Pottery Barn 2011 Annual Report Download - page 135

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Compensation Discussion and Analysis
Who serves on the Compensation Committee?
Throughout fiscal 2011, Adrian D.P. Bellamy, Anthony A. Greener and Ted W. Hall served as members of the
Compensation Committee. Richard T. Robertson did not stand for re-election to the Board of Directors and
therefore served as a member of the Compensation Committee until May 24, 2011. Mr. Bellamy serves as
Chairman of the Compensation Committee. The Board determined that, in fiscal 2011, each member of the
Compensation Committee was independent under the NYSE rules as currently in effect, was an outside director
as such term is defined with respect to Section 162(m) of the Internal Revenue Code and was a non-employee
director under Section 16(b) of the Securities Exchange Act of 1934. None of the Compensation Committee
members has ever served as an officer of the company.
How many times did the Compensation Committee meet during fiscal 2011?
The Compensation Committee held a total of five meetings during fiscal 2011, one of which was a telephonic
meeting. The Compensation Committee met in executive session without management present at each meeting in
fiscal 2011.
What is the Compensation Committee’s philosophy of executive compensation?
The Compensation Committee believes that the company’s executive compensation programs should support the
company’s objective of creating value for its stockholders by rewarding long-term stockholder value creation and
providing competitive pay opportunities to attract and retain highly qualified executive talent. Accordingly, the
Compensation Committee believes that executive officers and other key employees should have a significant
interest in the company’s stock performance, and incentive programs should link executive compensation to
stockholder value. The Compensation Committee strives to ensure that the company’s executive compensation
programs maintain direct links between executive pay and performance, including individual performance, the
company’s financial performance, and stockholder returns.
The Compensation Committee has sought to accomplish these goals by properly balancing the elements of the
executive compensation program (e.g., fixed versus incentive, short-term versus long-term, and cash versus
equity). A significant portion of individual compensation opportunity is directly dependent on the company’s
achievement of financial goals with an opportunity for significant rewards when those goals are exceeded. The
Compensation Committee believes that superior financial performance, on a sustained basis, is an effective
means of enhancing long-term stockholder return. Since there is no pre-established policy or formal target for the
allocation between cash and non-cash compensation and short-term and long-term compensation, the
Compensation Committee reviews and determines the appropriate level and mix of compensation to meet these
philosophical goals on an ongoing basis. The Compensation Committee favors stability in the executive
compensation structure, but supports modifications that reinforce the philosophy and objective described above.
The Compensation Committee also retained Cook & Co. to evaluate the risk inherent in the company’s executive
and non-executive compensation programs.
Did the Compensation Committee consider the results of the 2011 advisory vote on executive compensation?
On May 25, 2011, we held a stockholder advisory vote on the compensation of our named executive officers,
commonly referred to as a Say on Pay advisory vote. Our stockholders approved the compensation of our named
executive officers, with approximately 86% of stockholder votes cast in favor of our 2011 Say on Pay resolution.
Given this result, the Compensation Committee decided to retain our overall approach to executive
compensation. Moreover, in determining how often to hold a stockholder advisory vote on executive
compensation, the Board took into account our stockholders’ preference (approximately 90% of votes cast) for an
annual vote at the 2011 annual meeting of stockholders. Specifically, the Board determined that we will hold an
annual advisory stockholder vote on our named executive officer compensation until considering the results of
our next Say on Pay frequency vote.
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