Pottery Barn 2011 Annual Report Download - page 143

payable to the named executive officers under the Bonus Plan in amounts up to three times each executive’s base
salary as of the beginning of the fiscal year subject to the Compensation Committee’s discretion.
In making its decision regarding bonuses, the Compensation Committee evaluated company performance and the
individual performance of the named executive officers. The Chief Executive Officer made recommendations to
the Compensation Committee based on her subjective assessment of each executive’s performance relative to
their roles and areas of responsibility. In fiscal 2011, achievement of the secondary performance goal of earnings
per share was set at $2.19 per share. Actual performance for fiscal 2011 was $2.24 per share (excluding store
impairments and other extraordinary non-recurring charges, and including any amounts payable to covered
employees under the Bonus Plan). The Compensation Committee discussed the Chief Executive Officer’s
recommendations at the meeting and concurred that the results for fiscal 2011 were better than expected and the
named executive officers performed well, noting that performance results varied significantly. Therefore, the
Compensation Committee accepted the recommendation and awarded the named executive officers bonuses as
described below. The Compensation Committee, in recognition of Ms. Alber’s individual performance and
overall company performance, awarded her the payout amount described below. The actual fiscal 2011 bonus
amounts awarded to the named executive officers under the Bonus Plan were:
Named Executive Officer
Fiscal 2011
Bonus
Amount
Fiscal 2011
Bonus
(as a Percentage
of Base Salary)
Laura J. Alber ......................... $2,600,000 217%
Sharon L. McCollam .................... — —
Patrick J. Connolly ..................... $ 700,000 112%
Richard Harvey ........................ $ 270,000 40%
Sandra Stangl .......................... $1,200,000 160%
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 stockholder 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, with the exception of Mr. Connolly. Mr. Connolly’s target total direct
compensation (base salary, target bonus and equity awards) is over the 75th percentile because of the importance
of his role and performance to the company.
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
for retention and also result in less dilution than options and stock-settled stock appreciation rights. At the same
time, the Compensation Committee believes that stock-settled stock appreciation rights provide valuable
incentives to increase stockholder value.
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