Pottery Barn 2014 Annual Report Download - page 130

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our compensation program, the compensation decisions
we made under our program, and the reasoning underlying those decisions. This discussion and analysis focuses
on the compensation of our “Named Executive Officers,” who in fiscal 2014 were:
Laura J. Alber Director, President and Chief Executive Officer
Julie P. Whalen Executive Vice President, Chief Financial Officer
Sandra N. Stangl President, Pottery Barn Brands
Janet M. Hayes President, Williams-Sonoma Brand
Patrick J. Connolly Director and Executive Vice President, Chief Strategy and Business
Development Officer
Compensation Discussion and Analysis – Executive Summary
Our compensation decisions begin with the objective of paying for performance. Our stockholders cast a
substantial vote in favor of our 2013 executive compensation at our 2014 Annual Meeting of Stockholders, and
our fiscal 2014 financial performance was above fiscal 2013 levels (including another year of record net revenues
in fiscal 2014). For fiscal 2014, the Compensation Committee took the following steps to continue to align
executive pay with company performance.
• We introduced performance stock units (PSUs) to our equity program, with variable payout based on a
cumulative three-year performance metric and 100% cliff vesting after three years.
• We did not change the base salary of our Chief Executive Officer, which has remained unchanged since
2012, to continue our emphasis on the performance-based components of her compensation.
• 90% of the total target compensation of our Chief Executive Officer was based on company performance.
• We set the fiscal 2014 earnings per share target under our annual bonus plan significantly higher than our
actual earnings per share for 2013 and did not increase target cash bonus percentages for our Named
Executive Officers.
• The stock ownership guidelines for the Named Executive Officers and certain other executives (other
than the Chief Executive Officer) were increased from one times base salary to two times base salary,
effective March 2015. The stock ownership guideline for our Chief Executive Officer remained at five
times base salary.
In addition to actual results, our perspective is that performance includes how we achieve those results. Our
company values guide the way we think and approach our business, and we measure executive performance with
respect to these values as we make compensation decisions. This assessment is reflected in the compensation
recommendations that our Chief Executive Officer makes to the Compensation Committee with respect to the
other Named Executive Officers and the Compensation Committee’s decisions with respect to the compensation
of our Chief Executive Officer.
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