Pottery Barn 2010 Annual Report Download - page 165

Committee also considers overall company performance and performance relative to peer companies generally
and the home furnishings industry specifically. For fiscal 2010, the Compensation Committee considered the
appropriate pay mix, but there was no formalized policy.
The Compensation Committee reviews the base salaries of its named executive officers against, and sets the base
salaries of its named executive officers relative to, the salaries of the executives in its proxy peer group. At the
beginning of fiscal 2010, the then-current Chief Executive Officer, Mr. Lester, reviewed the performance of the
named executive officers (other than himself), assessing individual and business unit performance against the
expectations set at the beginning of fiscal 2009. The Chief Executive Officer also reviewed proxy peer group
data provided by Cook & Co. on behalf of the Compensation Committee and additional market survey data
provided to management by the Hay Group, Hewitt Consultants and Towers Perrin, which was reviewed on
behalf of the Compensation Committee by Cook & Co. At the time, peer group data had not yet been reported for
fiscal 2009 so the review was based on actual 2008 proxy peer group information, except for Mr. Harvey (for
whom the review was based on current market data for Brand Presidents) and Mr. Jaffe (for whom the review
was based on current market data for General Counsels). The Chief Executive Officer believed that the named
executive officers were performing very well, and that the company’s positive results were directly related to the
efforts of his executive team. He believed that their adherence to and execution of the strategic initiatives set out
in fiscal 2009 led to the company’s ability to gain market share and increased earnings over initial estimates for
each quarter.
After a review of the base salaries of the named executive officers relative to proxy peer group and market
survey data, the Chief Executive Officer proposed changes to the base salaries of all of the named executive
officers, including for Mr. Jaffe, who was not a named executive officer at that time, along with increases to their
respective bonus targets. The Chief Executive Officer proposed these changes so that the base salaries and bonus
targets of the named executive officers would bring the executives to at or above the 50th percentile for target
total cash compensation compared to the company’s proxy peer group and relevant market data as described
above. The adjustments to Ms. McCollam’s base salary and Mr. Harvey’s base salary were made to reflect
increased responsibility within the company. As Mr. Connolly’s and Mr. Jaffe’s responsibilities were not
increased, they received an increase of 2%, equivalent to the increase provided to the company’s associates in the
general course of the company’s annual focal review process. These changes were informed by the impending
changes to the executive management team, including Ms. Alber’s anticipated appointment as the company’s
Chief Executive Officer (discussed below).
Following Mr. Lester’s recommendations, the Compensation Committee approved the following base salaries of
the named executive officers (other than for Mr. Lester) for fiscal 2010 at the Compensation Committee meeting
held on March 22, 2010:
Named Executive Officer Fiscal 2009 Base Salary Fiscal 2010 Base Salary
Laura J. Alber ................................. $800,000 $975,000
Sharon L. McCollam ............................ $725,000 $850,000
Patrick J. Connolly ............................. $570,000 $581,400
Richard Harvey ................................ $525,000 $600,000
Seth R. Jaffe .................................. $375,000 $382,500
In accordance with the terms of his Retirement and Consulting Agreement, which had been entered into on
January 25, 2010, Mr. Lester’s base salary for fiscal 2010 (through his retirement date) did not change from his
fiscal 2009 base salary.
Were annual incentive bonuses awarded to named executive officers for fiscal 2010?
Yes. Annual incentive bonuses were awarded to our named executive officers for fiscal 2010 under the
company’s 2001 Incentive Bonus Plan (the “Bonus Plan”). In addition, the Compensation Committee awarded a
special bonus of $350,000 to Ms. Alber, in recognition of her outstanding performance and the company’s results
for fiscal 2010. This bonus was made outside of the Bonus Plan.
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