Pottery Barn 2010 Annual Report Download - page 114

PROPOSAL 2
REINCORPORATION OF THE COMPANY FROM CALIFORNIA TO DELAWARE
What is this proposal?
Our Board has unanimously approved a change in our state of incorporation from California to Delaware (the
“Reincorporation”) pursuant to the terms of a merger agreement providing for us to merge into a newly formed
wholly-owned subsidiary incorporated in the State of Delaware (“W-S Delaware”), subject to the approval of our
shareholders and certain other conditions. The name of the company after the Reincorporation will remain
Williams-Sonoma, Inc. For purposes of the discussion below, the company as it currently exists as a corporation
organized under the laws of the State of California is sometimes referred to as “W-S California.”
The State of Delaware is recognized for adopting comprehensive, modern and flexible corporate laws that are
periodically revised to respond to the changing legal and business needs of corporations. Consequently, the
Delaware judiciary has become particularly familiar with corporate law matters and a substantial body of court
decisions has developed construing Delaware law. Delaware corporate law, accordingly, has been, and is likely
to continue to be, interpreted in many significant judicial decisions, a fact which may provide greater clarity and
predictability with respect to our corporate legal affairs. For this reason, the majority of public corporations,
including a majority of our peer companies, are incorporated in Delaware.
Our Board believes that the Reincorporation is in the best interests of the company and will help maximize
shareholder value. The Board also believes that the Reincorporation in Delaware will allow us to take advantage
of the certainty provided by extensive Delaware case law, provide us access to the specialized Delaware
Chancery Court, and help in the recruitment and retention of outside directors due to the more tested exculpation
and indemnification provisions permitted under Delaware law.
Shareholders are urged to read this proposal carefully, including all of the related exhibits referenced below and
attached to this Proxy Statement, before voting on the Reincorporation. The following discussion summarizes
material provisions of the Reincorporation. This summary is subject to and qualified in its entirety by the
Agreement and Plan of Merger (the “Reincorporation Agreement”) that will be entered into by W-S California
and W-S Delaware in substantially the form attached hereto as Exhibit A, the Amended and Restated Certificate
of Incorporation of W-S Delaware to be effective immediately following the Reincorporation (the “Delaware
Certificate”), in substantially the form attached hereto as Exhibit B, and the Amended and Restated Bylaws of
W-S Delaware to be effective immediately following the Reincorporation (the “Delaware Bylaws”), in
substantially the form attached hereto as Exhibit C. Copies of the Articles of Incorporation of W-S California
filed in California, as amended to date (the “California Articles”), and the bylaws of W-S California, as amended
to date (the “California Bylaws”), are filed publicly as exhibits to our periodic reports and are also available for
inspection at our principal executive offices. Copies will be sent to shareholders free of charge upon written
request to Williams-Sonoma, Inc., Attention: Corporate Secretary, 3250 Van Ness Avenue, San Francisco,
California 94109.
What are the reasons for the Reincorporation?
Our Board and management believe that it is essential for us to be able to draw upon well-established principles
of corporate governance in making legal and business decisions. The prominence and predictability of Delaware
corporate law provide a reliable foundation on which our governance decisions can be based, and we believe that
our shareholders will benefit from the responsiveness of Delaware corporate law to their needs and to those of
the corporation they own. The principal factors the Board considered in electing to pursue the Reincorporation
are summarized below:
• highly developed and predictable corporate law in Delaware;
• enhanced ability of the majority of shareholders to exercise control; and
• enhanced ability to attract and retain directors and officers.
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