Restoration Hardware 2012 Annual Report Download - page 31

For fiscal 2012, Mr. Alberini earned a bonus of $279,825 under the MIP, Ms. Boone earned a bonus of
$39,210 under the MIP, and Mr. Dunaj earned a bonus of $75,000 under the MIP.
In addition, from time to time the compensation committee may approve cash bonuses outside of the MIP
on a discretionary basis for reasons such as individual performance or in connection with an executive officer’s
initial employment arrangement with the Company or other events, and such bonus awards may overlap with
bonus awards paid under the MIP. For example, for fiscal 2012, in addition to her MIP award, Ms. Boone
received a bonus of $40,000 as part of her initial employment arrangement with the Company and a bonus of
$100,000 in connection with the completion of the Company’s initial public offering. In addition, for fiscal 2012,
Ms. Boone earned a discretionary bonus of $25,790.
For fiscal 2013, the MIP bonus scale for each of Mr. Alberini, Ms. Boone and Mr. Dunaj as a percentage of
such individual’s base salary is the same as the fiscal 2012 MIP bonus scale for such individual.
Mr. Friedman’s advisory services agreement provides that Mr. Friedman is eligible to earn a minimum
annual bonus of $500,000, assuming achievement of annual performance goals and criteria established by our
Chief Executive Officer, provided that the maximum bonus for which Mr. Friedman was eligible in fiscal 2012 is
$400,000. In fiscal 2012, Mr. Friedman earned a bonus of $400,000. .
Long-Term Equity Incentive Compensation. We believe that providing long-term incentives as a component
of compensation helps us to attract and retain our named executive officers. These incentives also align the
financial rewards paid to our named executive officers with our long-term performance, thereby encouraging our
named executive officers to focus on our long-term goals.
In connection with our initial public offering in November 2012, we completed the Reorganization. In
connection with these events, our board of directors adopted the Restoration Hardware 2012 Equity Replacement
Plan, which we refer to as the Replacement Plan. At such time, all existing equity awards made to our named
executive officers were replaced with awards granted under the Replacement Plan. A portion of the shares issued
to our named executive officers under the Replacement Plan were fully vested, unrestricted shares.
In addition, a portion of the shares issued under the Replacement Plan are subject to resale restrictions
whereby the holder may not sell the shares for a period of 20 years after our initial public offering, except as
follows: (i) with respect to certain of these shares, such resale restrictions will lapse over time based on the
named executive officer’s continued service in accordance with the dates set forth in the award agreement, and
(ii) with respect to certain of these shares, such resale restrictions will lapse on the date on which the ten-day
average trading price of our common stock reaches a price per share of $46.50 for at least ten consecutive trading
days. If we terminate an executive officer’s service for certain causes, we will have the right, for a period of
90 days following such termination, to repurchase any vested shares that remain subject to resale restrictions for
their fair market value as of the repurchase date, payable, in our sole discretion, either in cash or by an unsecured
promissory note with a term of up to ten years. If we terminate an executive officer’s service as a result of his or
her material breach of a Company agreement or policy, or his or her conviction for criminal acts, any vested
shares that remain subject to resale restrictions shall be deemed reconveyed to the Company for no cash or other
consideration, and we will be the legal and beneficial owner of such shares.
In addition, a portion of the shares issued under the Replacement Plan were unvested restricted shares issued to
Mr. Alberini and Mr. Friedman in replacement of their 2X—3X performance based units and unvested 3X—5X
performance based units. With respect to the 512,580 shares received by Mr. Alberini and Mr. Friedman in
replacement of their 2X—3X performance-based units, such shares would fully vest, and restrictions would lapse,
during the 36-month period following our initial public offering when the ten-day average trading price of our
common stock reaches a price per share of $31.00 for at least ten consecutive trading days (with proportional
vesting based on our stock price in our initial public offering). All such shares have vested. With respect to the
1,331,548 shares received by Mr. Alberini and Mr. Friedman in replacement of their 3X—5X performance-based
units, such shares began to vest, and restrictions began to lapse, during the 36-month period following our initial
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Proxy Statement