Restoration Hardware 2012 Annual Report Download - page 41

Gary Friedman
Benefits and Payments
Termination Without
Cause or
Resignation With
GoodReason
Cash severance payment (1) $4,400,000
Total $4,400,000
(1) This amount includes salary continuation in the aggregate amount of $4 million paid over 24 months and a
lump sum payment of $400,000, which corresponds to Mr. Friedman’s annual bonus amount for fiscal 2012.
Employee Benefit and Stock Plans
2012 Equity Replacement Plan
In connection with our initial public offering, our board of directors adopted the Restoration Hardware 2012
Equity Replacement Plan, which we refer to as the “Replacement Plan.” 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 818,209 of these shares, such resale
restrictions will lapse over time in accordance with the dates set forth in the award agreement, and (ii) with
respect to 1,523,041 of these shares, such resale restrictions will lapse on the date after our initial public offering
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.
A portion of the shares issued under the Replacement Plan are restricted shares issued to Mr. Alberini and
Mr. Friedman. With respect to the shares received by Mr. Alberini and Mr. Friedman, 512,580 of such shares had
vested when the price of our common stock reached a price per share of $31.00 for at least ten consecutive
trading days. In addition, 1,331,548 of such shares shall fully vest when 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 (with proportional
vesting between the $31.00 and $46.50 average prices), and 583,389 of such shares had vested as of May 10,
2013. The unvested shares held by Mr. Alberini and Mr. Friedman may not be sold prior to vesting and will be
forfeited if they have not vested by the date that is 36 months after our initial public offering.
No further awards will be granted under the Replacement Plan.
2012 Stock Option Plan
In connection with our initial public offering, our board of directors adopted the Option Plan, pursuant to
which we have granted 6,829,041 options in connection with our initial public offering to certain of our
employees and advisors. The options granted under this plan vest and are subject to resale restrictions as follows:
(i) with respect to 875,389 of these shares, which have an exercise price equal to $29.00 per share, such resale
restrictions will lapse over time in accordance with the dates set forth in the award agreement, and (ii) with
respect to 5,953,652 shares, which have an exercise price equal to $46.50 per share, such resale restrictions will
lapse in increments on dates after our initial public offering on which the price of our common stock reach, for at
least ten consecutive trading days, prices specified in the applicable award agreement ranging. As of fiscal year
2012, ended on February 2, 2013, all shares remained subject to resale restrictions.
No further awards will be granted under the Option Plan.
2012 Stock Incentive Plan
In connection with our initial public offering, our board of directors adopted the 2012 Stock Incentive Plan.
The 2012 Stock Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422
of the Code to our employees and any parent and subsidiary corporations’ employees, and for the grant of cash,
shares of our common stock, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock
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Proxy Statement