Pottery Barn 2012 Annual Report Download - page 111

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PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
What is this proposal?
This is a proposal asking stockholders to approve, on an advisory basis, the compensation of our named
executive officers as disclosed in this Proxy Statement in accordance with the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010, or the “Dodd-Frank Act,” and the applicable SEC rules. This proposal is
commonly known as a “Say on Pay” proposal, and gives our stockholders the opportunity to express their views
on the compensation of our named executive officers.
Compensation Program and Philosophy
As described in detail under the headings “Information Concerning Executive Officers” and “Executive
Compensation,” our executive officer compensation program is designed to attract, retain and motivate highly
qualified personnel who are critical to our success while maintaining direct links between executive pay,
individual performance, the company’s financial performance and stockholder returns. The Compensation
Committee believes that our executive compensation programs should support the company’s objective of
creating value for its stockholders.
Accordingly, the Compensation Committee believes that executive officers should have a significant interest in
the company’s stock performance, and compensation programs should link executive compensation to
stockholder value. One of the ways that we have sought to accomplish these goals is by making a significant
portion of individual compensation directly dependent on the company’s achievement of financial goals, which
in turn enhances long-term stockholder return while encouraging executives to build an equity interest in the
company. In fiscal 2012, the Compensation Committee also retained Cook & Co. to identify and assess the risks
in the company’s compensation programs and policies.
Fiscal 2012 Compensation
To align our executive compensation packages with our executive compensation philosophy, the following
compensation actions were approved by the Compensation Committee for fiscal 2012:
•Adjustments to Base Salary: The base salaries of our named executive officers were increased for fiscal
2012 to reflect strong performance. Total cash compensation for our named executive officers remains
generally above the 75th percentile compared to our proxy peer group and relevant market data as
described under “Executive Compensation” in this Proxy Statement.
•Performance-Based Cash Bonus: Performance-based cash bonuses were paid for performance in fiscal
2012 as a result of the achievement of positive net cash flow by operating activities, exceeding earnings
per share goals set by the Compensation Committee for fiscal 2012, and outstanding leadership and
individual performance by our named executive officers in fiscal 2012.
•Performance-Based and Time-Based Equity: In fiscal 2012, our named executive officers were granted
restricted stock units containing both performance and service criteria. The restricted stock units granted
in fiscal 2012 vest on the second anniversary and the fourth anniversary of the grant date, in each case
only if positive net cash flow from operating activities was achieved in fiscal 2012.
In addition to the above summary, stockholders are urged to read the “Executive Compensation” section of this
Proxy Statement for details about our executive compensation programs, including information about the fiscal
2012 compensation of our named executive officers.
We are asking our stockholders to indicate their support for our named executive officer compensation as
described in this Proxy Statement. This vote is not intended to address any specific item of compensation, but
17
Proxy