Pottery Barn 2012 Annual Report Download - page 66

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
2012 (53 Weeks)
Basic $256,730 99,266 $2.59
Effect of dilutive stock-based awards 1,785
Diluted $256,730 101,051 $2.54
2011 (52 Weeks)
Basic $236,931 104,352 $2.27
Effect of dilutive stock-based awards 2,230
Diluted $236,931 106,582 $2.22
2010 (52 Weeks)
Basic $200,227 106,956 $1.87
Effect of dilutive stock-based awards 2,566
Diluted $200,227 109,522 $1.83
Stock-based awards of 1,313,000, 1,743,000 and 1,488,000 shares in fiscal 2012, fiscal 2011 and fiscal 2010,
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 February 3, 2013, there were approximately 7,563,315
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. 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. Option awards
and 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 2012, fiscal 2011 and fiscal 2010, we recognized total stock-based compensation expense, as a
component of selling, general and administrative expenses, of $31,042,000 (including stock-based compensation
expense of $3,019,000 associated with the retirement of our former Executive Vice President, Chief Operating
and Chief Financial Officer), $24,336,000, and $26,630,000, respectively. As of February 3, 2013, there was
$48,351,000 of unrecognized stock-based compensation expense (net of estimated forfeitures), which we expect
to recognize on a straight-line basis over a weighted average remaining service period of approximately two
years. At each reporting period, all compensation expense attributable to vested awards has been fully
recognized.
52