Restoration Hardware 2012 Annual Report Download - page 42

units, dividend equivalent rights, cash-based awards and any combination thereof to our employees, directors and
consultants and our parent and subsidiary corporations’ employees, directors and consultants.
Pursuant to the 2012 Stock Incentive Plan, in connection with our initial public offering, we granted
1,264,036 options to certain of our employees with a weighted-average exercise price of $26.50 per share. These
options vested upon the completion of our initial public offering and are subject to resale restrictions, which will
lapse over time in accordance with the dates set forth in the applicable award agreements. In addition, in
connection with our initial public offering, we granted an aggregate of 40,623 shares of unvested common stock
to certain of our directors, which shares vested in January 2013. Subsequently, in fiscal 2012, we also granted
unvested stock options to purchase 66,500 shares of stock.
Share Reserve. We have reserved a total of 5,830,983 shares of our common stock for issuance pursuant to
the 2012 Stock Incentive Plan. In addition, the 2012 Stock Incentive Plan provides for annual increases in the
number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with
our fiscal year following the year of our initial public offering, equal to the lowest of (x) two percent of the
number of shares of our common stock outstanding on the last day of our immediately preceding fiscal year,
calculated on a fully diluted basis; or (y) a lower number of shares determined by our board of directors. After
giving effect to all outstanding awards made under the 2012 Stock Incentive Plan as of May 10,
2013, 4,352,732 shares remained available for grant.
Administration. Our board of directors administers the 2012 Stock Incentive Plan with respect to directors
and officers, and our board of directors has delegated to the compensation committee the non-exclusive authority
to administer the 2012 Stock Incentive Plan with respect to employees and consultant that are not executive
officers or directors. Notwithstanding the foregoing, in the case of awards intended to qualify as “performance-
based compensation” within the meaning of Section 162(m) of the Code, the administrator will consist of two or
more “outside directors” within the meaning of Section 162(m) of the Code. The administrator has the power to
determine and interpret the terms and conditions of the awards, including the employees, directors and
consultants who will receive awards, the exercise price, the number of shares subject to each such award, the
vesting schedule and exercisability of the awards, the restrictions on transferability of awards and the form of
consideration payable upon exercise. The administrator also has the authority to reduce the exercise prices of
outstanding stock options and the base appreciation amount of any stock appreciation right and to cancel options
and stock appreciation rights in exchange for new awards, in each case without stockholder approval.
Stock Options. The 2012 Stock Incentive Plan allows for the grant of incentive stock options that qualify under
Section 422 of the Code only to our employees and employees of any parent or subsidiary of ours. Non-qualified
stock options may be granted to our employees, directors, and consultants and those of any parent or subsidiary of
ours. The exercise price of all options granted under the 2012 Stock Incentive Plan must at least be equal to the fair
market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten
years, except that with respect to any employee who owns more than 10% of the voting power of all classes of our
outstanding stock or any parent or subsidiary corporation as of the grant date, the term must not exceed five years,
and the exercise price must equal at least 110% of the fair market value on the grant date.
After the continuous service of an employee, director or consultant terminates, he or she may exercise his or
her option, to the extent vested, for the period of time specified in the option agreement. However, an option may
not be exercised later than the expiration of its term.
Stock Appreciation Rights. The 2012 Stock Incentive Plan allows for the grant of stock appreciation rights.
Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common
stock between the date of grant and the exercise date. The administrator will determine the terms of stock
appreciation rights, including when such rights become exercisable and whether to pay the increased appreciation
in cash or with shares of our common stock, or a combination thereof, except that the base appreciation amount
for the cash or shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100%
of the fair market value per share on the date of grant. After the continuous service of an employee, director or
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