Pottery Barn 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Pottery Barn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 200

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200

2 0 0 9 A N N U A L R E P O R T
ANNUAL MEETING OF SHAREHOLDERS
May 26, 2010

Table of contents

  • Page 1
    2009 ANNUAL REPORT ANNUAL MEETING OF SHAREHOLDERS May 26, 2010

  • Page 2

  • Page 3
    Shareholders Letter LETTER TO SHAREHOLDERS WILLIAMS-SONOMA, INC. 2009 ANNUAL REPORT

  • Page 4
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 5
    ..., after returning over $51 million in dividends to our shareholders. The Performance of Our Brands Fiscal 2009 net revenues in our core brands - including Williams-Sonoma, Pottery Barn, and Pottery Barn Kids - declined 8%. In our emerging brands - including West Elm, PBteen, and Williams-Sonoma Home...

  • Page 6
    ... the M.H. Alshaya Company to launch our portfolio of brands in the Middle East. We opened our first Pottery Barn and Pottery Barn Kids stores in Dubai in March 2010 to a strong consumer response and will open two additional stores in Kuwait in mid-2010. We believe with this business model, there is...

  • Page 7
    ... Chairman of the Board of Directors and Chief Executive Officer Shareholders' Letter This letter contains forward-looking statements. Please see the section titled "Forward-Looking Statements" on page 1 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2010, which is part...

  • Page 8
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 9
    Form 10-K FORM 10-K WILLIAMS-SONOMA, INC. 2009 ANNUAL REPORT

  • Page 10
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 11
    ...Ness Avenue, San Francisco, CA 94109 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 421-7900 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.01 par value New York Stock Exchange, Inc. (Title of class) (Name of...

  • Page 12
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 13
    ... the Williams-Sonoma brand; statements related to the timing of store openings in the Middle East; statements related to decreasing retail leased square footage in fiscal 2010; statements related to the Pottery Barn brand and its extensions continuing to be the major source of revenue in the direct...

  • Page 14
    ... Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. PART III Directors, Executive Officers and Corporate Governance Executive Compensation...

  • Page 15
    ... opened our first Pottery Barn Kids stores across the U.S. and, in 2001, we launched our Pottery Barn Kids e-commerce website and gift registry. West Elm In 2002, the West Elm brand was launched with the mailing of our first West Elm catalog. This brand targets design conscious consumers looking for...

  • Page 16
    ... Financial Statements. DIRECT-TO-CUSTOMER OPERATIONS The direct-to-customer segment has six merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home) and sells products through our seven direct-mail catalogs (Williams-Sonoma, Pottery Barn...

  • Page 17
    ... catalogs and e-commerce websites compete with other retail stores, including large department stores, discount retailers, other specialty retailers offering home-centered assortments, other mail order catalogs and other e-commerce websites. The substantial sales growth in the direct-to-customer...

  • Page 18
    ... core brand names or house marks for our subsidiaries, as well as brand names for selected products and services. The house marks in particular, including "Williams-Sonoma," the Williams-Sonoma Grande Cuisine logo, "Pottery Barn," "pottery barn kids," "PBteen," "west elm" and "Williams-Sonoma Home...

  • Page 19
    ... with brands or products similar to ours. The specialty retail and direct-to-customer business is highly competitive. Our specialty retail stores, direct mail catalogs and e-commerce websites compete with other retail stores, other direct mail catalogs and other e-commerce websites that market lines...

  • Page 20
    ... favorable brand recognition and achieving customer perception of value; effectively marketing and competitively pricing our products to consumers in several diverse market segments; developing innovative, high-quality products in colors and styles that appeal to consumers of varying age groups and...

  • Page 21
    ... to increase our sales and profits. Historically, the majority of our net revenues have been generated by our retail stores. Our ability to open additional stores or close existing stores successfully will depend upon a number of factors, including general economic conditions; our identification...

  • Page 22
    ..., possible acts of terrorism associated with such carriers' ability to provide delivery services to meet our shipping needs and disruptions or increased fuel costs associated with any regulations to address climate change. Failure to deliver merchandise in a timely and effective manner could damage...

  • Page 23
    ... of new merchandise and promotional events, the success of marketing programs, the cannibalization of existing store sales by our new stores, changes in catalog circulation and in our direct-to-customer business and fluctuations in foreign exchange rates. Among other things, weather conditions can...

  • Page 24
    ... future introduce new brands, and brand extensions, or reposition or close existing brands. Our newest brands - West Elm, PBteen and Williams-Sonoma Home - and any other new brands, may not grow as we project and plan for. Further, if we devote time and resources to new brands, brand extensions or...

  • Page 25
    ... may need to increase the number of our employees, especially during peak sales seasons, and incur other expenses to support new brands and brand extensions, as well as the opening of new stores and direct-to-customer growth of our existing brands. Alternatively, if we are unable to make substantial...

  • Page 26
    ... appears to be a growing number of wage-and-hour lawsuits and other employment-related lawsuits against retail companies, especially in California. We contract with various agencies to provide us with qualified personnel for our workforce. Any negative publicity regarding these agencies, such as...

  • Page 27
    ... our other public filings and public statements. Our actual results may not always be in line with or exceed the guidance we have provided, especially in times of great economic uncertainty. In the past, when we have reduced our previously provided guidance, the market price of our common stock has...

  • Page 28
    ... we are unable to pay quarterly dividends at intended levels, our reputation and stock price may be harmed. During fiscal 2009, our quarterly cash dividend was $0.12 per common share. Subsequent to year end, in March, 2010, our Board of Directors authorized an increase in our quarterly cash dividend...

  • Page 29
    ... customer orders are placed through our website or through our customer care centers. In addition, a significant portion of sales made through our retail channel require the collection of certain customer data, such as credit card information. In order for our sales channel to function and develop...

  • Page 30
    ... store locations, distribution centers, customer care centers and corporate facilities for original terms ranging generally from 2 to 22 years. Certain leases contain renewal options for periods of up to 20 years. For our store locations, our gross leased store space, as of January 31, 2010, totaled...

  • Page 31
    ... of 2009, we began occupying a 7,000 square foot customer care center in Shafter, California. Corporate Facilities We also lease office, design studio, photo studio, warehouse and data center space in the following locations: Location Brisbane, California San Francisco, California New York City, New...

  • Page 32
    ... this Annual Report on Form 10-K for the quarter-end closing price of our common stock for each quarter listed above. SHAREHOLDERS The number of shareholders of record of our common stock as of March 29, 2010 was 455. This number excludes shareholders whose stock is held in nominee or street name by...

  • Page 33
    ... total shareholder return for our common stock with those for the NYSE Composite Index and the S&P Retailing Index, our peer group index. The cumulative total return listed below assumed an initial investment of $100 and reinvestment of dividends. The graph shows historical stock price performance...

  • Page 34
    ... on May 24, 2010 to shareholders of record as of the close of business on April 27, 2010. Our quarterly cash dividend may be limited or terminated at any time. STOCK REPURCHASE PROGRAM We did not repurchase any shares of our common stock during fiscal 2009 or fiscal 2008, and there currently is no...

  • Page 35
    ... Store count Williams-Sonoma Pottery Barn Pottery Barn Kids West Elm Williams-Sonoma Home Outlets Hold Everything Number of stores at year-end Store selling area at fiscal year-end (sq. ft.) Store leased area at fiscal year-end (sq. ft.) Direct-to-Customer Revenues Direct-to-customer revenue growth...

  • Page 36
    ...Barn Kids, Pottery Barn and Williams-Sonoma brands, respectively. Although net revenues decreased, we continued to see economic resilience throughout the year in the Williams-Sonoma brand. Sales trends, however, improved in the fourth quarter of fiscal 2009, when comparable store sales were positive...

  • Page 37
    ... times. In the area of customer service, our focus will be on expanding the clienteling services program that we launched last year in our Pottery Barn stores. In fiscal 2010, we will complete the rollout of this program in West Elm. To execute our catalog and Internet marketing initiatives, we plan...

  • Page 38
    ... in Williams-Sonoma Home with a planned total company net revenue increase in fiscal 2010 in the range of 3% to 6%, diluted earnings per share increase in the range of $1.12 to $1.22 and a retail leased square footage decrease of approximately 1% to 2%. In addition, we also plan to tightly manage...

  • Page 39
    ... retail stores, as well as shipping fees on any retail products shipped to our customers' homes. Direct-to-customer sales include sales of merchandise to customers through our catalogs and the Internet, as well as shipping fees. Shipping fees consist of revenue received from customers for delivery...

  • Page 40
    ... Barn, Williams-Sonoma and Pottery Barn Kids brands, partially offset by net revenue increases in the West Elm brand. Comparable Store Sales Comparable stores are defined as those stores in which gross square footage did not change by more than 20% in the previous 12 months and which have been open...

  • Page 41
    ... store sales by our new stores, the benefits of closing underperforming stores in multi-store markets, changes in catalog circulation and in our direct-to-customer business and fluctuations in foreign exchange rates. Among other things, weather conditions can affect comparable store sales because...

  • Page 42
    Within our reportable segments, the direct-to-customer channel does not incur freight-to-store or store occupancy expenses, and typically operates with lower markdowns and inventory shrinkage than the retail channel. However, the direct-to-customer channel incurs higher customer shipping, damage and...

  • Page 43
    ... increase in incentive compensation expense in fiscal 2009; an approximate $16,000,000 benefit related to a gain on the sale of our corporate aircraft, an $11,023,000 benefit associated with the reversal of performance-based stock compensation expense and a net $9,350,000 incentive payment received...

  • Page 44
    ... percentage of net revenues increased due to declining sales during fiscal 2008 compared to fiscal 2007, we saw a reduction in catalog advertising expenditures due to our catalog circulation optimization strategy. INCOME TAXES Our effective income tax rate was 35.6% for fiscal 2009, 28.4% for fiscal...

  • Page 45
    ... there currently is no stock repurchase program authorized by our Board of Directors. Dividends During fiscal 2009 and fiscal 2008, total cash dividends declared were approximately $51,424,000 and $51,189,000, respectively, or $0.12 per common share per quarter. Subsequent to year end, in March 2010...

  • Page 46
    ...Leases We lease store locations, distribution centers, customer care centers, corporate facilities and certain equipment for original terms ranging generally from 2 to 22 years. Certain leases contain renewal options for periods up to 20 years. The rental payment requirements in our store leases are...

  • Page 47
    ...letters of credit. Prior to April 4, 2011, we may, upon notice to the lenders, request an increase in the credit facility of up to $200,000,000, to provide for a total of $500,000,000 of unsecured revolving credit. The revolving line of credit facility contains certain financial covenants, including...

  • Page 48
    .... We made annual rental payments in fiscal 2009, fiscal 2008 and fiscal 2007 of approximately $618,000, plus interest on the bonds calculated at a variable rate determined monthly (approximately 1.8% as of January 31, 2010), applicable taxes, insurance and maintenance expenses. The term of the lease...

  • Page 49
    ... ranges from large furniture to small tabletop items) and execution against loss prevention initiatives in our stores, distribution centers, off-site storage locations, and with our third-party transportation providers. Accordingly, there is no remaining shrinkage reserve balance at year-end. Due to...

  • Page 50
    ... 31, 2010 and February 1, 2009, our reserve for sales returns was $11,839,000 and $10,142,000, respectively. Stock-Based Compensation We measure and record compensation expense in our consolidated financial statements for all stock-based awards using a fair value method. For stock options and stock...

  • Page 51
    ... term until the option award is exercised or cancelled. The fair value of the award is amortized over the requisite service period. Total stock-based compensation expense was $24,989,000, $12,131,000 (which includes an $11,023,000 reversal of compensation expense related to performance-based stock...

  • Page 52
    ... these increased costs may have on our financial statements or results of operations. In addition, as of January 31, 2010, we have 17 retail stores in Canada and limited sourcing operations in both Europe and Asia, each of which expose us to market risk associated with foreign currency exchange rate...

  • Page 53
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Williams-Sonoma, Inc. Consolidated Statements of Earnings Fiscal Year Ended Dollars and shares in thousands, except per share amounts Net revenues Cost of goods sold Gross margin Selling, general and administrative expenses Interest income ...

  • Page 54
    Williams-Sonoma, Inc. Consolidated Balance Sheets Dollars and shares in thousands, except per share amounts ASSETS Current assets Cash and cash equivalents Accounts receivable - net Merchandise inventories - net Prepaid catalog expenses Prepaid expenses Deferred income taxes Other assets Total ...

  • Page 55
    Williams-Sonoma, Inc. Consolidated Statements of Shareholders' Equity Additional Paid-in Capital Accumulated Other Comprehensive Income Total Shareholders' Equity Common Stock Dollars and shares in thousands Balance at January 28, 2007 Net earnings Foreign currency translation adjustment ...

  • Page 56
    ... Tax benefit from exercise of stock-based awards Stock-based compensation expense Other Changes in: Accounts receivable Merchandise inventories Prepaid catalog expenses Prepaid expenses and other assets Accounts payable Accrued salaries, benefits and other current and long-term liabilities Customer...

  • Page 57
    ... our five retail store concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and WilliamsSonoma Home). The direct-to-customer segment of our business sells similar products through our seven directmail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and...

  • Page 58
    ... ranges from large furniture to small tabletop items) and execution against loss prevention initiatives in our stores, distribution centers, off-site storage locations, and with our third party transportation providers. Accordingly, there is no remaining shrinkage reserve balance at year-end. Due to...

  • Page 59
    ...,000 as of January 31, 2010 and February 1, 2009, respectively, and are recorded within accrued salaries, benefits and other. Customer Deposits Customer deposits are primarily comprised of unredeemed gift cards, gift certificates, and merchandise credits and deferred revenue related to undelivered...

  • Page 60
    ... associated with our retail stores, distribution warehouses, customer care centers, supply chain operations (buying, receiving and inspection) and corporate administrative functions. These costs include employment, advertising, third party credit card processing and other general expenses. Stock...

  • Page 61
    ... the period plus common stock equivalents consisting of shares subject to stock-based awards with exercise prices less than or equal to the average market price of our common stock for the period, to the extent their inclusion would be dilutive. Income Taxes Income taxes are accounted for using the...

  • Page 62
    ... long-term debt at January 31, 2010 were as follows: Dollars in thousands Fiscal 2010 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Thereafter Total $ 1,587 1,542 1,652 1,724 1,785 1,969 $10,259 Credit Facility We have a credit facility that provides for a $300,000,000 unsecured revolving line of...

  • Page 63
    ...Ended Dollars in thousands United States Foreign Total earnings before income taxes The provision for income taxes consists of the following: Fiscal Year Ended Dollars in thousands Current Federal State Foreign Total current Deferred Federal State Foreign Total deferred Total provision Jan. 31, 2010...

  • Page 64
    ... inventories Accrued liabilities Customer deposits Prepaid catalog expenses Other Total current Non-current: Depreciation Deferred rent Deferred lease incentives Stock-based compensation Executive deferral plan Uncertainties Other Total non-current Total deferred tax assets, net Jan. 31, 2010...

  • Page 65
    ... all material state, local and foreign income tax examinations have been concluded for years through 1999. Note E: Accounting for Leases Operating Leases We lease store locations, distribution centers, customer care centers, corporate facilities and certain equipment for original terms ranging...

  • Page 66
    .... We made annual rental payments in fiscal 2009, fiscal 2008 and fiscal 2007 of approximately $618,000, plus interest on the bonds calculated at a variable rate determined monthly (approximately 1.8% as of January 31, 2010), applicable taxes, insurance and maintenance expenses. The term of the lease...

  • Page 67
    ... the date of the annual meeting of shareholders (so long as they continue to serve as a non-employee Board member). Shares issued as a result of award exercises will be funded with the issuance of new shares. Equity Award Exchange Program In response to the significant decline in our stock price, on...

  • Page 68
    ...Subsequently, our Board of Directors decided to remove or modify the performance conditions but retain the service provisions of the awards. As a result, these awards are now considered probable of vesting. Accordingly, we measured the fair value of all such awards as of the date of the modification...

  • Page 69
    ...is defined as the price from which stock-settled stock appreciation rights are measured and is equal to the market value on the date of grant. Intrinsic value for outstanding and vested rights is defined as the excess of the current market value on the last business day of the fiscal year (or $18.98...

  • Page 70
    ...of 249,501 (at a fair market value of approximately $5,000,000, which was expensed in the fourth quarter of fiscal 2009) to our Chief Executive Officer associated with his fiscal 2009 performance. Tax Effect We present tax benefits resulting from the exercise of stock-based awards as operating cash...

  • Page 71
    ...2009, fiscal 2008 and fiscal 2007, respectively. We also have a nonqualified executive deferred compensation plan that provides supplemental retirement income benefits for a select group of management and other certain highly compensated employees. This plan permits eligible employees to make salary...

  • Page 72
    ... to the terms of the Agreement, Mr. Lester will retire as Chairman and Chief Executive Officer and as a member of the Board on the date of our 2010 annual shareholders' meeting, or May 26, 2010 (the "Retirement Date"). Mr. Lester will, however, provide consulting and advisory services in order to...

  • Page 73
    ..., retail. The direct-to-customer segment has six merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home) and sells similar products through our seven direct mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed...

  • Page 74
    .... Unallocated costs before income taxes in fiscal 2008 includes an approximate $16.0 million benefit related to a gain on sale of our corporate aircraft, an $11.0 million benefit related to the reversal of expense associated with certain performance-based stock awards and severance and lease...

  • Page 75
    Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Williams-Sonoma, Inc.: We have audited the accompanying consolidated balance sheets of Williams-Sonoma, Inc. and subsidiaries (the "Company") as of January 31, 2010 and February 1, 2009, and the ...

  • Page 76
    January 31, 2010, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. /s/ DELOITTE & TOUCHE LLP San Francisco, California April 1, 2010 64

  • Page 77
    .... Stock prices represent our common stock price at the close of business on the Friday before our fiscal quarter-end. Includes a net pre-tax benefit of $9,350,000 in selling, general and administrative expense related to an incentive payment from a landlord to compensate us for terminating a store...

  • Page 78
    ...management concluded that, as of January 31, 2010, our internal control over financial reporting is effective. Our independent registered public accounting firm audited the financial statements included in this Annual Report on Form 10-K and has issued an attestation report on the Company's internal...

  • Page 79
    ... Committee Report," "Committee Reports-Audit and Finance Committee Report," "Corporate Governance Guidelines and Corporate Code of Conduct" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION Information required by this Item is...

  • Page 80
    ... (a)(1) Financial Statements: The following consolidated financial statements of Williams-Sonoma, Inc. and subsidiaries and the related notes are filed as part of this report pursuant to Item 7: Consolidated Statements of Earnings for the fiscal years ended January 31, 2010, February 1, 2009 and...

  • Page 81
    ... on its behalf by the undersigned, thereunto duly authorized. WILLIAMS-SONOMA, INC. Date: April 1, 2010 By /s/ W. HOWARD LESTER Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 82
    ...FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2010 EXHIBIT NUMBER EXHIBIT DESCRIPTION ARTICLES OF INCORPORATION AND BYLAWS 3.1 Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended October 29, 1995 as filed...

  • Page 83
    ... by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended November 1, 2009 as filed with the Commission on December 12, 2009, File No. 001-14077) Reimbursement Agreement between the Company and Wells Fargo Bank, N.A., dated as of July 1, 2005 (incorporated by...

  • Page 84
    ...14077) Fifth Amendment, dated as of September 4, 2009, to the Reimbursement Agreement between the Company and Wells Fargo Bank, N.A., dated as of July 1, 2005 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended November 1, 2009 as filed with...

  • Page 85
    ...to the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2006 as filed with the Commission on April 15, 2005, File No. 001-14077) Williams-Sonoma, Inc. 2000 Nonqualified Stock Option Plan (incorporated by reference to Exhibit 4 to the Company's Registration Statement on Form...

  • Page 86
    ... Form 10-K for the fiscal year ended February 1, 2009 as filed with the Commission on April 2, 2009, File No. 001-14077) Restricted Stock Unit Award Agreement with W. Howard Lester dated January 25, 2010 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K as filed...

  • Page 87
    ...NUMBER 10.41+ EXHIBIT DESCRIPTION Williams-Sonoma, Inc. Executive Deferred Compensation Plan (incorporated by reference to Exhibit 10.41 to the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2009 as filed with the Commission on April 2, 2009, File No. 001-14077) Williams...

  • Page 88
    ... facility located in Olive Branch, Mississippi between Williams-Sonoma Retail Services, Inc. as lessee and SPI WS II, LLC (the successor-in-interest to Hewson/Desoto Partners, L.L.C.) as lessor, dated November 15, 1999 (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on...

  • Page 89
    ...-K for the fiscal year ended February 1, 2009 as filed with the Commission on April 2, 2009, File No. 001-14077) Retirement and Consulting Agreement, dated as of January 25, 2010, between the Company and Howard Lester (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form...

  • Page 90
    ... Officer, pursuant to Rule 13a-14(a) and Rule 15d14(a) of the Securities Exchange Act, as amended Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d14(a) of the Securities Exchange Act, as amended Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section...

  • Page 91
    Notice of 2010 Annual Meeting of Shareholders PROXY STATEMENT Proxy WILLIAMS-SONOMA, INC. 2009 ANNUAL REPORT

  • Page 92
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 93
    ...OF SHAREHOLDERS MEETING DATE: TIME: PLACE: May 26, 2010 9:00 a.m. Pacific Time Williams-Sonoma, Inc. 3250 Van Ness Avenue San Francisco, California 94109 1) 2) The election of our Board of Directors; The amendment and restatement of the Williams-Sonoma, Inc. 2001 Long-Term Incentive Plan to increase...

  • Page 94
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 95
    ... Meeting will be held at our corporate headquarters located at 3250 Van Ness Avenue, San Francisco, California 94109. Our Annual Report to Shareholders for the fiscal year ended January 31, 2010, or fiscal 2009, including our financial statements for fiscal 2009, is also included with hard copies...

  • Page 96
    ... proxy card. What if I return my proxy card directly to the company, but do not provide voting instructions? If a signed proxy card is returned to us without any indication of how your shares should be voted, votes will be cast "FOR" the election of the directors named in this Proxy Statement, "FOR...

  • Page 97
    ... is a broker non-vote? The term broker non-vote refers to shares that are held of record by a broker for the benefit of the broker's clients but that are not voted at the Annual Meeting on certain non-routine matters set forth in New York Stock Exchange, or NYSE, Rule 402.08(B) because a broker did...

  • Page 98
    ...quorum required to transact business at the Annual Meeting. Are there any shareholder proposals this year? No, we did not receive notice before December 10, 2009 of any shareholder proposals requesting inclusion in our Proxy Statement for our 2010 Annual Meeting or of any shareholder proposals to be...

  • Page 99
    ... may notify us that the shareholder would like a separate Notice or Annual Report and Proxy Statement by phone at 415-421-7900 or at the following mailing address: Williams-Sonoma, Inc., Attention: Annual Report Administrator, 3250 Van Ness Avenue, San Francisco, California 94109. If we receive such...

  • Page 100
    ... written communications to the Board or to any of our directors individually, including non-management directors and the Lead Independent Director, at the following address: Williams-Sonoma, Inc., Attention: Secretary, 3250 Van Ness Avenue, San Francisco, California 94109. All communications will...

  • Page 101
    ... the closing price of our common stock on the trading day prior to the grant date, rounding down to the nearest whole share: Value of Restricted Stock Unit Awards Initial Election to the Board ...Annual Grant for Board Service(1) ...Annual Grant for Service as Lead Independent Director(1) ...Annual...

  • Page 102
    ... fair value of $186,493 and (ii) fair market value associated with a restricted stock unit award of 1,306 shares of common stock made on September 9, 2009, with a fair value as of the grant date of $19.14 per share for an aggregate grant date fair value of $24,997. Includes taxable value of discount...

  • Page 103
    ... section below titled "Do we have a Lead Independent Director?" for further information regarding that role. Following Mr. Lester's retirement effective as of May 26, 2010, the date of the 2010 Annual Meeting, the Board intends to appoint Laura Alber to the role of Chief Executive Officer. The Board...

  • Page 104
    ...Under Mr. Lester's leadership, the company has grown from one brand with four stores and $4,000,000 in annual revenues to a nationwide specialty retailer comprised of six distinct merchandise brands with over 600 stores, seven direct mail catalogs and six e-commerce websites. Mr. Lester has used his...

  • Page 105
    ... Kids, Pottery Barn Bed + Bath and PBteen, as well as the company's international expansion • Extensive marketing experience, including 31 years of experience with the company • Directed the company's direct-tocustomer strategy, including the growth of its catalog business and the development...

  • Page 106
    ... ...Age 56 2005 • Extensive financial and accounting expertise as chief financial officer of two large public companies • Deep understanding of accounting principles and financial reporting rules and regulations, including how internal controls are effectively managed within organizations 12

  • Page 107
    ... Director Since Position with the Company and Recent Business Experience, including Directorships Held During Past Five Years Specific Experience, Qualifications, Attributes and Skills Anthony A. Greener ...Age 69 2007 • Member of the Compensation Committee and the Nominations and Corporate...

  • Page 108
    ... • Expertise in guiding long-term strategic and corporate management planning and advising on organization renewal, increasing organization performance, marketplace strategy, and executive team-building and business leadership practices THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE...

  • Page 109
    ... Director Emeritus Positions with the Company and Business Experience Charles E. Williams ...Age 94 James A. McMahan ...Age 87 2003 • Director, 1973 - 2003 • Vice Chairman, 1986 - 2003 • Founder • Director, 1979 - 2003 • Chief Executive Officer of McMahan Furniture Stores (furniture...

  • Page 110
    ... performance of our independent registered public accounting firm; the performance of our internal audit function; and our compliance with legal and regulatory requirements; • Prepares the report that the SEC rules require to be included in our annual proxy statement; and • Reviews the financial...

  • Page 111
    ... Plan may be designed to qualify as "performance-based" compensation within the meaning of Section 162(m). Pursuant to Section 162(m), the company generally may not deduct for federal income tax purposes compensation paid to our Chief Executive Officer or our three other highest paid employees...

  • Page 112
    ...our common stock on the New York Stock Exchange was $26.82. Has our Board approved the amended and restated plan? Yes. On March 24, 2010, our Board approved the amended and restated plan, subject to approval from our shareholders at the 2010 Annual Meeting. Our named executive officers and directors...

  • Page 113
    ... award by the closing price of our common stock on the trading day prior to the grant date, rounding down to the nearest whole share. For fiscal 2010, each new non-employee director will receive restricted stock units with a total monetary value of $184,000 upon the director's election to the Board...

  • Page 114
    ... fair market value of shares covered by an option is calculated as the closing price of our stock on the trading day prior to the grant date. With respect to an incentive stock option granted to a shareholder who holds more than 10% of the combined voting power of all classes of stock of the company...

  • Page 115
    ... and/or on continued service to us. The shares available for issuance under the plan will be reduced by one and nine-tenths shares for every one share issued subject to a restricted stock unit award that is granted with a purchase or exercise price of less than 100% of fair market value, and if such...

  • Page 116
    ... the shares payable under a deferred stock award for an additional specified period or until a specified event, if the election is made in accordance with the requirements of Section 409A of the Internal Revenue Code. What are performance goals? We have designed the plan so that it permits us to pay...

  • Page 117
    ... income; (viii) operating expenses or operating expenses as a percentage of revenue; (ix) operating income or net operating income; (x) return on assets or net assets; (xi) return on equity; (xii) return on sales; (xiii) total shareholder return; (xiv) stock price; (xv) growth in shareholder value...

  • Page 118
    ... Internal Revenue Code, or Section 409A, however, nonqualified stock options granted with an exercise price below the fair market value of the underlying stock may be taxable to participants before exercise of an award, and may be subject to additional taxes under Section 409A and comparable state...

  • Page 119
    ... applicable, state disability insurance taxes) at the time a deferred stock award vests, even if the participant has not yet received the shares subject to the award. We do not guarantee the federal or state income tax treatment of the deferred amounts. If the Internal Revenue Service successfully...

  • Page 120
    ... plan will not change as a result of this proposal. The following table sets forth information as of January 31, 2010 with respect to awards granted during fiscal 2009 under the 2001 Long-Term Incentive Plan to the named executive officers, all current executive officers as a group and all employees...

  • Page 121
    ...markets in which we compete. Such awards also are crucial to our ability to motivate employees to achieve our goals. We will benefit from increased stock ownership by selected executives, other employees and non-employee directors. The increase in the reserve of common stock available under the plan...

  • Page 122
    ... seeking shareholder approval of the material terms of the 2001 Incentive Bonus Plan for purposes of complying with Section 162(m) of the Internal Revenue Code. No other changes are being made to the plan. Has our Board approved the amended and restated plan? On March 23, 2010, our Board approved...

  • Page 123
    ... the terms and conditions of each award, such as the target amount and the performance goals, and at any time reduce any award to be paid out under the plan. Who is eligible to receive awards? Executive officers and those employees who are deemed "covered employees" for purposes of Section 162...

  • Page 124
    ... income; (viii) operating expenses or operating expenses as a percentage of revenue; (ix) operating income or net operating income; (x) return on assets or net assets; (xi) return on equity; (xii) return on sales; (xiii) total shareholder return; (xiv) stock price; (xv) growth in shareholder value...

  • Page 125
    ...for fiscal 2009. Name and Position Fiscal 2009 Cash Award Named Executive Officers: W. Howard Lester ...Sharon L. McCollam ...Laura J. Alber ...Patrick J. Connolly ...Richard Harvey(1) ...All current executive officers as a group (six persons) ...All current non-employee directors as a group (seven...

  • Page 126
    ... internal control over financial reporting, (iii) our 401(k) plan and (iv) our Puerto Rico division; • Review of our quarterly condensed consolidated financial statements; • Audit services related to periodic filings made with the SEC; and • Tax return review services. In fiscal 2009, Deloitte...

  • Page 127
    ... OFFICERS The following table provides certain information about our executive officers as of March 29, 2010. Our executive officers are appointed by our Board and serve at the pleasure of our Board, subject to rights, if any, under employment contracts. Name Position with the Company and Business...

  • Page 128
    ... The fair market value assumptions used in the calculation of these amounts are included in Note H to our Consolidated Financial Statements, which is included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2010. (4) Total income (loss) in the Executive Deferral Plan as shown...

  • Page 129
    ... 28, 2008, the modification date. (12) Restricted stock units were granted as part of the Williams-Sonoma, Inc. Equity Award Exchange, which was approved by shareholders at the 2008 Annual Meeting and was completed during fiscal 2009. Mr. Harvey was not a named executive officer at the time that the...

  • Page 130
    ... is equal to three times the eligible executive's base salary as of February 2, 2009, the first day of fiscal 2009. To ensure deductibility under our shareholder-approved 2001 Incentive Bonus Plan (intended to qualify as performance-based compensation under Internal Revenue Code Section 162(m)), the...

  • Page 131
    ...vest at the rate of 25% of the total number of shares subject to the stock-settled stock appreciation rights per year, with remaining vesting dates of November 7, 2010, November 7, 2011 and November 7, 2012, with accelerated vesting upon Mr. Lester's retirement in May 2010. Stock options vest at the...

  • Page 132
    ... at the rate of 20% of the total number of shares subject to the stock-settled stock appreciation rights per year, with remaining vesting dates of March 15, 2010 and March 15, 2011. Stock Awards Equity Incentive Equity Incentive Plan Plan Awards: Market Value of Awards: Number of Market or Payout...

  • Page 133
    ... deferrals into the plan. We will continue to evaluate this benefit program in the future to ensure that it is providing the best value to our employees and the company. Participant accounts are not put aside in trust or any other funding vehicle, and the obligations of the company to pay are simply...

  • Page 134
    ..., the closing price of our common stock on January 29, 2010, the last business day of fiscal 2009. (4) Based on a monthly health insurance premium of $1,436 to be paid by the company for 18 months, which is the period provided under COBRA. (5) Value of outplacement services based on current estimate...

  • Page 135
    ...98, the closing price of our common stock on January 29, 2010, the last business day of fiscal 2009. (4) Based on a monthly health insurance premium of $494 to be paid by the company for 18 months, which is the period provided under COBRA. (5) Value of outplacement services based on current estimate...

  • Page 136
    ... an initial value of $5,000,000, based on the closing price of our stock on the preceding business day). This award will vest upon his retirement, which is defined in the award agreement as leaving the company's employment having attained the age of 70 with at least 10 years of service (which...

  • Page 137
    ... The Board determined that, in fiscal 2009, each member of the Compensation Committee was independent under the NYSE rules as currently in effect, was an outside director as such term is defined with respect to Section 162(m) of the Internal Revenue Code and was a non-employee director under Section...

  • Page 138
    ...'s performance for the year and align the executive's financial reward with shareholder return. After considering these factors, management may recommend to the Compensation Committee changes in the amount and type of each element of total compensation. Management prepares meeting information for...

  • Page 139
    ... in discharging its responsibilities from time to time. During fiscal 2009, Cook & Co. provided the Compensation Committee with peer group proxy and other publicly disclosed data related to named executive officers and director compensation. Cook & Co. also provided certain services on behalf of the...

  • Page 140
    ...work toward long-term sustained growth and success from the perspective of owners of the company, to reward executives and other key employees for maximizing long-term shareholder value and to provide incentives to remain with the company. The named executive officers also receive certain retirement...

  • Page 141
    ... proxy data providing summarized data levels of base salary, target annual cash incentives, and equity-based and other long-term incentives to assess market competitiveness of our compensation programs for our named executive officers. Annual Net Revenue (in millions) Annual Net Income (in millions...

  • Page 142
    ...current market conditions and the company's overall financial position. Mr. Harvey was not a named executive officer at the time this review occurred in March 2009. His base salary also did not increase for fiscal 2009, and was set by the Chief Executive Officer based on the same criteria applicable...

  • Page 143
    ... with Internal Revenue Code rules, the Bonus Plan payout criteria are specified by the Compensation Committee in the first quarter of each fiscal year. For fiscal 2009, the Bonus Plan limited the maximum payout to each executive to three times the executive's base salary as of February 2, 2009, the...

  • Page 144
    ... as well as retention. The company promotes strong performance by rewarding its employees, other than its executive officers as of the start of the fiscal year, for achieving specific performance objectives with an annual cash bonus paid through the Management Bonus Plan. In some cases, strong...

  • Page 145
    ... for the company. The target bonus for Mr. Harvey for fiscal 2009 under the Management Bonus Plan was set by the Chief Executive Officer after a similar review of these considerations. In light of the market data and expected continued weakness of the retail industry, the Compensation Committee (and...

  • Page 146
    ...companies pay for performance strategy and aligns executive pay with shareholder interests. The target bonuses under the Bonus Plan for fiscal 2009 (and under the Management Bonus Plan for Mr. Harvey's fiscal 2009 target bonus) and under the Bonus Plan for fiscal 2010 are listed below for each named...

  • Page 147
    ... compensation awards are important for motivating executive officers and other employees to increase shareholder value over the long term. The equity awards granted to named executive officers are designed to be competitive with those offered by comparable companies for each named executive officer...

  • Page 148
    ...in the company's cash balance versus last year, and a marked increase in fiscal 2009 holiday revenues). In approving this grant, the Compensation Committee also considered the amounts and terms of equity grants that it expected it would make to other named executive officers early in fiscal 2010 and...

  • Page 149
    ... company's common stock on the trading day prior to the grant date. In general, equity awards to named executive officers are made during the Compensation Committee's March meeting in which the Compensation Committee reviews company performance over the past fiscal year and determines base salaries...

  • Page 150
    ...in retail operations; the advancement of the company's international strategies; and the strategic expansion of 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...

  • Page 151
    ... Marketing Officer, and nominating Sharon L. McCollam, Executive Vice President, Chief Operating and Chief Financial Officer, to the Board at the 2010 Annual Meeting of Shareholders. Are there any other benefits considerations? The company believes that benefits should provide our employees with...

  • Page 152
    ...$500 monthly car allowance. Some of these perquisites are also provided to other employees. In addition, Mr. Lester occasionally makes personal use of the corporate aircraft. The value of all of these benefits to each of the named executive officers is detailed in the "Other Annual Compensation from...

  • Page 153
    ... compensation plan for all associates beginning in January 2010 and will continue to evaluate the benefit program in the future to ensure that it is providing the best value to associates and the company. How does the Compensation Committee address Internal Revenue Code Section 162(m)? Under Section...

  • Page 154
    ... possible director candidates for election at next year's Annual Meeting. A shareholder that desires to recommend a candidate for election to the Board shall direct the recommendation in writing to Williams-Sonoma, Inc., Attention: Secretary, 3250 Van Ness Avenue, San Francisco, California 94109...

  • Page 155
    ... Rule 14a-8 of the Securities Exchange Act of 1934 and the company's Restated Bylaws, each of which are described in the "Shareholder Proposals" section of this Proxy Statement. Each director nominated in this Proxy Statement was recommended for election to the Board by the Nominations and Corporate...

  • Page 156
    ... the submission to shareholders of the director nominees described in the company's 2009 Proxy Statement; • Reviewed and evaluated the performance of the company's Chief Executive Officer; and • Considered and recommended to the Board the creation of a Lead Independent Director position and the...

  • Page 157
    ... the quality of the company's accounting principles, the soundness of significant judgments and the clarity of disclosures in the company's financial statements. Did we review the fees billed by Deloitte for fiscal 2009? Yes. We reviewed and discussed the fees billed by Deloitte for services in...

  • Page 158
    ... included in our Annual Report on Form 10-K and to review our condensed consolidated financial statements included in our quarterly reports on Form 10-Q. Fees for audit services billed also consisted of fees for the assessment of the company's internal control over financial reporting as required by...

  • Page 159
    ... Williams-Sonoma, Inc., Attention: Secretary, 3250 Van Ness Avenue, San Francisco, California 94109. To date, there have been no waivers that apply to our Chief Executive Officer, Chief Operating and Chief Financial Officer, Controller or persons performing similar functions under our Corporate Code...

  • Page 160
    .... We made annual rental payments in fiscal 2009, fiscal 2008 and fiscal 2007 of approximately $618,000, plus interest on the bonds calculated at a variable rate determined monthly (approximately 1.8% as of January 31, 2010), applicable taxes, insurance and maintenance expenses. The term of the lease...

  • Page 161
    ... fiscal 2009 transactions and (ii) information provided to us by them, we believe that all reporting requirements under Section 16(a) were met in a timely manner by the persons who were executive officers, members of the Board of Directors or greater than 10% shareholders during such fiscal year...

  • Page 162
    ... our stock listed below are currently exercisable or are exercisable within 60 days of March 29, 2010. Amount and Nature of Beneficial Ownership Percent of Shares Options Class(1) Name and Address of Beneficial Owner Position with Company James A. McMahan ...2237 Colby Avenue Los Angeles, CA...

  • Page 163
    ... sole power to vote or direct the voting of 4,200 shares of our common stock owned by the institutional accounts managed by Pyramis. (5) Mr. Lester owns $13,738 in the Williams-Sonoma, Inc. Stock Fund under our 401(k) plan, as of March 29, 2010. The number of shares listed in the table includes 512...

  • Page 164
    ... closing price of Williams-Sonoma, Inc. common stock on March 29, 2010. (10) Includes 4,400 shares owned by Mr. Robertson's wife. (11) The directors and officers as a group own $1,866,946 in the Williams-Sonoma, Inc. Stock Fund under our 401(k) plan, as of March 29, 2010. The number of shares listed...

  • Page 165
    ... fair market value of our common stock over the exercise price. No future awards will be granted from the 2000 Nonqualified Stock Option Plan or the 1993 Stock Option Plan. Proxy SHAREHOLDER PROPOSALS How can shareholders submit a proposal for inclusion in our Proxy Statement for the 2011 Annual...

  • Page 166
    ... public announcement naming all of the nominees for director or specifying the size of the increased Board at least 55 days prior to the anniversary date of this year's Annual Meeting, or April 1, 2011, a notice shall also be considered timely, but only with respect to nominees for any new positions...

  • Page 167
    ... www.williams-sonomainc.com/investors/annual-reports.html and upon written request and without charge to any shareholder by writing to: Williams-Sonoma, Inc., Attention: Annual Report Administrator, 3250 Van Ness Avenue, San Francisco, California 94109. San Francisco, California April 8, 2010 Proxy...

  • Page 168
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 169
    ... to the terms and conditions of this Plan. "Awarded Stock" means the Common Stock subject to an Award. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended, and any successor tax code, along with related rules and regulations. Exhibits...

  • Page 170
    ... from time to time. "Fair Market Value" means, as of any date, the closing sales price for a share of Stock (or the closing bid, if no sales are reported) as quoted on the New York Stock Exchange on the last market trading day prior to the day of determination, as reported in the Wall Street Journal...

  • Page 171
    ... and criteria of the New York Stock Exchange (or other market on which the Stock then trades) for qualification as an "independent director." (b) Delegation by the Administrator. The Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or...

  • Page 172
    ... the number of shares of Stock to be covered by any Award; (iv) Subject to Section 2(d), to determine and modify from time to time the terms and conditions, including restrictions, consistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and...

  • Page 173
    ... shall not increase the number of Shares available for issuance under the Plan. (b) Term of Plan. No Awards shall be made more than ten (10) years after the date upon which the Board approved the amended and restated Plan in 2010. Notwithstanding the foregoing, Stock Options and Stock Appreciation...

  • Page 174
    ...stock of the employing corporation. The Administrator may direct that the substitute Awards be granted with such terms and conditions as the Administrator considers appropriate in the circumstances. SECTION 4. ELIGIBILITY Those persons eligible to participate in the Plan shall be officers, employees...

  • Page 175
    ... Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option...

  • Page 176
    ... additional terms and conditions, consistent with the terms of the Plan, as the Administrator deems desirable. (i) Exercise Price. The exercise price per share shall be determined by the Administrator at the time of grant, but it shall not be less than 100% of the Fair Market Value on the date of...

  • Page 177
    ... between the Fair Market Value of a share of Stock on the date of exercise over the exercise price times the number of shares of Stock with respect to which the SAR is exercised, rounded down to the nearest whole share. The actual or constructive delivery of certificates (as described in Section 18...

  • Page 178
    ... a Non-employee Director or employee, the shares of Stock subject to such Award will vest in full no earlier than the earlier of: (A) the date that is one (1) day prior to the date of the annual meeting of the Company's shareholders next following the grant date (approximately one (1) year from the...

  • Page 179
    ... Non-employee Director or Employee, the Restricted Stock Units subject to such Award will vest in full no earlier than the earlier of: (A) the date that is one (1) day prior to the date of the annual meeting of the Company's shareholders next following the grant date (approximately one (1) year from...

  • Page 180
    ... a Non-employee Director or employee, the shares of Stock subject to such Award will vest in full no earlier than the earlier of: (A) the date that is one (1) day prior to the date of the annual meeting of the Company's shareholders next following the grant date (approximately one (1) year from the...

  • Page 181
    ... at least equal to the Fair Market Value on the date as of which the Stock Option is granted, or (ii) another Plan Award, as determined by the Administrator in its sole discretion. Such Awards shall vest and be payable and shall be subject to such other terms and conditions as may be determined by...

  • Page 182
    ... earned under Awards granted under the Plan qualify as performance-based compensation under Section 162(m) of the Code, if and to the extent intended to so qualify, or (b) the rules of the New York Stock Exchange, Plan amendments shall be subject to approval by the Company's shareholders entitled to...

  • Page 183
    ... employment or service as a director with the Company or any Subsidiary and shall not interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees at any time, with or without cause or notice. (d) Trading Policy Restrictions. Awards...

  • Page 184
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 185
    ... Internal Revenue Code of 1986, as amended (including regulations promulgated thereunder from time to time, the "Code"), and thereby help secure the full deductibility for federal income tax purposes of Plan bonus compensation paid to persons who are "executive officers" of the Company, as such term...

  • Page 186
    ... income; (viii) operating expenses or operating expenses as a percentage of revenue; (ix) operating income or net operating income; (x) return on assets or net assets; (xi) return on equity; (xii) return on sales; (xiii) total shareholder return; (xiv) stock price; (xv) growth in shareholder value...

  • Page 187
    ...Company, or, if not so defined, shall be defined in writing by the Committee at the time of the grant of the award. In the event that an award is paid pursuant to this Section 6.4, then the award shall not constitute performance-based compensation under Code Section 162(m). No payment under the Plan...

  • Page 188
    ... date shall be January 25, 2016, unless earlier terminated by the Board as provided in Section 9 or re-approved by the Company's shareholders at or before such meeting. No awards shall be paid under this Plan unless and until the material terms (within the meaning of Section 162(m)(4)(C) of the Code...

  • Page 189
    ... the New York Stock Exchange; and (ii) the rules of the Securities and Exchange Commission ("SEC"). • Each member will be an "Outside Director" as such term is defined with respect to Section 162(m) of the Internal Revenue Code of 1986, as amended. • Each member will be a "non-employee" director...

  • Page 190
    ... with the terms of such Plans. The Compensation Committee also shall review and make recommendations to the Board of Directors with respect to changes in the number of shares reserved for issuance under those Plans. • Preparing a compensation committee report on executive compensation as required...

  • Page 191
    ... with the Committee's Shareholder Recommendations Policy. • Annually evaluate the performance of the Company's Chief Executive Officer, annually oversee evaluation of the performance of the Board and the Company's management and provide a report with respect to this performance to the members of...

  • Page 192
    ... of the Board. REPORTS The Committee will report to the Board on a periodic basis and make such recommendations with respect to any of the above matters as the Committee deems necessary or appropriate. COMPENSATION Members of the Committee shall receive such fees, if any, for their service as...

  • Page 193
    ...created by the Board of Directors (the "Board") of Williams-Sonoma, Inc. (the "Company") to: • Oversee the integrity of the financial statements of the Company; the qualifications, independence, performance and retention of the Company's independent registered public accounting firm ("independent...

  • Page 194
    ... and reviews of the Company and its operations as the Chief Executive Officer or the Board may from time to time request. The Committee shall: Financial Statement and Disclosure Matters • Review and discuss with management and the independent auditor the annual audited financial statements and...

  • Page 195
    provided to investors. Such review may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made). • Review with management and the independent auditor the effect on the Company's financial statements of regulatory and accounting...

  • Page 196
    ... executive and the Company's Chief Financial Officer at least once each year the sufficiency of company systems to support effective internal controls and any recommended changes in the information technology department's priorities and projects planned for improving such systems. • Review reports...

  • Page 197
    ... frequently than four times per year. • The Committee shall meet at least annually with management, the internal auditors, and the independent auditor in separate executive sessions. The Committee may request any officer or employee of the Company or the Company's outside counsel or independent...

  • Page 198
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 199
    ... Trademarks Pottery Barn, pottery barn kids, PBteen, west elm, Williams-Sonoma and Williams-Sonoma Home are trademarks of Williams-Sonoma, Inc. Stock Exchange Listing New York Stock Exchange Symbol: WSM Corporate Website www.williams-sonomainc.com Shareholder/Investor Information www.williams...

  • Page 200
    Cert no. SCS-COC-000648