Pottery Barn 2011 Annual Report Download - page 129

For purposes of the management retention agreement “good reason” means, without the executive’s consent, (i) a
reduction in his or her annual base salary (except pursuant to a reduction generally applicable to senior
executives of the company), (ii) a material diminution of his or her authority or responsibilities, (iii) a reduction
of the executive’s title, (iv) the executive ceasing to report directly to a specified individual or the Board of the
company or the entity holding all or substantially all of the company’s assets following a change of control, or
(v) relocation of the executive to a location more than 50 miles from the company’s San Francisco, California
main office location. In addition, upon any such voluntary termination for good reason the executive must
provide written notice to the company of the existence of one or more of the above conditions within 90 days of
its initial existence and the company must be provided with at least 30 days to remedy the condition.
Laura J. Alber
We entered into an employment agreement with Laura J. Alber, effective as of May 26, 2010. The employment
agreement has an initial three-year term and will be automatically extended for one-year following the initial
term unless either party provides notice of non-extension. If we terminate Ms. Alber’s employment without
“cause,” if she terminates her employment with us for “good reason,” or her employment is terminated due to her
death or “disability,” she will be entitled to receive (i) continuation of her base salary at the time of termination
for up to two years, (ii) if such termination occurs in 2011, an amount equal to 200% of the average annual bonus
received in the last 24 months, or if such termination occurs in 2012 or later, an amount equal to 200% of the
average annual bonus received in the last 36 months, (iii) in lieu of continued employment benefits (other than as
required by law), payments of $3,000 per month for 18 months and (iv) accelerated vesting of her then-
outstanding equity awards that vest solely based upon Ms. Alber’s continued service by up to an additional
18 months’ of vesting credit, and if the awards were subject to cliff-vesting of more than one-year, the cliff-
vesting provision will be lifted and vesting credit given as if the award had been subject to monthly vesting, and
equity awards subject to performance based vesting will remain outstanding through the date upon which the
achievement of the applicable performance milestones are certified with such awards paid out, subject to the
attainment of the applicable performance milestones, to the same extent and at the same time as if Ms. Alber had
remained employed through the 18-month anniversary of her termination date. Ms. Alber’s receipt of the
severance benefits discussed above is contingent on her signing and not revoking a release of claims against us,
her continued compliance with our Corporate Code of Conduct (including its provisions relating to confidential
information and non-solicitation), her not accepting employment with one of our competitors, and her continued
non-disparagement of us.
For purposes of the employment agreement with Ms. Alber, “cause” is defined as (i) an act of dishonesty made
by her in connection with her responsibilities as an employee, (ii) Ms. Alber’s conviction of or plea of nolo
contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude,
(iii) Ms. Alber’s gross misconduct, (iv) Ms. Alber’s unauthorized use or disclosure of any proprietary
information or trade secrets of the company or any other party to whom she owes an obligation of nondisclosure
as a result of her relationship with the company, (v) Ms. Alber’s willful breach of any obligations under any
written agreement or covenant with the company or breach of the company’s Corporate Code of Conduct, or
(vi) Ms. Alber’s continued failure to perform her employment duties after she has received a written demand of
performance from the Board which specifically sets forth the factual basis for the Board’s belief that she has not
substantially performed her duties and has failed to cure such non-performance to the company’s satisfaction
within 30 days after receiving such notice.
For purposes of the employment agreement with Ms. Alber, “disability” means Ms. Alber (i) is unable to engage
in any substantial gainful activity by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or
(ii) is, by reason of any medically determinable physical or mental impairment which can be expected to last for
a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less
than 3 months under an accident and health plan covering company employees.
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