Pottery Barn 2012 Annual Report Download - page 103

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Separating the positions of Chief Executive Officer and Chairman of the Board maximizes the Board’s
independence and aligns our leadership structure with current trends in corporate governance best practices. Our
Chief Executive Officer is responsible for day-to-day leadership and for setting the strategic direction of the
company, while the Chairman of the Board provides independent oversight and advice to our management team,
and presides over Board meetings.
Do we have a Lead Independent Director?
No. Our Corporate Governance Guidelines provide that in the event that the Chairman of the Board is not an
independent director, the Board shall elect a Lead Independent Director. As Adrian D.P. Bellamy, an
independent director, currently serves as Chairman of the Board, we have not appointed a separate Lead
Independent Director.
What is the Board’s role in overseeing the risk management of the company?
The Board actively manages the company’s risk oversight process and receives regular reports from management
on areas of material risk to the company, including operational, financial, legal and regulatory risks. Our Board
committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit and
Finance Committee assists the Board with its oversight of the company’s major financial risk exposures.
Additionally, in accordance with NYSE requirements, the Audit and Finance Committee reviews with
management the company’s major financial risk exposures and the steps management has taken to monitor and
control such exposures, including the company’s risk assessment and risk management policies. The
Compensation Committee assists the Board with its oversight of risks arising from our compensation policies and
programs and assesses on an annual basis potential material risk to the company from its compensation policies
and programs, including incentive and commission plans at all levels. The Nominations and Corporate
Governance Committee assists the Board with its oversight of risks associated with Board organization, Board
independence, succession planning, and corporate governance. While each committee is responsible for
evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed
through committee reports about such risks.
Did the company evaluate risks relating to its executive and non-executive compensation programs?
Our Compensation Committee is responsible for monitoring our compensation policies and programs relative to
all our employees, including non-executive officers, for potential risks that are reasonably likely to have a
material adverse effect on our company. In performing its duties, the Compensation Committee regularly reviews
and discusses potential risks that could arise from our employee compensation plans and programs with our
management and the Compensation Committee’s independent compensation consultant. The Compensation
Committee is responsible for reporting to the Board any material risks associated with our compensation plans
and programs, including recommended actions to mitigate such risks.
For fiscal 2012, the Compensation Committee retained an independent consultant, Frederic W. Cook & Co. or
Cook & Co., to identify and assess the risk inherent in the company’s compensation programs and
policies. Accordingly, Cook & Co. evaluated the company’s executive and non-executive compensation
programs for such risk and the mechanisms in our programs designed to mitigate these risks. Among other
things, Cook & Co. reviewed our pay philosophy, forms of incentives, performance metrics, balance of cash and
equity compensation, balance of long-term and short-term incentive periods, compensation governance practices,
and equity grant administration practices. Based on the assessment, Cook & Co. concluded that our
compensation programs and policies do not create risks that are reasonably likely to have a material adverse
effect on our company.
Does the Board hold executive sessions?
Yes. It is the Board’s policy to have a separate meeting time for independent directors, typically during the
regularly scheduled Board meetings. During fiscal 2012, executive sessions were led by our Chairman of the
Board, Mr. Bellamy.
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