Pottery Barn 2009 Annual Report Download - page 122

PROPOSAL 3
AMENDMENT AND RESTATEMENT OF OUR 2001 INCENTIVE BONUS PLAN
What is this proposal?
This is a proposal asking shareholders to approve the extension of the term of the amended and restated
Williams-Sonoma, Inc. 2001 Incentive Bonus Plan so that it will continue in place until January 25, 2016 and to
approve the material terms of the plan. The plan currently is due to expire on January 25, 2011. If approved, the
amended and restated 2001 Incentive Bonus Plan will be effective as of January 25, 2011.
The amended and restated 2001 Incentive Bonus Plan allows us to achieve the company’s goals and receive a
federal income tax deduction for certain compensation paid under the plan. In order for the company to continue
to receive federal income tax deductions for all compensation paid under the amended and restated 2001
Incentive Bonus Plan after the expiration date of the current plan, we must obtain new shareholder approval
before bonuses that are earned in fiscal 2011 are paid out in fiscal 2012. If shareholders do not approve the
amended and restated 2001 Incentive Bonus Plan and the material terms of the plan, bonuses earned in fiscal
2011 and thereafter will not be paid under the plan. Shareholders last approved the 2001 Incentive Bonus Plan in
2005. The amended and restated plan is attached to this Proxy Statement as Exhibit B.
What changes are being made to the current plan?
The term of the amended and restated 2001 Incentive Bonus Plan has been extended so that it will continue in
place until January 25, 2016, which is the fifth anniversary of the effective date of the amendment and
restatement, unless it is re-approved by the company’s shareholders at or before such time or is earlier terminated
by the Board. In addition, we have updated and expanded the performance goals that can be applied to awards
under the plan, and have made some other non-material changes. We are also 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 the amended and restated 2001 Incentive Bonus Plan, subject to approval
from our shareholders at the Annual Meeting. If shareholders do not approve the amended and restated 2001
Incentive Bonus Plan, the current 2001 Incentive Bonus Plan will continue in effect as currently in place through
fiscal 2010 and will terminate pursuant to its terms. Also, if shareholders do not approve the amended and restated
2001 Incentive Bonus Plan, the company may not be entitled to a deduction for certain incentive compensation paid
to our Chief Executive Officer and the next three most highly compensated executive officers after the current 2001
Incentive Bonus Plan expires. Our named executive officers 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
2001 Incentive Bonus Plan and its operation. This summary is qualified in its entirety by the amended and
restated 2001 Incentive Bonus Plan attached as Exhibit B.
What is the purpose of the plan?
The amended and restated 2001 Incentive Bonus Plan is intended to motivate and reward participants by making
a significant portion of their cash compensation directly dependent upon achieving the company’s objectives.
The amended and restated 2001 Incentive Bonus Plan accomplishes this by providing additional compensation to
the company’s executive officers as an incentive to attain the company’s goals. The amended and restated 2001
Incentive Bonus Plan also functions as a retention tool, helping to ensure the continued availability of the
services of the executive officers to the company.
The amended and restated 2001 Incentive Bonus Plan also is designed to allow us to provide compensation that
qualifies as “performance-based” compensation under Section 162(m). Under Section 162(m), the company may
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