Pottery Barn 2011 Annual Report Download - page 69

Note G: Earnings Per Share
The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings
per share computations:
Dollars and amounts in thousands, except per share amounts
Net
Earnings
Weighted
Average Shares
Earnings
Per Share
2011
Basic $236,931 104,352 $2.27
Effect of dilutive stock-based awards 2,230
Diluted $236,931 106,582 $2.22
2010
Basic $200,227 106,956 $1.87
Effect of dilutive stock-based awards 2,566
Diluted $200,227 109,522 $1.83
2009
Basic $ 77,442 105,763 $0.73
Effect of dilutive stock-based awards 1,610
Diluted $ 77,442 107,373 $0.72
Stock-based awards of 1,743,000, 1,488,000 and 2,684,000 shares in fiscal 2011, fiscal 2010 and fiscal 2009,
respectively, were not included in the computation of diluted earnings per share, as their inclusion would be anti-
dilutive.
Note H: Stock-Based Compensation
Equity Award Programs
Our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) provides for grants of incentive stock
options, nonqualified stock options, stock-settled stock appreciation rights (collectively, “option awards”),
restricted stock awards, restricted stock units, deferred stock awards (collectively, “stock awards”) and dividend
equivalents up to an aggregate of 25,759,903 shares. As of January 29, 2012, there were approximately 9,065,265
shares available for future grant. Awards may be granted under the Plan to officers, employees and
non-employee Board members of the company or any parent or subsidiary. Annual grants are limited to
1,000,000 shares covered by option awards and 400,000 shares covered by stock awards on a per person basis.
All grants of option awards made under the Plan have a maximum term of seven years. Incentive stock options
that may be issued to 10% stockholders, however, have a maximum term of five years. The exercise price of
these option awards is not less than 100% of the closing price of our stock on the day prior to the grant date or
not less than 110% of such closing price for an incentive stock option granted to a 10% stockholder. Option
awards granted to employees generally vest over a period of four to five years. Stock awards granted to
employees generally vest over a period of four years. Certain option awards, stock awards and other agreements
contain vesting acceleration clauses resulting from events including, but not limited to, retirement, merger or a
similar corporate event. Option and stock awards granted to non-employee Board members generally vest in one
year. Non-employee Board members automatically receive stock awards on the date of their initial election to the
Board and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve
as a non-employee Board member). Shares issued as a result of award exercises will be funded with the issuance
of new shares.
Stock-Based Compensation Expense
During fiscal 2011, fiscal 2010 and fiscal 2009, we recognized total stock-based compensation expense, as a
component of selling, general and administrative expenses, of $24,336,000, $26,630,000, and $24,989,000,
respectively. As of January 29, 2012, there was a remaining unamortized expense balance of $45,958,000 (net of
estimated forfeitures), which we expect to be recognized on a straight-line basis over an average remaining
service period of approximately three years.
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Form 10-K