Pottery Barn 2014 Annual Report Download - page 117

Deferred Stock Awards
A deferred stock award is the right to receive shares of common stock at the end of a specified deferral period
determined by the committee or elected by the participant pursuant to rules set by the committee. The committee
may determine that the right to the award vests based on continued service to us and/or on the achievement of
specific performance goals established by the committee. The committee determines the vesting schedule of
deferred stock awards, subject to the minimum vesting requirements and the permitted Vesting Exceptions
described above. Subject to these requirements, the committee generally has the authority to accelerate the
vesting of any award.
The participant may defer receipt of the shares beyond vesting (for instance, until termination of employment or
other specified time). Deferred stock awards may allow participants to defer income tax until the receipt of the
shares. Refer to the questions and answers below dealing with tax consequences of deferred stock awards.
The shares available for issuance under the plan will be reduced by one and nine-tenths shares for every share
issued subject to a deferred stock award granted on or after May 23, 2006, and if such an award is forfeited,
canceled or otherwise terminated, the reserve of shares available for future awards will be replenished by one and
nine-tenths shares for every one share subject to the forfeited, canceled or terminated portion of the award.
The committee will determine the number of shares of deferred stock awards granted to any participant, but no
participant may be granted more than an aggregate of 1,000,000 shares covered by awards of deferred stock
awards, restricted stock or restricted stock units during any calendar year.
Further Deferring Shares Covered by a Deferred Stock Award
If the committee permits it, a participant may elect to further defer receipt of the shares payable under a deferred
stock award for an additional specified period or until a specified event, if the election is made in accordance
with the requirements of Section 409A of the Internal Revenue Code.
Performance Goals
We have designed the plan in a manner intended to permit us to pay compensation that qualifies as performance-
based under Section 162(m). If the committee intends for an award to qualify as performance-based
compensation, then, at the committee’s discretion, one or more of the following performance goals may apply:
(i) revenue (on an absolute basis or adjusted for currency effects); (ii) cash flow (including operating cash flow or
free cash flow); (iii) cash position; (iv) earnings (which may include earnings before interest and taxes, earnings
before taxes, net earnings or earnings before interest, taxes, depreciation and amortization); (v) earnings per
share; (vi) gross margin; (vii) net income; (viii) operating expenses or operating expenses as a percentage of
revenue; (ix) operating income or net operating income; (x) return on assets or net assets; (xi) return on equity;
(xii) return on sales; (xiii) total stockholder return; (xiv) stock price; (xv) growth in stockholder value relative to
the moving average of the S&P 500 Index, or another index; (xvi) return on capital; (xvii) return on investment;
(xviii) economic value added; (xix) operating margin; (xx) market share; (xxi) overhead or other expense
reduction; (xxii) credit rating; (xxiii) objective customer indicators; (xxiv) improvements in productivity;
(xxv) attainment of objective operating goals; (xxvi) objective employee metrics; (xxvii) return ratios;
(xxviii) profit; or (xxix) other objective financial metrics relating to the progress of the company or to a
subsidiary, division or department thereof.
These performance goals may apply to either the company as a whole or, except with respect to stockholder
return metrics, to a region, business unit, affiliate or business segment, or on an individual basis. The goals may
be measured on an absolute basis, a per-share basis or relative to a pre-established target, to a previous period’s
results or to a designated comparison group, in each case as specified by the committee. The performance goals
may differ from participant to participant and from award to award. Financial performance measures may be
determined in accordance with United States Generally Accepted Accounting Principles, or GAAP, in
accordance with accounting standards established by the International Accounting Standards Board, or IASB
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