Pottery Barn 2010 Annual Report Download - page 152

quarterly installments over 5, 10 or 15 years, or a single lump sum, is available for terminations due to
retirement or disability, as defined in the plan, if the account is over $25,000. All other distributions are paid
as a single lump sum. The commencement of payments can be postponed, subject to advance election and
minimum deferral requirements. At death, the plan may provide a death benefit funded by a life insurance
policy, in addition to payment of the participant’s account.
(2) Represents the value realized on each vesting date of the following: (i) 249,501 shares that vested upon
Mr. Lester’s retirement on May 26, 2010 (the “Retirement Shares”), with a value realized on such vesting of
$7,272,954, and (ii) an aggregate of 20,835 shares, of which 4,167 shares vested on each of June 30,
2010, July 31, 2010, August 31, 3010, September 30, 2010 and October 31, 2010 (collectively, the
“Consulting Shares”), with an aggregate value realized on such vesting dates of $592,839. The Retirement
Shares were deferred pursuant to the terms of the equity award. The Consulting Shares were deferred
pursuant to the terms of the Retirement and Consulting Agreement.
(3) Represents the following: (i) the aggregate loss of $3,638 incurred during fiscal 2010 under the Executive
Deferral Plan, (ii) $1,726,547, which represents the difference between the value realized on the vesting of
the Retirement Shares and the value realized on December 31, 2010, when such shares were delivered, and
(ii) $158,679, which represents the difference between the aggregate value realized on the vesting of the
Consulting Shares and the aggregate value realized on December 31, 2010, when such shares were
delivered.
(4) Following Mr. Lester’s retirement, he received a distribution under the Executive Deferral Plan of $294,572
and elected to receive the remaining balance in quarterly installments over 15 years. A quarterly payment of
$1,259 was made on October 20, 2010, and upon Mr. Lester’s death, the remaining balance of $89,660 was
distributed to his estate.
Employment Contracts and Termination of Employment and Change-of-Control Arrangements
We have entered into a management retention agreement with each of Ms. Alber, Ms. McCollam, Mr. Connolly,
Mr. Harvey and Mr. Jaffe. Each retention agreement has an initial two-year term and will be automatically
extended for one-year following the initial term unless either party provides notice of non-extension. If we enter
into a definitive agreement with a third party providing for a “change of control,” each retention agreement will
be automatically extended for 18 months following the change of control. If within 18 months following a
change of control, an executive’s employment is terminated by us without “cause,” or by the executive for “good
reason,” (i) 100% of such executive’s outstanding equity awards, including full value awards, with performance-
based vesting where the payout is a set number or zero depending on whether the performance metric is obtained,
will immediately become fully vested, except that if a full value award has performance-based vesting and the
performance period has not been completed and the number of shares that can be earned is variable based on the
performance level, a pro-rata portion of such executive’s outstanding equity awards will immediately become
fully vested at the target performance level, and (ii) in lieu of continued employment benefits (other than as
required by law), such executive will be entitled to receive payments of $3,000 per month for 12 months.
In addition, if, within 18 months following a change of control, Ms. Alber’s, Ms. McCollam’s, Mr. Connolly’s or
Mr. Harvey’s employment is terminated by us without “cause,” or by the executive for “good reason,” such
executive will be entitled to receive (i) severance equal to 200% of such executive’s base salary as in effect
immediately prior to the change of control or such executive’s termination, whichever is greater, with such
severance to be paid over 24 months, and (ii) if such termination occurs in 2010, an amount equal to 200% of the
annual bonus received in the last 12 months, if such termination occurs in 2011, an amount equal to 200% of the
average annual bonus received in the last 24 months, or if such termination occurs in 2012 or later, an amount
equal to 200% of the average annual bonus received in the last 36 months, with such severance to be paid over 24
months. If, within 18 months following a change of control, Mr. Jaffe’s employment is terminated by us without
“cause,” or by Mr. Jaffe for “good reason,” he will be entitled to receive (i) severance equal to 100% of his base
salary as in effect immediately prior to the change of control or his termination, whichever is greater, with such
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