Pottery Barn 2009 Annual Report Download - page 149

addition, when determining the size of the equity awards granted to Ms. Alber and Ms. McCollam, the
Compensation Committee took into account Ms. Alber’s and Ms. McCollam’s anticipated increased roles and
responsibilities with the company following Mr. Lester’s anticipated retirement from the company (discussed in
further detail below).
The equity grants approved at the March 2010 meeting are as follows:
Named Executive Officer
Number of
Restricted
Stock
Units
Number of Stock-
Settled Stock
Appreciation
Rights
Laura Alber ....................... 280,000 200,000
Sharon McCollam .................. 210,000 150,000
Pat Connolly ....................... 11,250 9,375
Richard Harvey .................... 25,000 0
The restricted stock units granted to the named executive officers (including those granted to Ms. Alber and
Ms. McCollam) vest on the fourth anniversary of the award’s grant date, subject to the company achieving positive
net cash provided by operating activities in fiscal 2010 and the named executive officer’s continued service to the
company through such date. The stock-settled stock appreciation rights granted to the named executive officers
(including those granted to Ms. Alber and Ms. McCollam) vest in equal annual installments over the four year
period from the date of grant, subject to the named executive officer’s continued service with the company.
What other changes did the company make to equity grants?
The company has added an acceleration feature to grants of stock-settled stock appreciation rights and restricted
stock units made to its employees, including its named executive officers, to provide for the full acceleration of
vesting of such awards in the event of a qualifying retirement, which is defined as leaving the company’s
employment at age 70 or later, with at least fifteen years of service.
When are equity awards made to executive officers?
In general, equity awards to executive officers are only approved at scheduled Compensation Committee
meetings. Executives do not have any role in selecting the grant date of equity awards. The grant date of equity
awards is generally the date of the approval of the award, and the exercise price of stock options or stock-settled
stock appreciation rights is always the closing price of the company’s common stock on the trading day prior to
the grant date. In general, equity awards to named executive officers are made during the Compensation
Committee’s March meeting in which the Compensation Committee reviews company performance over the past
fiscal year and determines base salaries and bonuses for named executive officers. The Compensation Committee
also makes equity awards at other times during the year in connection with promotions, assumptions of
additional responsibilities and other considerations, such as special retention or incentive concerns. The restricted
stock unit award granted to Mr. Lester (as discussed above) was made by the Compensation Committee at a
special January 2010 meeting for the reasons described above. Grants made by the Incentive Award Committee
are made in the first week of each open trading window on an as-needed basis. The Compensation Committee
does not time equity grants to take advantage of anticipated or actual changes in the price of our common stock
prior to or following the release of material information regarding the company.
Did any of the named executive officers participate in the recent stock option exchange offer?
On March 16, 2009, the company commenced an exchange offer whereby active employees other than our
named executive officers could elect to exchange some or all of their outstanding options and stock-settled stock
appreciation rights with an exercise price greater than $27.72 per share for new restricted stock units. However,
because Richard Harvey was not a named executive officer at the time the exchange program began, he was
eligible to participate in the exchange, and Mr. Harvey elected to participate in the exchange program. See the
“Grants of Plan-Based Awards” table on page 36 for further discussion about the awards granted to Mr. Harvey
in connection with the exchange program.
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