Pottery Barn 2009 Annual Report Download - page 146

In February and March of 2010, a similar process was undertaken by the Compensation Committee to establish
fiscal 2010 target bonuses for all of the named executive officers, including the target bonus for the future Chief
Executive Officer. After considering market data for comparable companies and a review of the respective
responsibilities of the named executive officers, the current combinations of pay elements for each named
executive officer and whether such combinations were appropriate to create incentives to achieve desired results
for the company, the Compensation Committee determined that target bonuses as a percentage of base salary
should be increased for the named executive officers, including our anticipated Chief Executive Officer, Laura J.
Alber, in fiscal 2010.
The increases in base salaries as well as increases in the target bonus levels result in target total cash
compensation for fiscal 2010 increasing from around the 50th percentile to between the 50th percentile and the
75th percentiles for similarly situated executive officers at comparable companies, except for Ms. McCollam,
whose target total cash compensation exceeds the 75th percentile due to her continued strong performance and her
significant and critical responsibilities. The Compensation Committee believes that delivering a greater
percentage of total cash compensation through incentive compensation reinforces the companies pay for
performance strategy and aligns executive pay with shareholder interests.
The target bonuses under the Bonus Plan for fiscal 2009 (and under the Management Bonus Plan for
Mr. Harvey’s fiscal 2009 target bonus) and under the Bonus Plan for fiscal 2010 are listed below for each named
executive officer:
Named Executive Officer
Fiscal 2009
Target Bonus
(as a Percentage
of Base Salary)
Fiscal 2010
Target Bonus
(as a Percentage
of Base Salary)
W. Howard Lester ................ 100% N/A
Sharon L. McCollam .............. 50% 125%
Laura J. Alber ................... 50% 150%
Patrick J. Connolly ............... 50% 75%
Richard Harvey .................. 50% 75%
Under the shareholder-approved Bonus Plan, no amounts were payable for fiscal 2009 unless the primary
performance goal was achieved. During fiscal 2009, the company saw improvements in sales and earnings and
did achieve the primary performance goal of positive net cash provided by operating activities.
As the Compensation Committee certified that the Bonus Plan’s fiscal 2009 primary performance goal was
achieved, it had discretion to award bonuses to the named executive officers (other than Mr. Harvey) under the
plan in amounts up to three times each executive’s base salary as of the beginning of the fiscal year. The
Compensation Committee also determined that the earnings per share goal was met so as to permit funding at
maximum target funding levels under the Management Bonus Plan and had discretion to award Mr. Harvey a
bonus under the plan that was higher than his allocated portion of such bonus pool.
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