Pottery Barn 2012 Annual Report Download - page 126

50% of the restricted stock units granted to the named executive officers vest on the second anniversary of the
award’s grant date, and the remaining 50% of the restricted stock units vest on the fourth anniversary of the
award’s grant date. For all named executive officers other than Ms. Whalen, the vesting of the restricted stock
units is also subject to the company achieving positive net cash flow provided by operating activities in fiscal
2012 (excluding any non-recurring charges) as provided on our consolidated statements of cash flows, with
adjustments to any evaluation of performance to exclude (i) any extraordinary non-recurring items, or (ii) the
effect of any changes in accounting principles affecting the company’s or a business unit’s reported results, and
subject to the named executive officer’s continued service to the company through such date.
The performance metric for Ms. Whalen’s grant is identical to the metric described above, except that the
performance requirement of positive net cash flow provided by operating activities is applicable to the last two
fiscal quarters of the company’s 2012 fiscal year only.
When are equity awards made to named executive officers?
In general, equity awards to named executive officers are approved at scheduled Compensation Committee
meetings. Executives do not have any role in selecting the grant date of equity awards. The grant date of equity
awards may be a date set in advance by the Compensation Committee or the date of the Compensation
Committee’s approval. The exercise price of stock options or stock-settled stock appreciation rights is always the
closing price of the company’s common stock on the trading day prior to the grant date.
In general, equity awards to named executive officers are determined during the Compensation Committee’s
meeting held during the first quarter of the fiscal year. The Compensation Committee also makes equity awards
at other times during the year in connection with promotions, assumptions of additional responsibilities and other
considerations, such as special retention or incentive concerns, including, for example, the July 2012 restricted
stock unit grant made to Ms. Whalen. Neither the Compensation Committee nor the Incentive Award Committee
times equity grants to take advantage of anticipated or actual changes in the price of our common stock or grant
equity in anticipation of the release of material non-public information regarding the company.
Does the company have a stock ownership policy for its executive officers?
Yes, beginning in fiscal 2011, the Compensation Committee approved an Executive Share Ownership Policy for
all executives at the level of Executive Vice President and above and all executives who are required to file
reports with the U.S. Securities and Exchange Commission, or SEC, under Section 16(a) of the Securities
Exchange Act of 1934. The Compensation Committee believes that an Executive Share Ownership Policy
supports the company’s objective of creating value for its stockholders by aligning the executives’ interests
directly with those of the company’s stockholders.
Under the Executive Share Ownership Policy, in fiscal 2012, the Chief Executive Officer was expected to
accumulate and hold a number of shares of the company’s common stock equal to that number of shares with a
value equal to three times annual base salary and to maintain this minimum amount of stock ownership
throughout employment. In March 2013, the Compensation Committee approved an amendment to the Executive
Share Ownership Policy with respect to the Chief Executive Officer to increase the required ownership from
three times to five times annual base salary. The company’s other executives are expected to accumulate and
hold a number of shares of the company’s common stock equal to that number of shares with a value equal to one
times annual base salary and to maintain this minimum amount of stock ownership throughout employment.
The following equity holdings qualify toward satisfaction of the guidelines listed above: shares directly owned
by the executive or his or her immediate family members; shares held in trust, limited partnerships, or similar
entities for the benefit of the executive or his or her immediate family members; and shares held in Williams-
Sonoma Inc.’s qualified and non-qualified retirement plans, including shares held in the Williams-Sonoma, Inc.
401(k) Plan. Unexercised stock appreciation rights, unexercised stock options and unvested restricted stock units
or other full-value awards do not count towards satisfying the guidelines listed above.
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