms of the grant. The Compensation Committee believes these arrangements are
necessary to ensure that our named executive officers are focused on the company’s goals and objectives, as well
as the best interests of shareholders, rather than potential personal economic exposure under these particular
circumstances. Additionally, the Compensation Committee believes that these agreements will provide a smooth
transition should the company undergo such an event. Otherwise, the executive officers do not have
arrangements that provide them with specific benefits upon or following a change of control.
In addition, none of the executive officers is guaranteed any type of golden parachute excise tax gross-up. Our
equity compensation plans do not otherwise provide for automatic vesting acceleration upon or following a
change of control. We have considered the total potential cost of the change of control protection afforded to our
executive officers and have determined that it is reasonable and not excessive given the importance of the
objectives described above.
Do our executive officers have severance protection?
As noted in the section titled “Employment Contracts and Termination of Employment and Change-of-Control
Arrangements” beginning on page 25, if either Laura J. Alber, President, or Sharon L. McCollam, Executive
Vice President, Chief Operating and Chief Financial Officer, is terminated without cause or voluntarily
terminates her employment for good reason, she will be entitled to certain severance benefits. The Compensation
Committee believes these arrangements are necessary to ensure that these two senior executives are focused on
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