Pottery Barn 2011 Annual Report Download - page 114

PROPOSAL 2
AMENDMENT AND RESTATEMENT OF OUR 2001 INCENTIVE BONUS PLAN
What is this proposal?
This is a proposal asking stockholders to approve the following with respect to the Williams-Sonoma, Inc. 2001
Incentive Bonus Plan: (i) increase the limit on permissible payments to any participant for any award period from
(A) the lesser of three million dollars or three times the participant’s annual base salary to (B) ten million dollars,
(ii) the extension of the plan term from January 25, 2016 to January 25, 2017, and (iii) the material terms of the
plan. If approved, the amended and restated 2001 Incentive Bonus Plan will be effective as of March 22, 2012.
The amended and restated 2001 Incentive Bonus Plan allows us to achieve the company’s goals and receive a
federal income tax deduction for certain compensation paid under the plan. If stockholders do not approve the
amended and restated 2001 Incentive Bonus Plan and the material terms of the plan, bonuses earned in fiscal
2012 and thereafter will not be paid under the plan. Stockholders last approved the 2001 Incentive Bonus Plan in
2011. The amended and restated plan is attached to this Proxy Statement as Exhibit A.
What changes are being made to the current plan?
The primary change is to increase the limit on permissible payments to any participant for any award period from
the lesser of three million dollars or three times the participant’s annual base salary (as such annual base salary is
in effect on the first day in the first fiscal year of the award period) to ten million dollars. The reason for this
change is to provide the Compensation Committee with greater flexibility in paying fully deductible incentive
compensation to our Chief Executive Officer and other named executive officers. Also, the term of the amended
and restated 2001 Incentive Bonus Plan has been extended by one year so that it will continue in place until
January 25, 2017, unless it is re-approved by the company’s stockholders at or before such time or is earlier
terminated by the Board. Finally, we are also seeking stockholder approval of the material terms of the 2001
Incentive Bonus Plan for purposes of complying with Section 162(m) of the Internal Revenue Code. No other
changes are being made to the plan.
Has our Board approved the amended and restated plan?
On March 22, 2012, our Board approved the amended and restated 2001 Incentive Bonus Plan, subject to
approval from our stockholders at the Annual Meeting. Our named executive officers have an interest in this
proposal because they are eligible to receive plan awards.
SUMMARY OF THE AMENDED AND RESTATED PLAN
The following questions and answers provide a summary of the principal features of the amended and restated
2001 Incentive Bonus Plan and its operation. This summary is qualified in its entirety by the amended and
restated 2001 Incentive Bonus Plan attached as Exhibit A.
What is the purpose of the plan?
The amended and restated 2001 Incentive Bonus Plan is intended to motivate and reward participants by making
a significant portion of their cash compensation directly dependent upon achieving the company’s objectives.
The amended and restated 2001 Incentive Bonus Plan accomplishes this by providing additional compensation to
the company’s executive officers as an incentive to attain the company’s goals. The amended and restated 2001
Incentive Bonus Plan also functions as a retention tool, helping to ensure the continued availability of the
services of the executive officers to the company.
The amended and restated 2001 Incentive Bonus Plan also is designed to allow us to provide compensation that
qualifies as “performance-based” compensation under Section 162(m). Under Section 162(m), the company may
not receive a federal income tax deduction for compensation paid to our Chief Executive Officer or any of the
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