Restoration Hardware 2012 Annual Report Download - page 159

During the fourth quarter of fiscal 2012, all 512,580 shares received by Mr. Alberini and Mr. Friedman in
replacement of certain of their performance-based units met the performance objective of $31.00 per share for at
least 10 consecutive trading days. The Company recorded a non-cash compensation charge of approximately
$12.5 million related to these awards in fiscal 2012 which is included in selling, general and administrative
expenses on the consolidated statements of operations. During the fourth quarter of fiscal 2012, 442,932 shares of
the 1,331,548 shares received by Mr. Alberini and Mr. Friedman in replacement of certain of their performance-
based units had vested in accordance with the performance objective as described above. The Company recorded
a non-cash compensation charge of approximately $10.6 million related to these awards in fiscal 2012 which is
included in selling, general and administrative expenses on the consolidated statements of operations.
Unrecognized compensation for units that have not yet met the performance objectives as of February 2, 2013
was $16.4 million.
Subsequent to February 2, 2013, and through April 16, 2013, 140,457 shares of the 1,331,548 shares
received by Mr. Alberini and Mr. Friedman in replacement of certain of their performance-based units had vested
in accordance with the performance objective as described above. The Company will record a non-cash
compensation charge of approximately $3.4 million related to these awards in the first quarter of fiscal 2013
through April 16, 2013. Additionally, the unvested portion will continue to vest based upon stock price
performance in future periods as described above.
Aside from the awards described above, no other awards will be granted under the Replacement Plan.
2012 Stock Option Plan and 2012 Stock Incentive Plan
In connection with the Reorganization, the Board of Directors adopted the Restoration Hardware 2012 Stock
Option Plan (the “Option Plan”), pursuant to which 6,829,041 fully vested options were granted in connection
with the Reorganization to certain of the Company’s employees and advisors, including Mr. Alberini and
Mr. Friedman. The options granted under this plan were fully vested upon the completion of the initial public
offering and are subject to resale restrictions whereby the holder may not sell the shares for a period of 20 years
after the initial public offering, except as follows: (i) with respect to 875,389 of these shares with an exercise
price of $29.00 per share, such resale restrictions will lapse over time in accordance with the dates set forth in the
applicable award agreement, and (ii) with respect to 5,953,652 shares with an exercise price of $46.50 per share,
such resale restrictions will lapse on dates after the initial public offering on which the 10-day average closing
price per share of the Company’s common stock reaches specified levels ranging from $50.75 to $111.25 for at
least 10 consecutive trading days. Aside from these options granted in connection with the Reorganization, no
other awards will be granted under the Option Plan.
In connection with the Reorganization, the Board of Directors adopted the Restoration Hardware 2012 Stock
Incentive Plan (the “Stock Incentive Plan”). The Stock Incentive Plan provides for the grant of incentive stock
options to the Company’s employees, non-qualified stock options, stock appreciation rights, restricted stock,
restricted stock units, dividend equivalent rights, cash-based awards and any combination thereof to the
Company’s employees, directors and consultants and the Company’s parent and subsidiary corporations’
employees, directors and consultants. In connection with the Reorganization, the Board of Directors granted
options to purchase 1,264,036 shares of the Company’s common stock to employees of the Company under the
Stock Incentive Plan, which options were fully vested upon the completion of the initial public offering, with a
weighted-average exercise price equal to $26.50 per share.
In addition, in connection with the Reorganization, the Board of Directors granted an aggregate of 40,623
restricted stock units to certain of the Company’s directors under the Stock Incentive Plan. Such restricted stock
units vested in full on January 31, 2013.
In connection with the grants under the Option Plan and the Stock Incentive Plan, the Company recorded a
non-cash compensation charge at the Reorganization of $52.0 million related to these awards which is included
in selling, general and administrative expenses on the consolidated statements of operations.
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Form 10-K