Pottery Barn 2011 Annual Report Download - page 116

decrease the amount of any award payable under the plan but cannot increase the amount once the plan has been
determined.
What are performance goals?
Performance goals are goals that require the achievement of a quantifiable metric over an established period of
time. This allows the committee to make performance goals applicable to a participant with respect to an award.
At the committee’s discretion, one or more of the following performance goals may apply to an award:
(i) revenue (on an absolute basis or adjusted for currency effects); (ii) cash flow (including operating cash flow or
free cash flow); (iii) cash position; (iv) earnings (which may include earnings before interest and taxes, earnings
before taxes, net earnings or earnings before interest, taxes, depreciation and amortization); (v) earnings per
share; (vi) gross margin; (vii) net income; (viii) operating expenses or operating expenses as a percentage of
revenue; (ix) operating income or net operating income; (x) return on assets or net assets; (xi) return on equity;
(xii) return on sales; (xiii) total stockholder return; (xiv) stock price; (xv) growth in stockholder value relative to
the moving average of the S&P 500 Index, or another index; (xvi) return on capital; (xvii) return on investment;
(xviii) economic value added; (xix) operating margin; (xx) market share; (xxi) overhead or other expense
reduction; (xxii) credit rating; (xxiii) objective customer indicators; (xxiv) improvements in productivity;
(xxv) attainment of objective operating goals; (xxvi) objective employee metrics; (xxvii) return ratios;
(xxviii) profit; (xxix) objective qualitative milestones; or (xxx) other objective financial or other metrics relating
to the progress of the company or to a subsidiary, division or department thereof.
These performance goals may apply to company performance as a whole or, except with respect to stockholder
return metrics, to a region, business unit, affiliate or business segment. The goals may be measured either on an
absolute basis, a per-share basis or relative to a pre-established target, to a previous period’s results or to a
designated comparison group, in each case as specified by the committee. Performance goals may be different
from participant to participant, within or between award periods and from award to award.
Financial performance measures may be determined in accordance with United States Generally Accepted
Accounting Principles (“GAAP”), in accordance with accounting standards established by the International
Accounting Standards Board (“IASB Standards”) or may be adjusted by our committee when established to
exclude or include any items otherwise includable or excludable, respectively, under GAAP or under IASB
Standards.
How are awards under the plan paid out?
Before awards are paid under the plan, the committee must certify that the performance goal for the award has
been satisfied. Awards under the plan are paid in cash, reasonably promptly following the conclusion of the
award period and the committee’s certification that the applicable performance goals have been satisfied. In no
event are the awards paid later than two and one-half months after the conclusion of the fiscal year of the
company in which the award period ends.
What happens if a participant terminates employment before an award is paid?
A participant in the plan is generally required to be employed through the last day of an award period in order to
receive an award. A participant may not receive an award if he or she is not employed with the company on the
last day of an award period, unless the committee specified at the time of grant that the award would be paid in
full or on a prorated basis if, before the end of such award period, the participant dies, becomes disabled, or in
the event there is a change in control of the company (or upon certain terminations of employment within a
specified period following a change in control). If the award is paid in such an event, it will not constitute
performance-based compensation for purposes of Section 162(m).
How can we amend or terminate the plan?
The Board generally may amend, suspend or terminate the plan at any time and for any reason. Amendments will
be contingent on stockholder approval in the event that the amendment raises the maximum award limit under
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