Pottery Barn 2013 Annual Report Download - page 128

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• Whether the established bonus targets are effective in motivating our executives to deliver strong
performance.
The target bonuses as a percentage of base salary under the Bonus Plan remained unchanged, with the exception
of Ms. Whalen, the Chief Financial Officer, whose target bonus was increased from 70% to 100% of base salary
to reflect Ms. Whalen’s increased experience and responsibility.
In executive session at a meeting in March 2013, without the Chief Executive Officer present, the Compensation
Committee reviewed Ms. Alber’s bonus target and concluded that her bonus target would remain unchanged for
fiscal 2013 as her total cash compensation is properly 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.
Named Executive Officer
Fiscal 2012
Target Bonus
(as a Percentage
of Base Salary)
Fiscal 2013
Target Bonus
(as a Percentage
of Base Salary)
Laura J. Alber .................. 150% 150%
Julie P. Whalen ................. 70% 100%
Sandra N. Stangl ................ 100% 100%
Janet M. Hayes ................. 100% 100%
Patrick J. Connolly .............. 100% 100%
Our Bonus Performance Goal – EPS
The pool from which executive bonuses are paid depends on our achievement of EPS goals established by the
Compensation Committee. For fiscal 2013, the Compensation Committee set a diluted EPS target of $2.80
(excluding extraordinary non-recurring charges). The target performance goal required significant improvement
over fiscal 2012 results for executives to earn target payout. The threshold goal also required an overall increase
in annual EPS for any bonuses to be paid under the Bonus Plan in fiscal 2013. For fiscal 2013, the pool funded
between the target and maximum performance goals.
Individual Bonus Objectives
If the company meets the minimum threshold EPS goal under the Bonus Plan, individual performance is assessed
in order to determine the payout of bonuses. The Compensation Committee believes that the achievement of
individual objectives is critical to the overall success of the company and, as such, bonuses are paid to reflect
individual achievement. For example, if an executive fails to fully meet some or all individual objectives, the
executive’s bonus may be significantly reduced or even eliminated. Conversely, if the objectives are
overachieved, awards may be subject to less or no reduction from the maximum amount payable to the executive
based on our achievement of the primary positive net cash flow goal described above.
In March 2014, the Compensation Committee reviewed the fiscal 2013 performance of each Named Executive
Officer and considered the recommendations of the Chief Executive Officer, which were informed by the
following factors, in determining bonus payouts to executives:
• Achievement of established financial and operating objectives; and
• A qualitative assessment of each executive’s leadership accomplishments in the fiscal year, noting that
accomplishments that increase stockholder return or that significantly impact future stockholder return are
significant factors in the assessment of individual performance.
The Compensation Committee decides the bonus amount, if any, for the Chief Executive Officer in an executive
session in which the Chief Executive Officer is not present. In March 2014, the Compensation Committee
36