Pottery Barn 2009 Annual Report Download - page 112

increase the shares available for issuance under the 2001 Long-term Incentive Plan. If this proposal is approved,
then a total of 18,459,903 shares will have been authorized for grant under the amended and restated plan since
its inception. As of March 29, 2010, before the addition of shares pursuant to this proposal, 9,092,755 of these
reserved shares were subject to outstanding awards and 1,170,265 of these reserved shares remained available for
future grant. The 1993 Stock Option Plan and the 2000 Nonqualified Stock Option Plan are no longer used to
grant awards. On March 29, 2010, the closing price of a share of 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 have an interest in this
proposal because they are eligible to receive plan awards.
SUMMARY OF THE AMENDED AND RESTATED PLAN
The following questions and answers provide a summary of the principal features of the amended and restated
plan and its operation. This summary is qualified in its entirety by the Amended and Restated 2001 Long-Term
Incentive Plan attached as Exhibit A.
What types of awards are available under the plan?
We may grant the following types of incentive awards under the plan: (i) stock options; (ii) restricted stock;
(iii) restricted stock units; (iv) stock appreciation rights that are settled in shares; (v) dividend equivalents; and
(vi) deferred stock awards.
Who administers the plan?
A committee of at least two non-employee members of our Board administers the plan (the “committee”). To the
extent the company wishes to qualify grants as exempt from Rule 16b-3 of the Securities Exchange Act, as
amended, the members of the committee must qualify as “non-employee directors” under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended. Further, to make grants to our officers or directors, the members of
the committee must qualify as “independent directors” under the applicable requirements and criteria of the New
York Stock Exchange. Members of the committee must also qualify as “outside directors” under Section 162(m) to
the extent the company wishes to receive a federal tax deduction for certain compensation paid under the plan to our
Chief Executive Officer and the next three highest paid employees. The committee has delegated its authority under
the plan to two members of the Board, but only with respect to grants to certain of our employees who are not
“officers” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.
What are the powers of the committee?
Subject to the terms of the plan, the committee has the sole discretion to: (i) select the employees and directors
who will receive awards; (ii) determine the terms and conditions of awards such as the exercise price and vesting
schedule (see below for certain limitations); and (iii) interpret the provisions of the plan and outstanding awards.
The committee may not reduce the exercise price of stock options or stock appreciation rights, nor may it allow
employees to cancel an existing stock option or stock appreciation right in exchange for a new award, cash, or a
combination of the two, without prior consent from our shareholders.
Who is eligible to receive awards?
The committee selects the employees and non-employee directors who will be granted awards under the plan
(our non-employee directors receive awards under the plan as compensation for Board service). The actual
number of employees and non-employee directors who will receive an award under the plan cannot be
determined in advance because the committee has the discretion to select the participants. As of March 29, 2010,
approximately 20,000 employees and seven non-employee directors were eligible to participate in the plan.
However, of our employees, our current policy is to grant equity awards only to employees at the level of vice
president or above; as of March 29, 2010, there were 100 such employees.
18