Pottery Barn 2010 Annual Report Download - page 133

What is a restricted stock unit?
Restricted stock units are essentially the same as awards of restricted stock, except that instead of the shares
being issued immediately and then being subject to forfeiture or repurchase until vested, the shares or other
payments for the award are not actually issued unless and until the award vests. Awards of restricted stock units
may be granted at no cost to the participant, as determined by the committee in its discretion. The committee will
determine the number of restricted stock units granted to any participant, but no participant may be granted more
than an aggregate of 400,000 shares covered by awards of restricted stock units, restricted stock or deferred stock
awards during any calendar year. Upon the grant of an award of restricted stock units, the recipient will receive
an award agreement that specifies the terms and conditions of the award, including the number of restricted stock
units granted and the terms, conditions and restrictions related to the award.
How do restricted stock units vest?
Vesting of restricted stock unit awards may be based on the achievement of performance goals established by the
committee and/or on continued service to us. The shares available for issuance under the plan will be reduced by
one and nine-tenths shares for every one share issued subject to a restricted stock unit award that is granted with
a purchase or exercise price of less than 100% of fair market value, and if such an award is forfeited, canceled or
otherwise terminated without vesting, the reserve of shares available for future awards will be replenished by one
and nine-tenths shares for every one share subject to the forfeited, canceled or terminated portion of the award.
The committee determines the vesting schedule of restricted stock unit awards, subject to the minimum vesting
requirements and the permitted Vesting Exceptions described above. Subject to these requirements, the
committee generally has the authority to accelerate the vesting of any award.
What is a stock-settled stock appreciation right?
A stock-settled stock appreciation right is an award that allows the recipient to receive the appreciation in fair
market value between the date of the grant and the exercise date for the number of shares as to which the right is
exercised, which is payable only in shares of our common stock. Thus, a stock appreciation right will have value
only if the shares increase in value after the date of grant. The increased appreciation will be paid with shares of
our common stock of equivalent value. The committee determines the terms of the stock appreciation right,
including when the right becomes exercisable. The same expiration rules that apply to options generally also
apply to stock appreciation rights. The committee will determine the number of shares covered by each stock
appreciation right, but the committee may not grant more than an aggregate of 1,000,000 shares covered by stock
appreciation rights or options to any one person during any calendar year. The shares available for issuance under
the plan will be reduced by one share for every share subject to a stock appreciation right granted under the plan,
regardless of the number of shares used to settle the award upon exercise, and if the award expires or becomes
unexercisable without having been exercised in full, the reserve of shares available for future awards will be
replenished by one share for every one share subject to the expired or forfeited portion of the award.
A stock appreciation right granted under the plan generally cannot be exercised until it vests. The committee
establishes the vesting schedule of each stock appreciation right at the time of grant. Stock appreciation rights
granted under the amended and restated plan expire at the times established by the committee, but not later than
seven years after the grant date.
Upon the grant of an award of stock appreciation rights, the recipient will receive an award agreement that
specifies the terms and conditions of the award, including the number of shares subject to the stock appreciation
right and the terms, conditions and restrictions related to the award.
What is the exercise price of a stock appreciation right?
The exercise price of the shares subject to each stock appreciation right is set by the committee, but cannot be
less than 100% of the fair market value on the date of grant of the shares covered by the stock appreciation right.
The fair market value of shares covered by a stock appreciation right is calculated as the closing price of our
stock on the trading day prior to the grant date.
37
Proxy