Pottery Barn 2014 Annual Report Download - page 141

The Compensation Committee decides the bonus amount, if any, for the Chief Executive Officer in an executive
session in which the Chief Executive Officer is not present. In March 2015, the Compensation Committee
assessed the performance of the Chief Executive Officer through a discussion of her strong performance against
the achievement of financial objectives including an increase in net revenues of 7.1%, EPS growth of 14.9%, and
over $350 million returned to stockholders. Additionally the Compensation Committee recognized the Chief
Executive Officer’s performance against our long-term strategies: strengthening our brands, laying the
foundation for global expansion and new business development, investing in our supply chain, and investing in e-
commerce as well as technology and infrastructure. The Compensation Committee also reviewed the Chief
Executive Officer’s performance against our core values, in particular noting the development of a strong culture
and exceptional leadership team, and the company’s continued achievements in the areas of corporate
responsibility and sustainability.
In March 2015, the Compensation Committee reviewed the fiscal 2014 performance of each Named Executive
Officer and considered the recommendations of the Chief Executive Officer. For fiscal 2014, the Compensation
Committee approved the bonus payments in the table below under the Bonus Plan for each Named Executive
Officer, which were informed by the following factors:
• Achievement of established financial and operating objectives; and
• A qualitative assessment of each executive’s leadership accomplishments in the fiscal year (noting that
accomplishments that increase stockholder return or that significantly impact future stockholder return are
significant factors in the assessment of individual performance) and, in the case of Mr. Connolly, his
changed responsibilities in fiscal 2014.
Named Executive Officer
Fiscal 2014
Bonus
Amount*
Fiscal 2014
Actual Bonus
(as a Percentage
of Target)
Laura J. Alber ..................... $3,250,000 167%
Julie P. Whalen .................... $ 800,000 114%
Sandra N. Stangl ................... $1,600,000 145%
Janet M. Hayes .................... $1,300,000 144%
Patrick J. Connolly ................. $ 500,000 71%
* Reflects the Compensation Committee’s exercise of discretion to reduce the maximum amount payable to the
executive under the Bonus Plan for fiscal 2014 from $10,000,000 to the amount shown.
Long-Term Incentives
The third component of the company’s compensation program is long-term equity compensation. The
Compensation Committee believes that equity compensation awards encourage our executives to work toward
the company’s long-term business and strategic objectives and to maximize long-term stockholder returns. In
addition, the Compensation Committee believes that equity awards incentivize executives to remain with the
company.
In fiscal 2014, equity was granted to our Named Executive Officers in the form of PSUs and RSUs. PSUs were
granted with a cumulative three-year earnings growth target and a cliff vesting schedule of 100% after three
years. PSUs earned are variable based on actual earnings performance relative to target with no PSUs earned for
below threshold performance, 50% of target earned for threshold performance, 100% of target earned for target
performance, and 200% of target earned for maximum performance and above. RSUs were granted with a
performance-based vesting requirement and a time-based vesting schedule of 25% per year over four years. The
Compensation Committee believes that granting equity in the form of RSUs and PSUs drives strong
performance, aligns each executive’s interests with those of stockholders, and provides an important and
powerful retention tool. In determining the long-term incentive awards for fiscal 2014, the Compensation
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