Pottery Barn 2014 Annual Report Download - page 140

Compensation Committee’s discretion to reduce such amount. For fiscal 2014, this goal was positive net cash
flow provided by operating activities as provided on the company’s consolidated statements of cash flows. This
primary goal was met in fiscal 2014, and the Compensation Committee used negative discretion to determine the
actual payout to each Named Executive Officer based on achievement of the EPS goal and each individual’s
performance, as described below.
Fiscal 2014 Bonus Targets
At a meeting held in March 2014, the Compensation Committee reviewed the bonus targets under the Bonus Plan
for each Named Executive Officer. The Compensation Committee considered the recommendations of the Chief
Executive Officer, which were informed by the following factors:
• Each executive’s respective responsibilities;
• The bonus targets set by our proxy peers;
• The relationship of the bonus target to other compensation elements; and
• Whether the established bonus targets are effective in motivating our executives to deliver strong
performance.
The target bonuses as a percentage of base salary under the Bonus Plan remained unchanged for fiscal 2014.
In executive session at a meeting in March 2014, without the Chief Executive Officer present, the Compensation
Committee reviewed Ms. Alber’s bonus target and concluded that her bonus target would remain unchanged for
fiscal 2014 as her total cash compensation is properly positioned.
The target bonuses as a percentage of base salary under the Bonus Plan for fiscal 2013 and fiscal 2014 are listed
below for each Named Executive Officer.
Named Executive Officer
Fiscal 2013
Target Bonus
(as a Percentage
of Base Salary)
Fiscal 2014
Target Bonus
(as a Percentage
of Base Salary)
Laura J. Alber .................. 150% 150%
Julie P. Whalen ................. 100% 100%
Sandra N. Stangl ................ 100% 100%
Janet M. Hayes ................. 100% 100%
Patrick J. Connolly .............. 100% 100%
Our Bonus Performance Goal – EPS
The pool from which executive bonuses are paid depends on our achievement of EPS goals established by the
Compensation Committee. For fiscal 2014, the Compensation Committee set a diluted EPS target of $3.20
(excluding extraordinary non-recurring charges or unusual items and the effect of changes in accounting
principles). The target performance goal required significant improvement over fiscal 2013 results. The threshold
goal also required an overall increase in annual EPS for any bonuses to be paid under the Bonus Plan in fiscal
2014. For fiscal 2014, we achieved the diluted EPS target.
Individual Bonus Objectives
If the company meets the minimum threshold EPS goal under the Bonus Plan, individual performance is assessed
in order to determine the payout of bonuses. The Compensation Committee believes that the achievement of
individual objectives is critical to the overall success of the company and, as such, bonuses are paid to reflect
individual achievement. For example, if an executive fails to fully meet some or all individual objectives, the
executive’s bonus may be significantly reduced or even eliminated. Conversely, if the objectives are
overachieved, awards may be subject to less or no reduction from the maximum amount payable to the executive
based on our achievement of the primary positive net cash flow goal described above.
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