Pottery Barn 2009 Annual Report Download - page 117

committee’s discretion, one or more of the following performance goals may apply: (i) revenue (on an absolute
basis or adjusted for currency effects); (ii) cash flow (including operating cash flow or free cash flow); (iii) cash
position; (iv) earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings
or earnings before interest, taxes, depreciation and amortization); (v) earnings per share; (vi) gross margin;
(vii) net 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 relative to the moving average
of the S&P 500 Index, or another index; (xvi) return on capital; (xvii) return on investment; (xviii) economic
value added; (xix) operating margin; (xx) market share; (xxi) overhead or other expense reduction; (xxii) credit
rating; (xxiii) objective customer indicators; (xxiv) improvements in productivity; (xxv) attainment of objective
operating goals; (xxvi) objective employee metrics; (xxvii) return ratios; (xxviii) profit; (xxix) objective
qualitative milestones; or (xxx) other objective financial or other metrics relating to the progress of the company
or to a subsidiary, division or department thereof.
These performance goals may apply to either the company as a whole or, except with respect to shareholder
return metrics, to a region, business unit, affiliate or business segment. The goals may be measured on an
absolute basis, a per-share basis or relative to a pre-established target, to a previous period’s results or to a
designated comparison group, in each case as specified by the committee. The performance goals may differ
from participant to participant and from award to award. Financial performance measures may be determined in
accordance with United States Generally Accepted Accounting Principles (“GAAP”), in accordance with
accounting standards established by the International Accounting Standards Board (“IASB Standards”) or may be
adjusted by our committee when established to exclude or include any items otherwise includable or excludable,
respectively, under GAAP or under IASB Standards. The committee may choose other performance goals for
awards that are not intended to qualify as performance-based compensation under Section 162(m).
What happens to awards that expire or are forfeited?
If an award expires or is canceled or otherwise terminated without having been fully exercised or vested, the
unvested, expired, forfeited, canceled or otherwise terminated shares generally will be returned to the available
pool of shares reserved for issuance under the plan. However, the available pool of shares reserved for issuance
under the plan will be reduced by one and nine-tenths shares for every share issued subject to an award of
restricted stock, restricted stock units or deferred stock granted on or after the date of shareholder approval of the
2006 amendment and restatement, so if such an award expires or is canceled or otherwise terminated without
vesting, the reserve of shares available for future awards will be replenished by one and nine-tenths shares for
every one share subject to the expired, canceled or terminated portion of the award. Shares used to pay the
exercise price of an option or stock-settled stock appreciation right will not be returned to the available pool of
shares reserved for issuance under the plan.
Any payout of dividend equivalents will not reduce the number of shares available for issuance under the plan,
because such awards are payable in cash. Similarly, the forfeiture of dividend equivalents will not increase the
number of shares available for issuance under the plan.
What happens if our capital structure changes as a result of a stock split or other similar event?
If we experience a change in our capital structure as a result of a stock dividend, reorganization, merger,
consolidation, sale of all or substantially all of our assets, recapitalization, reclassification, stock split, reverse
stock split, stock dividend or other similar transaction, the committee will make an appropriate or proportionate
adjustment to (i) the maximum number of shares available for issuance under the plan, (ii) the per person limits
on awards, (iii) the number and kind of shares subject to outstanding awards, and (iv) the exercise price of
outstanding stock option or stock appreciation right awards, as appropriate to reflect the change to our capital
structure.
23
Proxy