Pottery Barn 2010 Annual Report Download - page 162

Management prepares meeting information for each Compensation Committee meeting and works with the
Committee Chairperson to establish meeting agendas. Materials are provided to the Compensation Committee
members several days in advance of each meeting. The Compensation Committee considers, but is not bound to
and does not always accept, management proposals. The Chief Executive Officer also participates in
Compensation Committee meetings at the invitation of the Compensation Committee to provide:
• Background information regarding the company’s strategic objectives;
• Evaluations of the performance of senior executive officers; and
• Compensation recommendations as to senior executive officers (other than the Chief Executive Officer).
At certain of these meetings during fiscal 2010, the then-current Chief Executive Officer made recommendations
with respect to the compensation arrangements for other executives and with respect to the structure and terms of
those officers’ target bonuses and equity-based compensation. However, in fiscal 2010 the Chief Executive
Officer did not participate in the portions of the meetings during which his or her own compensation was
considered and established. This structure is expected to remain the same with respect to Ms. Alber, our Chief
Executive Officer.
Does the Compensation Committee have outside advisors?
The Compensation Committee Charter grants the Compensation Committee the sole authority to hire outside
advisors and compensation consultants. Although the company pays their fees, these advisors report directly to
the Compensation Committee. Frederic W. Cook & Co., Inc., or Cook & Co., has been engaged as the
independent executive compensation consulting firm to assist the Compensation Committee in discharging its
responsibilities from time to time. During fiscal 2010, Cook & Co. provided the Compensation Committee with
peer group proxy and other publicly disclosed data related to named executive officers and director
compensation. Cook & Co. also provided certain services on behalf of the Compensation Committee primarily
related to compiling market data and advice regarding general compensation trends in the retail industry and
among similarly situated companies. The Compensation Committee may request that Cook & Co. attend its
meetings and advise the Compensation Committee either in person or by telephone. Cook & Co. provided
counsel to the Compensation Committee at the November 10, 2010 Compensation Committee meeting at the
request of the Chairman, Adrian Bellamy.
In fiscal 2010, Cook & Co. did not provide services to the company relating to non-executive compensation other
than advising on issues relating to our proposed share increase to our equity plan in 2010.
What is the Compensation Committee’s philosophy of executive compensation?
The Compensation Committee believes that the company’s executive compensation programs should support the
company’s objective of creating value for its shareholders. Accordingly, the Compensation Committee believes
that executive officers and other key employees should have a significant interest in the company’s stock
performance, and compensation programs should link executive compensation to shareholder value. For this
reason, the Compensation Committee strives to ensure that the company’s executive officer compensation
programs are designed to enable the company to attract, retain, motivate and reward highly qualified executive
officers while maintaining strong and direct links between executive pay, individual performance, the company’s
financial performance and shareholder returns.
One of the ways that the Compensation Committee has sought to accomplish these goals is by making a
significant portion of individual compensation directly dependent on the company’s achievement of financial
goals, and by providing significant rewards for exceeding those goals. The Compensation Committee believes
that strong financial performance, on a sustained basis, is an effective means of enhancing long-term shareholder
return. There is no pre-established policy or target for the allocation between cash and non-cash compensation
and short-term and long-term compensation. Rather, the appropriate level and mix of compensation to meet these
philosophical goals was reviewed and determined on an ongoing basis, and at least annually.
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