Pottery Barn 2009 Annual Report Download - page 135

The following table describes the payments and/or benefits which would have been owed by us to Ms. McCollam
as of January 31, 2010, if her employment had been terminated in various situations.
Compensation and Benefits
For Good
Reason
Involuntary
Without Cause
Change-in-
Control Death Disability
Base Salary(1) .............. $725,000 $725,000 — Through date of death $ 181,250(2)
Lump Sum Payment ......... $580,000 $580,000 — — —
Restricted Stock Units(3) ..... — — $1,423,500 $1,423,500 $1,423,500
Health Care Benefits(4) ...... $ 8,892 $ 8,892 — — —
Other Perquisites(5) ......... $150,000 $150,000 — — —
(1) Based on Ms. McCollam’s base salary as of January 31, 2010.
(2) Payment of 13 weeks of salary.
(3) Acceleration of vesting of 75,000 restricted stock units. Value is based on a stock price of $18.98, 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 of costs for these services.
W. Howard Lester
On January 25, 2010, we entered into a Retirement and Consulting Agreement (the “Consulting Agreement”)
with W. Howard Lester, our Chairman and Chief Executive Officer. Pursuant to the terms of the Consulting
Agreement, Mr. Lester will retire as Chairman and Chief Executive Officer and as a member of the Board on
May 26, 2010, the date of the 2010 Annual Meeting. Mr. Lester will continue to provide consulting and advisory
services following his retirement in order to assist with the transition to a new Chief Executive Officer.
Following his retirement, Mr. Lester will have the title of Chairman Emeritus.
Pursuant to the terms of the Consulting Agreement, Mr. Lester will provide consulting services from his
retirement through December 2012 and, during this consulting period, will receive an annualized payment of
$500,000 per year, reasonable administrative support and reimbursement for reasonable expenses incurred in
connection with his services. He will receive restricted stock units representing the right to receive 125,000
shares of our common stock in addition to receiving cash payments representing the value of 125,000 shares of
our common stock (including dividend equivalent rights that are payable at the same time that the shares subject
to the related restricted stock units are delivered), in each case which will vest monthly over the consulting
period and be settled at the end of each year. In the event that we terminate the Consulting Agreement as a result
of Mr. Lester’s material breach of the Consulting Agreement, death, permanent disability or a change in control
transaction in which the Consulting Agreement is not assumed, any unvested portion of these restricted stock
units or cash payments will be forfeited and no further consulting payments will be made. During the consulting
period, as further described in the Compensation Discussion and Analysis beginning on page 43, Mr. Lester will,
at our request, advise and assist on such matters as store real estate strategy, negotiations with real estate lessors,
seasonal assortments and layouts, and outreach to shareholders. The Consulting Agreement also provides that
Mr. Lester will not, among other things, compete with us or attempt to hire our employees.
In recognition of his retirement and his contributions to the company, and in exchange for a general release of
claims against the company, Mr. Lester will receive accelerated vesting of his currently outstanding stock
options, stock appreciation rights and restricted stock units. He will also receive a lump sum payment of
$175,000 (representing estimated costs of health benefits through December 2012) and continued lifetime
employee discount privileges. As disclosed in further detail below in this Proxy Statement, we have an aircraft
lease agreement with a management company owned by Mr. Lester, which will continue pursuant to its current
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Proxy