Pottery Barn 2010 Annual Report Download - page 169

per share exceeded $1.44 per share, which would have funded the Management Bonus Plan at maximum levels.
However, capping funding of the pool and using negative discretion to correspondingly reduce bonuses to the
named executive officers would have resulted in bonuses which did not adequately reflect their outstanding
performance. In light of the outstanding executive performance, the Chief Executive Officer recommended that
the Compensation Committee deviate from the secondary performance goal guidelines and apply less negative
discretion in its reduction of the maximum available awards. The Compensation Committee discussed the Chief
Executive Officer’s recommendations at the meeting and concurred that the results for fiscal 2010 were
significantly better than expected and performance of the named executive officers was outstanding. Therefore,
the Compensation Committee accepted the recommendation to deviate from the guidelines, but nonetheless used
its negative discretion to award bonuses under the Bonus Plan to named executive officers other than the Chief
Executive Officer that were less than the maximum potential payout and awarded these named executive officers
bonuses as described below. Similarly, the Compensation Committee felt that any use of negative discretion in
deciding the Chief Executive Officer’s bonus under the Bonus Plan would not have adequately reflected her
contribution to the company during fiscal 2010. Therefore, in recognition of her outstanding individual
performance and leadership, and strong company performance, the Compensation Committee decided that it
would apply no negative discretion and awarded Ms. Alber the maximum payout amount available as a result of
the achievement of the primary performance goal. The actual fiscal 2010 bonus amounts awarded to the named
executive officers under the Bonus Plan were:
Named Executive Officer
Fiscal 2010
Bonus
Amount
Fiscal 2010
Bonus
(as a Percentage
of Base Salary)
Laura J. Alber ......................... $2,400,000 246%
W. Howard Lester ...................... — * — *
Sharon L. McCollam .................... $1,600,000 188%
Patrick J. Connolly ..................... $ 800,000 138%
Richard Harvey ........................ $ 700,000 117%
Seth R. Jaffe ........................... $ 300,000 78%
* Pursuant to his Retirement and Consulting Agreement, Mr. Lester was not eligible to receive any bonus for fiscal 2010.
Were any bonuses granted outside of the Bonus Plan for fiscal 2010?
Yes. In recognition of Ms. Alber’s outstanding performance and the company’s results for fiscal 2010, the
Compensation Committee decided to grant a special, discretionary bonus of $350,000 to Ms. Alber, which was
awarded outside of the Bonus Plan.
How is long-term incentive compensation determined in general?
The third primary component of the company’s executive compensation program consists of long-term equity
compensation awards. The Compensation Committee continues to believe that equity compensation awards are
important for motivating executive officers and other employees to increase shareholder value over the long
term.
The equity awards granted to named executive officers are designed to deliver target total direct compensation
(base salary, target bonus and equity awards) that is competitive with that offered by comparable companies for
each named executive officer’s job level, e.g., between the 50th and 75th percentile of our company’s proxy peer
group and relevant market data as described above, to reflect the Chief Executive Officer and Compensation
Committee’s assessment of such executive’s ongoing contributions to the company, to create an incentive for
such executives to remain with the company, and to provide a long-term incentive to help the company achieve
its financial and strategic objectives.
Historically, the Compensation Committee has granted restricted stock units and stock-settled stock appreciation
rights to its named executive officers. The Compensation Committee believes restricted stock units are effective
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