Pottery Barn 2014 Annual Report Download - page 118

Standards, or may be adjusted by our committee when established to exclude or include any items otherwise
includable or excludable, respectively, under GAAP or under IASB Standards. The committee may choose other
performance goals for awards that are not intended to qualify as performance-based compensation under
Section 162(m).
Awards that Expire or are Forfeited
If an award expires or is canceled or otherwise terminated without having been fully exercised or vested, the
unvested, expired, forfeited, canceled or otherwise terminated shares generally will be returned to the available
pool of shares reserved for issuance under the plan. However, the available pool of shares reserved for issuance
under the plan will be reduced by one and nine-tenths shares for every share issued subject to an award of
restricted stock, restricted stock units or deferred stock granted on or after the date of stockholder approval of the
2006 amendment and restatement, so if such an award expires or is canceled or otherwise terminated without
vesting, the reserve of shares available for future awards will be replenished by one and nine-tenths shares for
every one share subject to the expired, canceled or terminated portion of the award. Shares used to pay the
exercise price of an option or stock-settled stock appreciation right or to satisfy tax withholding obligations will
not be returned to the available pool of shares reserved for issuance under the plan.
The payout of dividend equivalents in shares will reduce the number of shares available for issuance under the
plan by one and nine-tenths shares for every share issued. Similarly, the forfeiture of dividend equivalents
payable in shares will increase the number of shares available for issuance under the plan by one and nine-tenths
shares for every share forfeited. In addition, to the extent an award under the plan (other than a stock option or
stock appreciation right) is paid out in cash, such cash payment will not reduce the number of shares available
under the plan (and in the case of stock options and stock appreciation rights will reduce the available number of
shares by the number of shares having a fair market value equal to the cash delivered). However, shares
purchased by the company with the proceeds of a stock option exercise shall not again be available for issuance
under the plan.
Consequences of Changes in our Capital Structure
If we experience a change in our capital structure as a result of a stock dividend, reorganization, merger,
consolidation, sale of all or substantially all of our assets, recapitalization, reclassification, extraordinary cash
dividend, stock split, reverse stock split, or other similar transaction, our outstanding shares are increased or
decreased or exchanged for a different number or kind of shares or other securities of the company, or additional
shares or new or different shares or other securities of the company or other non-cash assets are distributed with
respect to such shares or securities, subject to the constraints of Code sections 162(m) and 409A, the committee
will make an appropriate or proportionate adjustment to (i) the maximum number of shares available for issuance
under the plan, (ii) the per person limits on awards, (iii) the number and kind of shares subject to outstanding
awards, and (iv) the exercise price of outstanding stock option or stock appreciation right awards.
Consequences of a Merger or Similar Transaction
In the event that we (i) consummate a merger or consolidation with another corporation, (ii) sell all or
substantially all of our assets, (iii) reorganize, (iv) liquidate, or (v) dissolve, the Board may, in its discretion,
provide that outstanding awards will be assumed or substituted for by the successor corporation or provide that
all outstanding awards will terminate and accelerate vesting immediately prior to the consummation of the
transaction. In the event of the acceleration (which shall not be automatic and require the exercise of discretion
by the Board) and termination of awards in lieu of assumption or substitution, awards other than options and
stock appreciation rights will be settled in kind in an amount determined by the committee after taking into
consideration the amount per share received by stockholders in the transaction (that is, the transaction price).
Under such circumstances, options and stock appreciation rights will be settled in kind in an amount per share
equal to the transaction price minus the aggregate exercise price of such options or stock appreciation rights.
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