Pottery Barn 2009 Annual Report Download - page 113

What are the limits on the committee’s ability to vest and accelerate awards?
The committee generally has the sole discretion to determine and/or modify the vesting provisions of each award.
However, awards of restricted stock, restricted stock units and deferred stock awards (together, these are called
“full value awards”) typically are subject to certain “minimum vesting requirements” under the plan. The
minimum vesting requirements generally require that grants of full value awards will vest in full no earlier than
three years from the award grant date if the award will vest based solely on continued service to us, and no earlier
than one year from the award grant date if the award will not vest based solely on continued service to us (or, for
awards granted to non-employee directors, the earlier of one year from the date of grant or the day before the
next regularly scheduled annual meeting.
Certain “Vesting Exceptions” to the minimum vesting requirements apply, however:
The committee may grant full value awards resulting in the issuance of shares of up to 5% of the maximum
aggregate number of shares of stock authorized for issuance under the plan (the “5% Limit”) to employees or
non-employee directors without respect to the minimum vesting requirements in the plan. Also, awards granted
to non-employee directors pursuant to a formula approved by the Board do not count towards the 5% Limit and
are not subject to the minimum vesting requirements.
In addition, the committee’s ability to discretionarily accelerate the vesting of full value awards, and the vesting
in full of options and stock appreciation rights, is subject to the 5% Limit, except that the committee may
discretionarily accelerate awards without regard to the 5% Limit: (i) in connection with a merger or similar
transaction under the plan (including an additional or subsequent event, such as termination following such a
transaction); (ii) a participant’s death or disability; or (iii) a participant’s retirement. The committee may
accelerate the vesting of full value awards such that the minimum vesting requirements still must be met, without
such vesting acceleration counting toward the 5% Limit.
The 5% Limit is considered one aggregate limit applying to the discretionary vesting acceleration of awards to
the granting of full value awards to employees or non-employee directors without respect to the plan’s minimum
vesting requirements.
What awards may non-employee directors receive?
Non-employee directors are eligible for any of the awards available under the plan. In addition, our
non-employee directors will receive annual awards under the non-employee director award program portion of
the plan in connection with their service on our Board. The plan provides that such annual awards may be of any
type available under the plan as determined by the committee.
Pursuant to the non-employee director award program portion of the plan and by subsequent Board resolution,
each new non-employee director will receive such awards as the committee determines, upon his or her election
to the Board and annually thereafter on the date of our Annual Meeting, provided that he or she has then served
as a non-employee director for at least three months. For fiscal 2010, these awards will consist of restricted stock
units. The number of restricted stock units granted will be determined by dividing the total monetary value of
each 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, and each continuing non-employee
director who has served as a non-employee director for at least three months will receive additional restricted
stock units with a total monetary value of $170,000. In addition, the chairperson of the Audit and Finance
Committee will receive restricted stock units with a total monetary value of $41,000 and the chairperson of each
of the Compensation and Nominations and Corporate Governance Committees will receive additional restricted
stock units with a total monetary value of $16,500. Non-employee directors will receive dividend equivalent
payments with respect to these 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. Subject to the terms of
the plan, the committee determines the other terms and conditions applicable to the awards.
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