Pottery Barn 2014 Annual Report Download - page 111

PROPOSAL 2
AMENDMENT AND RESTATEMENT OF OUR 2001 LONG-TERM INCENTIVE PLAN
This is a proposal to approve the amendment and restatement of the Williams-Sonoma, Inc. 2001 Long-Term
Incentive Plan, or Incentive Plan, to increase the shares issuable under the plan by 6,550,000 shares and extend
the term of the plan to 2025. We are also seeking stockholder approval of the material terms of the Incentive Plan
for purposes of complying with the stockholder approval provisions of Section 162(m) of the Internal Revenue
Code, or Section 162(m).
If stockholders approve amending and restating the Incentive Plan, the amended and restated Incentive Plan will
replace the current version of the Incentive Plan.
Changes Being Made to the Current Plan
The amended and restated Incentive Plan will increase the number of authorized shares of our common stock
available for grant by 6,550,000 shares. If the amended and restated Incentive Plan is approved, it may remain in
effect until March 25, 2025, unless sooner terminated by our Board or further extended. The increase in shares
will help us to continue to achieve our goal of attracting, retaining and motivating our talented employees. We
are also seeking stockholder approval of the material terms of the Incentive Plan for purposes of complying with
the stockholder approval provisions of Section 162(m).
Pursuant to Section 162(m), the company generally may not deduct for federal income tax purposes
compensation paid to our Chief Executive Officer or our three other highest paid employees (other than our
principal financial officer) to the extent such compensation exceeds $1,000,000 per person in any single year.
However, if the compensation qualifies as “performance-based” for Section 162(m) purposes, the company may
deduct for federal income tax purposes the compensation paid even if such compensation exceeds such limit. For
certain awards granted under the Incentive Plan to qualify as “performance-based” compensation under
Section 162(m), among other things, our stockholders must approve the material terms of the amended and
restated Incentive Plan at the 2015 Annual Meeting. A favorable vote for this proposal will allow us the
opportunity to continue to deduct certain executive compensation in excess of $1,000,000 and provide us with
potentially significant future tax benefits and associated cash flows.
In addition, the following material changes are being made to the Incentive Plan:
• Dividends and dividend equivalents payable with respect to awards subject to outstanding performance
conditions will be held in escrow, subject to the achievement of the performance conditions. Stock
options and stock appreciation rights will not include the right to dividends, dividend equivalents or other
similar distribution rights.
• An annual limit on grants to non-employee directors has been added.
• Awards are subject to recoupment as required by applicable law or any recoupment policy adopted by the
company from time to time.
• Dividend equivalents may now be payable in cash or stock as determined by the committee.
• The maximum number of shares underlying grants of restricted stock, restricted stock unit and deferred
stock awards in the aggregate during any calendar year has been increased from 400,000 to 1,000,000.
Shares Available for Issuance under the Amended and Restated Incentive Plan
The amended and restated Incentive Plan will increase the number of shares reserved for issuance by 6,550,000
shares. In addition to this increase, and as currently permitted under the current plan as a result of prior
stockholder approval in 2011 and 2006, the number of authorized shares of our common stock available for
issuance will continue to also include 754,160 shares subject to options under our 1993 Stock Option Plan and
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