Pottery Barn 2009 Annual Report Download - page 151

us with unique services for which we believe the compensation under the Consulting Agreement is appropriate.
For example, we believe that Mr. Lester will be able to provide valuable and unique services in negotiating and
working with major real estate lessors, particularly since a significant number of our real estate leases are
scheduled to expire in the next two years. The Consulting Agreement provides that his services will include the
following, at the request of the company:
• participation in the ongoing review of the store real estate strategy;
• assistance in negotiations with major real estate lessors, such as Simon, General Growth and Westfield;
• consulting on seasonal assortments, store design and seasonal layouts;
• commenting on the company’s monthly financial performance;
• assistance in the outreach to selected major shareholders;
• upon request, participating in the mentoring of the executive team and providing advice and guidance to
our non-executive Chairman; and
• as Chairman Emeritus, serving as a cultural symbol within the company and the vendor community.
In addition, Mr. Lester will receive benefits in connection with his retirement, which are described under
“Employment Contracts and Termination of Employment and Change-of-Control Arrangements” beginning on
page 40 and were approved in recognition of his retirement and his significant contributions to the company.
Mr. Lester will continue to provide consulting services from his retirement through December 2012 as described
above. As compensation for his services to the company, he will receive an annual fee of $500,000, plus a
one-time grant of 125,000 restricted stock units, and a cash payment representing the value of 125,000 restricted
stock units, each of which will vest monthly over the consulting period. Mr. Lester will receive a lump sum
payment of $175,000 (which represents the estimated costs of health benefits through December 2012) and
continued lifetime employee discount privileges. The company has an aircraft lease agreement with a
management company owned by Mr. Lester, and the company agreed to continue the agreement on its current
economic terms through May 2011. Under the Consulting Agreement, Mr. Lester has agreed to give the company
an option to purchase this aircraft at its estimated fair market value at the time we entered into the Consulting
Agreement.
What leadership changes occurred in fiscal 2009?
On June 16, 2009, David DeMattei notified the company of his resignation, effective on or about August 1, 2009.
Mr. DeMattei did not receive any severance from the company. Mr. DeMattei had served as the Group President
of the company’s Williams-Sonoma, Williams-Sonoma Home and West Elm brands. The company made some
adjustments in management team responsibilities to account for Mr. DeMattei’s departure, but has not appointed
any one person to assume his former position.
What leadership changes will occur in fiscal 2010?
Upon Mr. Lester’s retirement, the company intends to appoint Laura J. Alber as the company’s Chief Executive
Officer and include her as a nominee to the Board at the 2010 Annual Meeting of Shareholders. The company is
also re-nominating Patrick J. Connolly, Director and Executive Vice President, Chief Marketing Officer, and
nominating Sharon L. McCollam, Executive Vice President, Chief Operating and Chief Financial Officer, to the
Board at the 2010 Annual Meeting of Shareholders.
Are there any other benefits considerations?
The company believes that benefits should provide our employees with protection and security through health
and welfare, retirement, disability insurance and life insurance programs. The named executive officers do not, in
general, receive benefits in excess of those provided to other employees. However, the Compensation Committee
may recommend additional benefits for certain individuals from time to time if the Compensation Committee
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