Pottery Barn 2014 Annual Report Download - page 135

•Long-Term Incentives. We granted long-term incentive awards of 47,946 RSUs with a one-year
performance-based vesting requirement and a time-based vesting schedule of 25% per year over a four-
year period. Additionally, we granted 111,874 PSUs at target payout subject to a cumulative three-year
performance metric and a three-year cliff vesting schedule.
Compensation Governance
We maintain compensation practices that are aligned with prevalent and sustainable corporate governance
principles intended to encourage actions that are in the long-term interests of stockholders and the company, and
discourage actions such as excessive risk-taking and other actions contrary to the long-term interests of
stockholders. Below, we highlight key elements of our compensation governance.
Compensation Practices We Follow
•We pay for performance. With the exception of base salary and benefits, our compensation elements are
incentive-based. Variable pay constitutes approximately 75% of total target compensation for our Named
Executive Officers other than our Chief Executive Officer, whose variable pay for fiscal 2014 was 90% of
total target compensation.
•We structure each element of compensation with a specific purpose. Our process for making
compensation decisions involves a strategic review of the role and the level of each element of
compensation, as well as the balance of short-term and long-term compensation opportunities.
•We set meaningful stock ownership guidelines. Our expectations for stock ownership align executives’
interests with those of our stockholders. The ownership guideline for our Chief Executive Officer is five
times base salary. In March 2015, the ownership guideline for the Named Executive Officers and certain
other executives increased from one times base salary to two times base salary. All of our Named
Executive Officers meet or exceed the revised stock ownership guidelines or comply with the stock
retention requirements for vested restricted stock units that are designed to bring the executive up to the
applicable ownership level.
•We review our equity plan share usage regularly. On an annual basis, the Compensation Committee
reviews and evaluates our share dilution, burn rate and overhang levels with respect to equity
compensation plans and their impact on stockholder dilution. The Compensation Committee is also
provided this information at each committee meeting.
•We provide limited perquisites. Our Named Executive Officers are not provided with any special
perquisites or benefits that are not otherwise offered broadly to associates of the company, with the
exception of $12,000 in financial consulting services offered to a limited number of executives. These
benefits are for financial counseling to address the complexity of the executives’ financial circumstances.
•We adopted double-trigger, not single-trigger, change in control benefits. Our Management Retention
Plan provides for accelerated vesting of equity awards and salary and bonus payouts after a change in
control, but only if an executive is involuntarily terminated without cause or separates for good reason.
•We consider the views of stockholders on an annual basis. We provide stockholders with an annual Say
on Pay advisory vote, and the Compensation Committee reviews and takes into account the results of this
vote.
•We engage an independent compensation consulting firm. The Compensation Committee’s independent
consultant does not provide any other advisory or consulting services to the company.
Compensation Practices We Do Not Follow
• We do not provide excise tax gross-ups or gross-ups of any kind.
• We do not allow hedging, pledging or short sales of company stock.
• We do not pay dividends on unvested performance-based RSUs and PSUs.
43
Proxy