Pottery Barn 2014 Annual Report Download - page 132
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•Investing in our supply chain – We completed the insourcing of our foreign buying offices, which will
not only reduce cost but improve quality and strengthen our supplier relationships. In addition, we
continue to refine our domestic supply chain by insourcing more of our furniture delivery operations. We
also made significant progress in automating aspects of our personalization capability.
•Investing in e-commerce, as well as technology and infrastructure – We implemented technology
enhancements to improve customer service and advance the flexibility and capacity of our e-commerce
platform. In fiscal 2014, e-commerce represented over 50% of our net revenues.
We have driven consistent profitable growth through innovation, operational excellence and our customer-
centered approach, along with exceptional financial discipline. We believe that our long-term outlook is strong
and that there is a significant opportunity to expand our reach domestically and globally.
Our Compensation Program Aligns and Advances Executive and Stockholder Interests
Our compensation program is constructed to attract, motivate and retain exceptional executives in support of our
primary objective to create long-term value for stockholders. Fundamentally, we believe that earnings per share,
or EPS, is the measure most closely aligned with long-term stockholder value and, as such, each executive’s
bonus payout is dependent on the company’s achievement of an annual EPS goal.
The chart below illustrates the year over year increases of our target performance goals under our 2001 Incentive
Bonus Plan, as well as our EPS. Our performance goals are consistently set higher than the previous year’s EPS.
$1.83
$2.22
$2.54
$2.82
$3.24
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.50
$3.00
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Annual Bonus - EPS Performance Goals
FY10-FY14
Target EPS
Similarly, our equity compensation and stock ownership guidelines are structured to encourage our executives to
deliver long-term sustained growth in our stock price. We believe this dual approach aligns executive and
stockholder interests. When we exceed targeted performance levels and/or our stock price appreciates, our
executives’ compensation opportunity is substantially increased. When we do not achieve targeted performance
levels and/or our stock price does not appreciate, our executives’ compensation opportunity is substantially
reduced.
40