Pottery Barn 2013 Annual Report Download - page 139

term and will be automatically extended for one year following the initial term unless either party provides notice
of non-extension. If we enter into a definitive agreement with a third party providing for a “change of control,”
each retention agreement will be automatically extended for 18 months following the change of control. In
addition, effective November 1, 2012, we adopted the 2012 EVP Level Management Retention Plan, or the EVP
Retention Plan. The EVP Retention Plan will replace the individual management retention agreements that we
previously entered into with each Named Executive Officer, other than the agreement entered into with
Ms. Alber, which remains in effect. The EVP Retention Plan provides that the executives will automatically
become participants in the plan upon the later of (i) the effective date of the EVP Retention Plan, or (ii) the lapse
of the term of 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 for
substantially the same severance benefits as the individual agreements.
We entered into an amended and restated management retention agreement with Ms. Alber on September 6,
2012. The management retention agreement restates substantially all of the material terms of the prior agreement,
with the exception of extending the term of the agreement through September 7, 2033. All other terms are
substantially the same as the EVP Retention Plan.
If within 18 months following a change of control, an executive’s employment is terminated by us without
“cause,” or by the executive for “good reason,” then (i) 100% of such executive’s outstanding equity awards,
including full value awards, with performance-based vesting where the payout is a set number or zero depending
on whether the performance metric is obtained, will immediately become fully vested, except that if a full value
award has performance-based vesting and the performance period has not been completed and the number of
shares that can be earned is variable based on the performance level, a pro-rata portion of such executive’s
outstanding equity awards will immediately become fully vested at the target performance level, and (ii) in lieu
of continued employment benefits (other than as required by law), such executive will be entitled to receive
payments of $3,000 per month for 12 months.
In addition, if, within 18 months following a change of control, the executive’s employment is terminated by us
without “cause,” or by the executive for “good reason,” such executive will be entitled to receive (i) severance
equal to 200% of such executive’s base salary as in effect immediately prior to the change of control or such
executive’s termination, whichever is greater, with such severance to be paid over 24 months, and (ii) 200% of
the average annual bonus received by such executive in the last 36 months prior to the termination, with such
severance to be paid over 24 months.
Each executive’s receipt of the severance benefits discussed above is contingent on such executive signing and
not revoking a release of claims against us, such executive’s continued compliance with our Code of Business
Conduct and Ethics (including its provisions relating to confidential information and non-solicitation), such
executive not accepting employment with one of our competitors, and such executive’s continued non-
disparagement of us. In the event that the severance payments and other benefits payable to an executive under a
retention agreement constitute a “parachute payment” under Section 280G of the U.S. tax code and would be
subject to the applicable excise tax, then the executive’s severance payments and other benefits will be either
(i) delivered in full or (ii) delivered to a lesser extent such that no portion of the benefits are subject to the excise
tax, whichever results in the receipt by such executive on an after-tax basis of the greatest amount of benefits.
For purposes of the EVP Retention Plan, “cause” means: (i) an act of dishonesty made by the executive in
connection with his or her responsibilities as an employee; (ii) the executive’s conviction of, or plea of nolo
contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude; (iii) the
executive’s gross misconduct; (iv) the executive’s unauthorized use or disclosure of any proprietary information
or trade secrets of the company or any other party to whom the executive owes an obligation of nondisclosure as
a result of the executive’s relationship with the company; (v) the executive’s willful breach of
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