Pottery Barn 2010 Annual Report Download - page 135

absolute basis, a per-share basis or relative to a pre-established target, to a previous period’s results or to a
designated comparison group, in each case as specified by the committee. The performance goals may differ
from participant to participant and from award to award. Financial performance measures may be determined in
accordance with United States Generally Accepted Accounting Principles (“GAAP”), in accordance with
accounting standards established by the International Accounting Standards Board (“IASB Standards”) or may be
adjusted by our committee when established to exclude or include any items otherwise includable or excludable,
respectively, under GAAP or under IASB Standards. The committee may choose other performance goals for
awards that are not intended to qualify as performance-based compensation under Section 162(m).
What happens to awards that expire or are forfeited?
If an award expires or is canceled or otherwise terminated without having been fully exercised or vested, the
unvested, expired, forfeited, canceled or otherwise terminated shares generally will be returned to the available
pool of shares reserved for issuance under the plan. However, the available pool of shares reserved for issuance
under the plan will be reduced by one and nine-tenths shares for every share issued subject to an award of
restricted stock, restricted stock units or deferred stock granted on or after the date of shareholder approval of the
2006 amendment and restatement, so if such an award expires or is 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 expired, canceled or terminated portion of the award. Shares used to pay the
exercise price of an option or stock-settled stock appreciation right will not be returned to the available pool of
shares reserved for issuance under the plan.
Any payout of dividend equivalents will not reduce the number of shares available for issuance under the plan,
because such awards are payable in cash. Similarly, the forfeiture of dividend equivalents will not increase the
number of shares available for issuance under the plan.
What happens if our capital structure changes as a result of a stock split or other similar event?
If we experience a change in our capital structure as a result of a stock dividend, reorganization, merger,
consolidation, sale of all or substantially all of our assets, recapitalization, reclassification, stock split, reverse
stock split, stock dividend or other similar transaction, the committee will make an appropriate or proportionate
adjustment to (i) the maximum number of shares available for issuance under the plan, (ii) the per person limits
on awards, (iii) the number and kind of shares subject to outstanding awards, and (iv) the exercise price of
outstanding stock option or stock appreciation right awards, as appropriate to reflect the change to our capital
structure.
What happens in the event of a merger or similar transaction?
In the event that we (i) consummate a merger or consolidation with another corporation, (ii) sell all or
substantially all of our assets, (iii) reorganize, (iv) liquidate, or (v) dissolve, the Board may, in its discretion,
provide that outstanding awards will be assumed or substituted for by the successor corporation or provide that
all outstanding awards will accelerate vesting and terminate immediately prior to the consummation of the
transaction. In the event of the acceleration and termination of awards in lieu of assumption or substitution,
awards other than options and stock appreciation rights will be settled in kind in an amount determined by the
committee after taking into consideration the amount per share received by shareholders in the transaction (that
is, the transaction price). Under such circumstances, options and stock appreciation rights will be settled in kind
in an amount per share equal to the transaction price minus the aggregate exercise price of such options or stock
appreciation rights.
Can awards be transferred by the participant?
Incentive stock options are not transferable, other than by will or by the applicable laws of descent and
distribution. Unless otherwise determined by the committee, other awards (including nonqualified stock options)
granted under the plan will not be transferable other than by will or by the applicable laws of descent and
distribution.
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