Pottery Barn 2014 Annual Report Download - page 144

implemented this arrangement to ensure that she remains focused on the company’s business and strategic
objectives rather than potential personal economic exposure under these particular circumstances. The
Compensation Committee has considered the total potential cost of her severance benefits and determined them
to be reasonable.
Severance Protection for the President, Williams-Sonoma Brand
In March 2013, Ms. Hayes became President of the Williams-Sonoma brand, leaving her role as President of
Pottery Barn Kids and PBteen. As Ms. Hayes moved to this new role, the Compensation Committee believed it in
the best interests of the Company and its stockholders to provide Ms. Hayes with certain employment protections
through May 2015. Details of Ms. Hayes’ employment agreement are described in the section titled
“Employment Contracts and Termination of Employment and Change-of-Control Arrangements” beginning on
page 59.
RSU and PSU Vesting Provisions Upon Retirement
Grants of RSUs, including the performance-based RSUs granted to our Named Executive Officers, include an
acceleration feature that provides for full vesting upon retirement, which is defined as leaving the company at age
70 or later, with a minimum of 15 years of service. Grants of PSUs granted to our Named Executive Officers vest
on a pro-rata basis subject to achievement of the applicable performance goals in the event of such a retirement.
Clawback Policy Following Financial Restatement
We do not have a formal policy regarding recovery of past payments or awards in the event of a financial
restatement, but in such event, the Compensation Committee will review all performance-based compensation
and consider initiating recovery of any favorably impacted performance-based compensation in appropriate
circumstances. Additional remedial actions could include an executive’s termination of employment. Further, we
intend to implement any recovery policies required by applicable law, including anticipated SEC rulemaking
under the Dodd-Frank Act.
Internal Revenue Code Section 162(m)
Internal Revenue Code Section 162(m) disallows the deduction of compensation paid to certain executives in
excess of $1,000,000 unless it is “qualified performance-based compensation.” The Compensation Committee
reviews the potential impact of Section 162(m) as it constructs the compensation program and in relation to the
level of each element of compensation, but reserves the right to pay non-deductible compensation where
appropriate to achieve our business objectives. Bonuses awarded to our executives in fiscal 2014 under our
Bonus Plan, as well as the equity awards granted to our executives, are intended to qualify as performance-based
compensation. However, because of the fact-based nature of the qualified performance-based compensation
exception and the limited availability of binding guidance thereunder, we cannot guarantee that any
compensation intended to qualify as deductible performance-based compensation so qualifies.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with
management. Based on this review and discussion with management, the Compensation Committee has
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy
Statement and in the company’s Annual Report on Form 10-K for fiscal 2014.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Adrian D.P. Bellamy, Chairman
Rose Marie Bravo
Anthony A. Greener
Lorraine Twohill
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