Pottery Barn 2014 Annual Report Download - page 137

Role of Independent Compensation Committee Consultant
Frederic W. Cook & Co., or Cook & Co., is the independent executive compensation consultant for the
Compensation Committee. Cook & Co. provides services only as directed by the Compensation Committee and
has no other relationship with the company. The Compensation Committee has reviewed its relationship with
Cook & Co. and has identified no conflicts of interest.
In fiscal 2014, Cook & Co. provided the Compensation Committee with publicly disclosed proxy data related to
Named Executive Officer compensation. The Compensation Committee occasionally requests that Cook & Co.
attend its meetings and receives from Cook & Co., on an annual basis, an in-depth update on general and retail
industry compensation trends and developments.
In addition, in fiscal 2014, the Compensation Committee asked Cook & Co. to evaluate the risk inherent in our
executive and non-executive compensation programs. Their report concluded that, among other things:
• The company’s executive compensation program is designed to encourage behaviors aligned with the long-
term interests of stockholders;
• There is appropriate balance in short-term versus long-term pay, cash versus equity, recognition of corporate
versus business unit performance, financial versus non-financial goals, and use of formulas and discretion;
and
• Policies are in place to mitigate compensation risk, such as stock ownership guidelines, insider trading
prohibitions and disclosure requirements, and independent Compensation Committee oversight.
After considering this evaluation, the Compensation Committee concluded that our compensation programs do
not encourage executives to take on business and operating risks that are reasonably likely to have a material
adverse effect on the company.
Role of Market Data
The Compensation Committee, the Chief Executive Officer and management believe that knowledge of general
market practices and the specific compensation practices of our proxy peer group, listed below, is important in
assessing the design and competitiveness of our compensation package. When market data is reviewed, it is
considered as a reference point, rather than a fixed policy, for compensation positioning and decision-making.
We do not set compensation to meet specific benchmarks or percentiles. For fiscal 2014, our executives’ target
total direct compensation is at or above the 75th percentile, while our total stockholder return for the last three
completed fiscal years is above the 90th percentile compared to our proxy peer group. The Compensation
Committee determined that setting total direct compensation at this level is appropriate given the executives’
strong performance and valuable experience operating in our complex multi-channel business model.
Our Proxy Peer Group
The Compensation Committee uses a peer group composed of public companies in the retail industry to review
competitive compensation data for the company’s executives. The Compensation Committee evaluates this proxy
peer group on an annual basis to ensure that the companies selected remain appropriate. The proxy peer group for
fiscal 2014 was selected by the Compensation Committee based on the guiding criteria described below, with
advice from Cook & Co. Certain proxy peer companies may not meet all selection criteria, but are included
because they are direct competitors of our business, direct competitors for our executive talent, have a
comparable business model, or for other reasons. The proxy peer group guiding criteria for fiscal 2014 was as
follows:
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Proxy