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2 013
ANNUAL
REPORT
Annual Meeting of Stockholders
2013 ANNUAL REPORT

Table of contents

  • Page 1
    2013 ANNUAL REPORT Annual Meeting of Stockholders

  • Page 2

  • Page 3
    LETTERS TO STOCKHOLDERS 2013 ANNUAL REPORT POTTERY BARN POTTERY BARN KIDS PBTEEN WILLIAMS-SONOMA WILLIAMS-SONOMA HOME WEST ELM MARK AND GRAHAM REJUVENATION

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  • Page 5
    ...- Pottery Barn, Pottery Barn Kids, PBteen, Williams-Sonoma, West Elm, Rejuvenation and Mark and Graham - across our retail and e-commerce channels, in conjunction with the quality of our associates and executive leadership, enabled our team to drive record operating results. Our strategic plans call...

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  • Page 7
    ... Barn, Pottery Barn Kids, PBteen, Williams-Sonoma, West Elm, Rejuvenation, and Mark and Graham. Each brand's unique design aesthetic enables our company to address a broad spectrum of our customers' personal styles, needs and life stages. Our brands offer innovative, exclusive products that help...

  • Page 8
    ... for us. Our direct business continues to be strong and is providing the customer with exceptional products, including the new and expanded Williams-Sonoma Home line. We look forward to continuing to execute our key strategies in 2014 in support of the brand's future growth and success. West Elm had...

  • Page 9
    ..., Chief Executive Officer and Director Stockholders Letters These letters contain forward-looking statements. Please see the section titled "Forward-Looking Statements" on page 1 of our Annual Report on Form 10-K for the fiscal year ended February 2, 2014, which is part of this Annual Report to...

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    FORM 10 -K 2013 ANNUAL REPORT POTTERY BARN POTTERY BARN KIDS PBTEEN WILLIAMS-SONOMA WILLIAMS-SONOMA HOME WEST ELM MARK AND GRAHAM REJUVENATION

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    ... 10-K WILLIAMS-SONOMA, INC. (Exact name of registrant as specified in its charter) Delaware 94-2203880 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3250 Van Ness Avenue, San Francisco, CA 94109 (Address of principal executive offices) (Zip Code...

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  • Page 15
    ... product lines and bring in new customers; statements related to our belief that our direct-mail catalogs and the Internet act as a cost-efficient means of testing market acceptance of new products and new brands; statements related to our marketing efforts; statements related to our global business...

  • Page 16
    ... in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 17
    ..., quality, style and value. Pottery Barn stores, website, and catalogs are specially designed to make shopping an enjoyable experience, with inspirational lifestyle displays dedicated to every space in the home. Pottery Barn products include furniture, bedding, bathroom accessories, rugs, curtains...

  • Page 18
    ..., Pottery Barn Kids, PBteen, West Elm, Rejuvenation and Mark and Graham) which sell our products through our e-commerce websites and direct-mail catalogs. We offer shipping from many of our brands to countries worldwide, while our catalogs reach customers across the U.S., Australia and the United...

  • Page 19
    ... retail business complements the direct-to-customer business by building brand awareness and attracting new customers to our brands. Our retail stores serve as billboards for our brands, which we believe inspires our customers to shop online and through our catalogs. Detailed financial information...

  • Page 20
    ... full-time. During the fiscal 2013 holiday selling season, we hired approximately 9,100 temporary employees primarily in our retail stores, customer care centers and distribution centers. AVAILABLE INFORMATION We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on...

  • Page 21
    ... with customer demand. Much of our inventory is sourced from vendors located outside of the United States. Thus, we usually must order merchandise, and enter into contracts for the purchase and manufacture of such merchandise, up to twelve months in advance of the applicable selling season...

  • Page 22
    ... the last several years and continues to be a significant part of our sales success. The success of our e-commerce business depends, in part, on third parties and factors over which we have limited control. We must successfully respond to changing consumer preferences and buying trends relating to...

  • Page 23
    ..., unless and until alternative supply arrangements are secured. We may not be able to develop relationships with new third party agents or vendors, and products from alternative sources, if any, may be of a lesser quality and/or more expensive than those we currently purchase. In addition, we are...

  • Page 24
    ... has been a small part of our business, we plan to continue to increase the number of stores we open both directly and through our franchise arrangements. Our ability to expand globally is dependent on numerous factors, including the demand for our products in new global markets and the cost of real...

  • Page 25
    ..., or our employees or third party agents, violates such laws, we could become subject to sanctions or other penalties that could negatively affect our reputation, business and operating results. A number of factors that affect our ability to successfully open new stores or close existing stores are...

  • Page 26
    ... with other e-commerce websites, other direct mail catalogs and other retail stores that market lines of merchandise similar to ours. We compete with national, regional and local businesses that utilize a similar retail store strategy, as well as traditional furniture stores, department stores and...

  • Page 27
    .... These problems could result in a reduction in sales as well as increased selling, general and administrative expenses. In addition, we face the risk that we cannot hire enough qualified employees to support our direct-to-customer operations, or that there will be a disruption in the workforce...

  • Page 28
    ...the timing of our releases of new merchandise and promotional events, the success of marketing programs, the cannibalization of existing store sales by our new stores, changes in catalog circulation and in our direct-to-customer business and fluctuations in foreign exchange rates. Among other things...

  • Page 29
    ... to sales through our retail and catalog channels, we seek to attract as many new customers as possible to our e-commerce websites. We continually analyze the business results of our channels and the relationships among the channels in an effort to find opportunities to build incremental sales. If...

  • Page 30
    ... selling seasons, and incur other expenses to support new brands and brand extensions and the growth of our existing brands, including the opening of new stores. Alternatively, if we are unable to make substantial adjustments to our cost structure during times of uncertainty, such as the 2008-2009...

  • Page 31
    ... our business as well as increased costs. For example, we utilize outside vendors for such things as payroll processing, email marketing and various distribution center services. Accordingly, we are subject to the risks associated with their ability to successfully provide the necessary services to...

  • Page 32
    ... year. In anticipation of increased holiday sales activity, we incur certain significant incremental expenses prior to and during peak selling seasons, particularly October through January, including fixed catalog production and mailing costs and the costs associated with hiring a substantial number...

  • Page 33
    ... Commission or the New York Stock Exchange. In addition, our internal controls may not prevent or detect all errors and fraud on a timely basis, if at all. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable assurance that...

  • Page 34
    ... 2, 2014: Location Distribution Centers Olive Branch, Mississippi South Brunswick, New Jersey City of Industry, California Memphis, Tennessee1 Claremont, North Carolina Other Corporate Facilities Brisbane, California New York City, New York Portland, Oregon San Francisco, California Customer Care...

  • Page 35
    ... is not included in the occupied square footage reported above. Owned Properties The following table summarizes the location and size of our owned facilities occupied as of February 2, 2014: Location San Francisco, California Rocklin, California Other Occupied Square Footage (Approximate) 412,000 42...

  • Page 36
    PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol WSM. The following table sets forth the high and low selling prices...

  • Page 37
    ... lines represent monthly index levels derived from compounded daily returns that include all dividends. The indices are re-weighted daily, using the market capitalization on the previous trading day. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading...

  • Page 38
    ...under our current $750,000,000 stock repurchase program: Maximum Total Number of Dollar Value of Average Shares Purchased as Shares That May Price Paid Part of a Publicly Yet Be Purchased Per Share Announced Program Under the Program Fiscal period Total Number of Shares Purchased November 4, 2013...

  • Page 39
    ...by operating activities Capital expenditures Long-term debt and other long-term obligations Stockholders' equity Stockholders' equity per share (book value) Return on equity Annual dividends declared per share Direct-to-Customer Net Revenues Direct-to-customer net revenue growth (decline) E-commerce...

  • Page 40
    ... the Williams-Sonoma Home collection, drove these results. In Pottery Barn Kids, comparable brand revenues increased 7.8% in fiscal 2013 compared to fiscal 2012. We saw strength in our seasonal and gifting businesses as well as decorative accessories, furniture and textiles. In West Elm, comparable...

  • Page 41
    ... Pottery Barn Williams-Sonoma Pottery Barn Kids West Elm PBteen Other Total Comparable Brand Revenue Comparable brand revenue includes retail comparable store sales and direct-to-customer sales, as well as shipping fees, sales returns and other discounts associated with current period sales. Outlet...

  • Page 42
    ... those stores temporarily closed and subsequently reopened due to square footage expansion, store modification or relocation. Included in the fiscal 2013 numbers above are 5 stores in Australia (2 West Elm, 1 Williams-Sonoma, 1 Pottery Barn and 1 Pottery Barn Kids) and 1 West Elm store in the United...

  • Page 43
    ...10,000 Williams-Sonoma Pottery Barn Pottery Barn Kids West Elm Rejuvenation Total Retail net revenues in fiscal 2013 increased by $99,383,000, or 4.6%, compared to fiscal 2012. This increase was primarily driven by Pottery Barn, West Elm and our international franchise operations, partially offset...

  • Page 44
    ... costs associated with our retail stores, distribution warehouses, customer care centers, supply chain operations (buying, receiving and inspection) and corporate administrative functions. These costs include employment, advertising, third party credit card processing and other general expenses...

  • Page 45
    ... retail channel, selling, general and administrative expenses as a percentage of net revenues increased in fiscal 2012 compared to fiscal 2011. This increase was primarily driven by higher employment costs. INCOME TAXES Our effective income tax rate was 38.4% for fiscal 2013, 37.4% for fiscal 2012...

  • Page 46
    ... within Part II, Item 5 of this Annual Report on Form 10-K for further information. Contractual Obligations The following table provides summary information concerning our future contractual obligations as of February 2, 2014: Payments Due by Period1 Dollars in thousands Operating leases2 Purchase...

  • Page 47
    ... for excess quantities and obsolescence, are stated at the lower of cost (weighted average method) or market. To determine if the value of our inventory should be marked down below cost, we consider current and anticipated demand, customer preferences and age of the merchandise. The significant...

  • Page 48
    ... in operations within our distribution centers, the mix of our inventory (which ranges from large furniture to small tabletop items) and execution against loss prevention initiatives in our stores, distribution centers, off-site storage locations, and with our third party transportation providers...

  • Page 49
    ... accrued salaries, benefits and other within our Consolidated Balance Sheets. Stock-Based Compensation We account for stock-based compensation arrangements by measuring and recognizing compensation expense in our Consolidated Financial Statements for all stock-based awards using a fair value based...

  • Page 50
    ... accounts and time deposits, are stated at cost and approximate their fair values. Foreign Currency Risks We purchase a significant amount of inventory from vendors outside of the U.S. in transactions that are denominated in U.S. dollars. Approximately 2% of our international purchase transactions...

  • Page 51
    ...Williams-Sonoma, Inc. Consolidated Statements of Earnings Fiscal Year Ended Dollars and shares in thousands, except per share amounts Net revenues Cost of goods sold Gross margin Selling, general and administrative expenses Operating income Interest (income) expense, net Earnings before income taxes...

  • Page 52
    Williams-Sonoma, Inc. Consolidated Balance Sheets Dollars and shares in thousands, except per share amounts ASSETS Current assets Cash and cash equivalents Restricted cash Accounts receivable, net Merchandise inventories, net Prepaid catalog expenses Prepaid expenses Deferred income taxes, net Other...

  • Page 53
    ... in fair value of derivative instruments Exercise of stock-based awards and related tax effect Conversion/release of stock-based awards Repurchases of common stock Stock-based compensation expense Dividends declared Balance at February 2, 2014 See Notes to Consolidated Financial Statements. 104...

  • Page 54
    ... in: Accounts receivable Merchandise inventories Prepaid catalog expenses Prepaid expenses and other assets Accounts payable Accrued salaries, benefits and other current and long-term liabilities Customer deposits Deferred rent and lease incentives Income taxes payable Net cash provided by operating...

  • Page 55
    ... - Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Williams-Sonoma Home, Rejuvenation, and Mark and Graham - are marketed through e-commerce websites, direct mail catalogs and 585 stores. We operate in the U.S., Canada, Australia and the United Kingdom, and ship our products to...

  • Page 56
    ... in operations within our distribution centers, the mix of our inventory (which ranges from large furniture to small tabletop items) and execution against loss prevention initiatives in our stores, distribution centers, off-site storage locations, and with our third party transportation providers...

  • Page 57
    ...within selling, general and administrative expenses. Goodwill Goodwill is not amortized, but rather is subject to impairment testing annually (on the first day of the fourth quarter), or between annual tests whenever events or changes in circumstances indicate that the fair value of a reporting unit...

  • Page 58
    ... fees charged to the customer are recognized as revenue at the time the products are delivered to the customer. Revenues are presented net of any taxes collected from customers and remitted to governmental authorities. Sales Returns Reserve Our customers may return purchased items for an exchange...

  • Page 59
    ... stores, distribution warehouses, customer care centers, supply chain operations (buying, receiving and inspection) and corporate administrative functions. These costs include employment, advertising, third party credit card processing and other general expenses. Stock-Based Compensation We account...

  • Page 60
    ...282,905) $ 849,293 $ 812,037 2 Corporate systems projects in progress as of February 2, 2014 and February 3, 2013 includes approximately $40.1 million and $39.7 million, respectively, for the portion of our new inventory and order management system currently under development and not ready for its...

  • Page 61
    ... letters of credit issued under the facilities is January 26, 2015. Note D: Income Taxes The components of earnings before income taxes, by tax jurisdiction, are as follows: Fiscal Year Ended Dollars in thousands United States Foreign Total earnings before income taxes The provision for income taxes...

  • Page 62
    ... income taxes at the statutory rate State income tax rate Other Effective tax rate Significant components of our deferred tax accounts are as follows: Dollars in thousands Current: Compensation Merchandise inventories Accrued liabilities Customer deposits Prepaid catalog expenses Other Total current...

  • Page 63
    ... state, local and foreign income tax examinations have been concluded through fiscal 2001. Note E: Accounting for Leases Operating Leases We lease store locations, distribution centers, customer care centers, corporate facilities and certain equipment for original terms ranging generally from...

  • Page 64
    ...,000 and $2,516,000 plus applicable taxes, insurance and maintenance expenses in fiscal 2013, fiscal 2012 and fiscal 2011, respectively. As of February 2, 2014, Partnership 2 qualifies as a variable interest entity and is consolidated by us due to its related party relationship and our obligation to...

  • Page 65
    ...new shares. Stock-Based Compensation Expense We measure and record stock-based compensation expense for all employee stock-based awards using a fair value method. During fiscal 2013, fiscal 2012 and fiscal 2011, we recognized total stock-based compensation expense, as a component of selling, general...

  • Page 66
    ... excess of the market value of our common stock on the last business day of the fiscal year (or $54.52) over the conversion price. The following table summarizes additional information about stock-settled stock appreciation rights: Weighted average grant date fair value per share of awards granted...

  • Page 67
    ... the last business day of the fiscal year (or $54.52). Form 10-K The following table summarizes additional information about restricted stock units: Fiscal 2013 Fiscal 2012 Fiscal 2011 $ 53.59 $ 37.94 $ 39.27 $24,568,000 $16,730,000 $12,865,000 Weighted average grant date fair value per share of...

  • Page 68
    ... in fiscal 2013, fiscal 2012 and fiscal 2011, respectively. We also have a nonqualified executive deferred compensation plan that provides supplemental retirement income benefits for a select group of management and other certain highly compensated employees. In January 2010 all employee salary and...

  • Page 69
    ... reportable segments, direct-to-customer and retail. The direct-to-customer segment has seven merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Rejuvenation and Mark and Graham) which sell our products through our e-commerce websites and direct-mail catalogs...

  • Page 70
    Segment Information Dollars in thousands 2013 (52 Weeks) Net revenues1 Depreciation and amortization expense Operating income Assets2 Capital expenditures 2012 (53 Weeks) Net revenues1 Depreciation and amortization expense Operating income Assets2 Capital expenditures 2011 (52 Weeks) Net revenues1 ...

  • Page 71
    ...OCI to cost of goods sold over the next 12 months. In addition, as of February 2, 2014, we had non-designated foreign currency forward contracts in place to sell Australian dollars and buy U.S. dollars totaling $5,500,000. These contracts allow us to reduce the exchange rate risk associated with our...

  • Page 72
    ... sold AOCI ending balance amount of gain (loss) Note N: Fair Value Measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We determine the fair value of financial...

  • Page 73
    ... internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide...

  • Page 74
    ... position of Williams-Sonoma, Inc. and subsidiaries as of February 2, 2014 and February 3, 2013, and the results of their operations and their cash flows for each of the three years in the period ended February 2, 2014, in conformity with accounting principles generally accepted in the United States...

  • Page 75
    ... in conditions, the effectiveness of any internal control may vary over time. Our management assessed the effectiveness of the company's internal control over financial reporting as of February 2, 2014. In making this assessment, we used the criteria set forth by the Committee of Sponsoring 61

  • Page 76
    ..., our management concluded that, as of February 2, 2014, our internal control over financial reporting is effective. Our independent registered public accounting firm audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and the Company's internal control over...

  • Page 77
    ... "Corporate Governance-Corporate Governance Guidelines and Code of Business Conduct and Ethics," "Corporate Governance-Audit and Finance Committee" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION Information required by this Item...

  • Page 78
    ... Statements of Williams-Sonoma, Inc. and subsidiaries and the related notes are filed as part of this report pursuant to Item 7: Consolidated Statements of Earnings for the fiscal years ended February 2, 2014, February 3, 2013 and January 29, 2012 Consolidated Statements of Comprehensive Income...

  • Page 79
    ...the undersigned, thereunto duly authorized. WILLIAMS-SONOMA, INC. Date: April 3, 2014 By /s/ LAURA J. ALBER Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant...

  • Page 80
    ... HOLDERS, INCLUDING INDENTURES 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K as filed with the Commission on May 25, 2011, File No. 001-14077) FINANCING AGREEMENTS 10.1 Fifth Amended and Restated Credit Agreement, dated...

  • Page 81
    ... the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2009 as filed with the Commission on April 2, 2009, File No. 001-14077) Form of Williams-Sonoma, Inc. 2001 Long-Term Incentive Plan Restricted Stock Unit Award Agreement for Grants to Non-Employee Directors (incorporated...

  • Page 82
    ...with the Commission on April 2, 2009, File No. 001-14077) Williams-Sonoma, Inc. Amended and Restated Executive Deferred Compensation Plan (incorporated by reference to Exhibit 10.42 to the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2013 as filed with the Commission on...

  • Page 83
    ... 10.43 to the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2002 as filed with the Commission on April 29, 2002, File No. 001-14077) Memorandum of Understanding between the Company and the State of Mississippi, Mississippi Business Finance Corporation, Desoto County...

  • Page 84
    ..., 2011, File No. 001-14077) 2012 EVP Level Management Retention Plan (incorporated by reference to Exhibit 10.63 to the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2013 as filed with the Commission on April 4, 2013, File No. 001-14077) Separation Agreement and General...

  • Page 85
    ... DESCRIPTION Consent of Independent Registered Public Accounting Firm Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the...

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    NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS - PROXY STATEMENT 2013 ANNUAL REPORT POTTERY BARN POTTERY BARN KIDS PBTEEN WILLIAMS-SONOMA WILLIAMS-SONOMA HOME WEST ELM MARK AND GRAHAM REJUVENATION

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  • Page 89
    ... Daylight Time Williams-Sonoma, Inc. 3250 Van Ness Avenue San Francisco, California 94109 1) 2) 3) The election of our Board of Directors; An advisory vote to approve executive compensation; The ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting...

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  • Page 91
    ... PUBLIC ACCOUNTING FIRM ...AUDIT AND FINANCE COMMITTEE REPORT ...INFORMATION CONCERNING EXECUTIVE OFFICERS ...EXECUTIVE COMPENSATION ...Compensation Discussion and Analysis ...Compensation Committee Report ...Summary Compensation Table for Fiscal 2013, Fiscal 2012 and Fiscal 2011 ...Other Annual...

  • Page 92
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  • Page 93
    3250 Van Ness Avenue San Francisco, California 94109 www.williams-sonomainc.com PROXY STATEMENT FOR THE 2014 ANNUAL MEETING OF STOCKHOLDERS GENERAL INFORMATION Our Board of Directors is soliciting your proxy to vote your shares at our 2014 Annual Meeting of Stockholders, to be held on Thursday, May...

  • Page 94
    ... record at the close of business on March 31, 2014, the record date, are entitled to receive notice of and to vote at the Annual Meeting. Each holder of our common stock will be entitled to one vote for each share of our common stock owned as of the record date. As of the record date, there were 94...

  • Page 95
    ... LLP as our independent registered public accounting firm for the fiscal year ending February 1, 2015. What are the directions to attend the Annual Meeting and vote in person? The following are directions to attend the Annual Meeting from various locations around the San Francisco Bay Area: From the...

  • Page 96
    ... Board within the authorized range. How many votes are needed to approve Proposals 2 and 3? Proposals 2 and 3 require the affirmative vote of holders of a majority of voting power entitled to vote thereon, present in person or represented by proxy, at the Annual Meeting. Proxy cards marked "abstain...

  • Page 97
    ... stockholder would like a separate Notice or Annual Report and Proxy Statement by phone at 415-421-7900 or by mail at the following mailing address: Williams-Sonoma, Inc., Attention: Annual Report Administrator, 3250 Van Ness Avenue, San Francisco, California 94109. If we receive such notification...

  • Page 98
    ... 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...

  • Page 99
    ...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...

  • Page 100
    ...steps management has taken to monitor and control such exposures. • Reviews and determines our executive officers' compensation; • Reviews and determines our general compensation goals and guidelines for our employees; • Administers certain of our compensation plans and provides assistance and...

  • Page 101
    ...rules. Compensation Committee The Board has determined that each member of the Compensation Committee is independent under the NYSE rules, as currently in effect, is an outside director as such term is defined with respect to Section 162(m) of the Internal Revenue Code and is a non-employee director...

  • Page 102
    ... for election to the Board shall direct the recommendation in writing to Williams-Sonoma, Inc., Attention: Corporate Secretary, 3250 Van Ness Avenue, San Francisco, California 94109. The recommendation must include: (i) the candidate's name, home and business contact information; (ii) detailed...

  • Page 103
    ..., by the closing price of our common stock on the trading day prior to the grant date, rounding down to the nearest whole share. Directors also received dividend equivalent payments with respect to outstanding restricted stock unit awards. Value of Annual Compensation Cash Compensation for Initial...

  • Page 104
    ... annual equity grant as identified in the preceding table, by the closing price of our common stock on the trading day prior to the grant date, rounding down to the nearest whole share. (2) Represents the fair market value associated with a restricted stock unit award of 5,585 shares of common stock...

  • Page 105
    ... Williams-Sonoma, Inc., Attention: Corporate Secretary, 3250 Van Ness Avenue, San Francisco, California 94109. To date, there have been no waivers that apply to our Chief Executive Officer, Chief Financial Officer, Controller or persons performing similar functions under our Code of Business Conduct...

  • Page 106
    ..., CafePress.com (customized and personalized products) since 2007 • Extensive retail industry, merchandising and operational experience, including 19 years of experience with the company • Implemented successful growth strategies, including Pottery Barn Kids, Pottery Barn Bed + Bath and PBteen...

  • Page 107
    ... (non-food discount retailer) since 2013 • Chairman and Director, The Body Shop International plc (personal care products), 2002 - 2008 • Extensive experience as both an executive and director in the retail industry, including 12 years as Chairman and Chief Executive Officer of DFS Group Ltd...

  • Page 108
    ... officer of two large public companies • Deep understanding of accounting principles and financial reporting rules and regulations, including how internal controls are effectively managed within organizations Anthony A. Greener ...Age 73 2007 • Extensive experience as both an executive...

  • Page 109
    ... the company since its Banking, J.P. Morgan (investment initial public offering in 1983 banking) since 2010 • Senior Managing Director, GSC Group (investment advisor), 2006 - 2009 (GSC Group filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in August 2010) • Advisory Board...

  • Page 110
    ...attend meetings of the Board, but do not vote on Board matters. The following table sets forth information, as of March 31, 2014, with respect to our Director Emeritus. Director Emeritus Since Director Emeritus Positions with the Company and Business Experience Charles E. Williams ...Age 98 2003...

  • Page 111
    ... per share goal, the achievement of positive net cash from operating activities, and outstanding leadership and individual performance by our Named Executive Officers. • Performance-Based and Time-Based Equity: In fiscal 2013, our Named Executive Officers were granted restricted stock units with...

  • Page 112
    ...Proposal 2 if you want your broker to vote your shares on the matter. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC. 20

  • Page 113
    ... statements for the last 34 years. Based in part upon information provided by Deloitte, the Audit and Finance Committee determined that Deloitte is independent under applicable independence standards. The Audit and Finance Committee has reviewed and discussed the fees billed by Deloitte for services...

  • Page 114
    ... registered public accounting firm if this proposal is not approved. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING FEBRUARY 1, 2015. 22

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    ... of Deloitte's current or former audit team is or has been employed by the company in a financial reporting oversight role; (ii) our review of audit and non-audit fees; and (iii) the written communications from Deloitte as required by Public Company Accounting Oversight Board (PCAOB) requirements...

  • Page 116
    ... its independence; and Based on the review and discussions referred to in items (1) through (3) above, the Audit and Finance Committee recommended to the Board that the audited financial statements be included in the company's Annual Report on Form 10-K for fiscal 2013 for filing with the SEC. AUDIT...

  • Page 117
    ... EXECUTIVE OFFICERS The following table provides certain information about our executive officers as of March 31, 2014. Our executive officers are appointed by and serve at the pleasure of our Board, subject to rights, if any, under employment contracts. Name Position with the Company and Business...

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    ...Named Executive Officers in light of our fiscal 2013 performance, as described below. • 87% of the total target compensation of our Chief Executive Officer was based on company performance. • The stock ownership guideline for the Chief Executive Officer was increased from three times base salary...

  • Page 119
    ... in fiscal 2012. Our exclusive products, great design, lifestyle positioning, and accessible price points are allowing us to lead the market. • Global expansion and new business development - We entered Australia and the United Kingdom with company-owned stores and fully enabled e-commerce and...

  • Page 120
    ... sustainable returns and increase stockholder value. We have built a portfolio of brands that provide continuing opportunities for growth and market share gains. Our Compensation Program Aligns and Advances Executive and Stockholder Interests Our compensation program is constructed to successfully...

  • Page 121
    ... rewards. Williams-Sonoma, Inc. EPS and TSR FY09-FY13 EPS TSR $622 $429 $247 $1.83 $0.72 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 $2.22 $2.54 $2.82 $474 $770 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Williams-Sonoma, Inc., the NYSE Composite Index, S&P Retailing, and Proxy Peer Group...

  • Page 122
    ... fiscal 2013 remained unchanged from fiscal 2012, with the exception of the Chief Financial Officer's target, which was increased in light of increased experience and responsibility. • Long-Term Incentives. We granted restricted stock units, or RSUs, to our Named Executive Officers with a one-year...

  • Page 123
    ... to five times base salary. • We review our share usage regularly. We regularly review and evaluate our share dilution, burn rate and overhang levels with respect to equity compensation plans and their impact on stockholders. • We provide limited benefits. Our Named Executive Officers are not...

  • Page 124
    ... to her own compensation). Management provides the Compensation Committee with analyses and recommendations developed internally with the Chief Executive Officer. The Compensation Committee reviews these materials with its compensation consultant and considers the consultant's advice as part of its...

  • Page 125
    ..., among other things The company's executive compensation program is designed to encourage behaviors aligned with the longterm interests of stockholders; There is appropriate balance in short-term versus long-term pay, cash versus equity, recognition of corporate versus business unit performance...

  • Page 126
    ... for revenue, market capitalization and number of employees. Components of Our Compensation Program, 2013 Decisions and the Decision-Making Process Our compensation program for our Named Executive Officers is made up of the four components listed below, which are designed to create long-term value...

  • Page 127
    ...time in fiscal 2013. Annual Bonus Cash bonuses are awarded to our Named Executive Officers under the 2001 Incentive Bonus Plan, the Bonus Plan, and paid only when established company and business objectives are met or exceeded. At the beginning of each fiscal year, the Compensation Committee reviews...

  • Page 128
    ... positioned. The target bonuses as a percentage of base salary under the Bonus Plan for fiscal 2012 and fiscal 2013 are listed below for each Named Executive Officer. Fiscal 2012 Target Bonus (as a Percentage of Base Salary) Fiscal 2013 Target Bonus (as a Percentage of Base Salary) Named Executive...

  • Page 129
    ... and new business development, investing in our supply chain to reduce cost and improve service, and investing in the technologies and infrastructure underlying all of these initiatives. The Compensation Committee also reviewed our Chief Executive Officer's performance against our core values, in...

  • Page 130
    ... offered to each of the Named Executive Officers is detailed in the Other Annual Compensation from Summary Compensation Table on page 42. As noted previously, the company does not provide any income tax gross-ups to Named Executive Officers on any benefits. Additional Information Executive Stock...

  • Page 131
    ... Retention Agreement or our 2012 EVP Level Management Retention Plan, other than our Chief Executive Officer, who is entitled to such benefits under an individual arrangement. None of our Named Executive Officers are provided with any type of golden parachute excise tax gross-up. We believe...

  • Page 132
    ... this review and discussion with management, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the company's Annual Report on Form 10-K for fiscal 2013. COMPENSATION COMMITTEE OF THE BOARD OF...

  • Page 133
    ... of the timing of paychecks issued in a given fiscal year. (2) Based on the fair market value of awards granted in fiscal 2013, fiscal 2012, and fiscal 2011, which is calculated by multiplying the closing price of our stock on the trading day prior to the grant date by the number of units granted...

  • Page 134
    ... each fiscal year. (2) Represents company matching contributions under our 401(k) plan. Similar to our other full-time employees, Named Executive Officers are eligible to participate in our 401(k) plan and receive matching contributions from the company of up to $7,650 during calendar 2013. Matching...

  • Page 135
    ... Executive Officers during fiscal 2013. All Other Stock Awards; Number of Shares of Stock or Units (#)(3) Grant Date Compensation Committee Approval Date Threshold ($) Estimated Future Payouts Under Non-Equity Incentive Plan Awards Target Maximum ($)(1)(2) ($)(2) Grant Date Fair Value of Stock...

  • Page 136
    ... total number of shares subject to the stock-settled stock appreciation rights per year, with remaining vesting dates of April 5, 2014 and April 5, 2015. (3) Stock-settled stock appreciation rights vest at the rate of 25% of the total number of shares subject to the stock-settled stock appreciation...

  • Page 137
    ... 2013 as provided on the company's consolidated statements of cash flows. In addition, upon vesting, the executive receives a cash payment equal to dividends declared between the grant date and the vesting date. (3) Represents restricted stock units granted on April 16, 2012. The restricted stock...

  • Page 138
    ...by the number of shares exercised and the applicable exercise price of the options. (2) The value realized upon vesting is calculated as the closing price of our stock on the day prior to the vesting date multiplied by the number of units vested. Pension Benefits None of our Named Executive Officers...

  • Page 139
    ...such executive's management retention agreement with the company in existence on the effective date of the EVP Retention Plan. The EVP Retention Plan will remain in effect through November 15, 2015, unless earlier terminated by the company in accordance with the plan. The EVP Retention Plan provides...

  • Page 140
    ... to report directly to a specified individual or the Board of the company or the entity holding all or substantially all of the company's assets following a change of control, or (v) relocation of the executive to a location more than 50 miles from the company's San Francisco, California main office...

  • Page 141
    ...an accident and health plan covering company employees. For purposes of the employment agreement with Ms. Alber, "good reason" is defined as, without Ms. Alber's consent, (i) a reduction in her base salary (except pursuant to a reduction generally applicable to senior executives of the company), (ii...

  • Page 142
    .... Value is based on a stock price of $54.52, the closing price of our common stock on January 31, 2014, the last business day of fiscal 2013. (6) Based on a monthly payment of $3,000 to be paid by the company for 18 months or 12 months, as applicable, in lieu of continued employment benefits. Janet...

  • Page 143
    ... of 75,457 restricted stock units and (ii) $300,355 for acceleration of vesting of 22,004 shares underlying outstanding option awards. Value is based on a stock price of $54.52, the closing price of our common stock on January 31, 2014, the last business day of fiscal 2013. (5) Represents the sum of...

  • Page 144
    ... by each Named Executive Officer in the 36-month period prior to February 2, 2014. (3) Value is based on a stock price of $54.52, the closing price of our common stock on January 31, 2014, the last business day of fiscal 2013. (4) Based on a monthly payment of $3,000 to be paid by the company for 12...

  • Page 145
    ... party transaction with us unless (i) the transaction is approved or ratified by our Audit and Finance Committee or the disinterested members of our Board or (ii) the transaction involves the service of one of our executive officers or directors or any related compensation, is reportable under Item...

  • Page 146
    ...fiscal 2013 transactions and (ii) information provided to us by them, we believe that all reporting requirements under Section 16(a) were met in a timely manner by the persons who were executive officers, members of the Board of Directors or greater than 10% stockholders during such fiscal year. 54

  • Page 147
    ... officers and directors as a group. Unless otherwise noted, the persons listed below have sole voting and investment power. In addition, unless otherwise noted, the address of each stockholder noted in the following table is c/o Williams-Sonoma, Inc., 3250 Van Ness Avenue, San Francisco, California...

  • Page 148
    ... 12/7/06) filed with the Securities and Exchange Commission on February 13, 2014. (7) Includes 37,875 shares held by Mr. Connolly in the Williams-Sonoma, Inc. Stock Fund under our 401(k) plan, based on a statement dated March 31, 2014. The number of shares listed in the table also includes 225,000...

  • Page 149
    ... 401(k) plan, based on a statement dated March 31, 2014. (10) Includes 5,564 shares held by Ms. Stangl in the Williams-Sonoma, Inc. Stock Fund under our 401(k) plan, based on a statement dated March 31, 2014. (11) Includes 2,300 shares owned by Mr. Dillon's children. The number of shares listed in...

  • Page 150
    ...) the 2000 Plan will continue; or (iv) each outstanding option will be exchanged for a payment in cash or shares equal to the excess of the fair market value of our common stock over the exercise price. (2) (3) Incentive Award Committee Pursuant to its charter, the Compensation Committee may form...

  • Page 151
    ... the company's 2001 Long-Term Incentive Plan to non-executive officer employees with a corporate rank at or below Senior Vice President. The Chief Executive Officer believes it is important to provide our associates with long-term incentive vehicles that are directly linked to stockholder return...

  • Page 152
    ... our website at www.williams-sonomainc.com/investors/annual-reports.html and upon written request and without charge to any stockholder by writing to: Williams-Sonoma, Inc., Attention: Annual Report Administrator, 3250 Van Ness Avenue, San Francisco, California 94109. San Francisco, California April...

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    ...Founder and Director Emeritus CORPORATE INFORMATION CORPORATE HEADQUARTERS Williams-Sonoma, Inc. 3250 Van Ness Avenue San Francisco, California 94109 LAURA J. ALBER Director, President and Chief Executive Officer ROSE MARIE BRAVO CBE Director Stock Exchange Listing New York Stock Exchange Symbol...

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    2013 ANNUAL REPORT Annual Meeting of Stockholders