Restoration Hardware 2012 Annual Report Download - page 96

would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult
for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions
you desire.
We do not expect to pay any cash dividends for the foreseeable future.
We do not anticipate that we will pay any cash dividends on shares of our common stock for the foreseeable
future. Any determination to pay dividends in the future will be at the discretion of our board of directors and
will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by
applicable law and other factors our board of directors deems relevant. Accordingly, realization of a gain on your
investment will depend on the appreciation of the price of our common stock, which may never occur. Investors
seeking cash dividends in the foreseeable future should not purchase our common stock.
Home Holdings, Catterton and Tower Three continue to have significant influence over us, including over
decisions that require the approval of stockholders, and their interests in our business may be different from
yours.
Home Holdings owns approximately 25.9 million shares, or 66.7%, of our outstanding common stock
(including outstanding restricted shares). Of that amount, Catterton beneficially owns approximately 11.8 million
shares, or 30.3%, of our outstanding common stock, Tower Three beneficially owns approximately 11.1 million
shares, or 28.6%, of our outstanding common stock and Glenhill beneficially owns approximately 3.0 million
shares, or 7.8%, of our outstanding common stock.
Home Holdings, and through Home Holdings, Catterton, Tower Three and Glenhill, have significant influence
over our reporting and corporate management and affairs and are able to control certain matters requiring
stockholder approval. It is possible that the interests of our Principal Equity Holders may in some circumstances
conflict with the interests of our other stockholders, including you. We have entered into a stockholders agreement
with Home Holdings that provides for certain approval rights for Home Holdings and designation of directors by
Home Holdings. The stockholders agreement provides that, for so long as Home Holdings and the Principal Equity
Holders hold a majority of the voting power of our outstanding common stock, Home Holdings shall have the right
to nominate a majority of the members of our board of directors and as long as Home Holdings and the Principal
Equity Holders hold at least 30% of the voting power of our outstanding common stock, Home Holdings shall have
the right to nominate two members of our board of directors. For so long as Home Holdings and the Principal
Equity Holders own a majority of the voting power of our outstanding common stock, no action may be taken or
vote approved by our board of directors or any committee thereof (other than the audit committee or any other
committee of directors that may be created with the approval of Home Holdings as not being subject to this
provision) without the affirmative vote of the Catterton and Tower Three designated directors. In addition, for so
long as Home Holdings and the Principal Equity Holders hold at least 30% of the voting power of our outstanding
common stock, certain actions may not be taken without the approval of Home Holdings. The stockholders
agreement (and our certificate of incorporation) also provides for a waiver of the corporate opportunity doctrine
with respect to Home Holdings and its affiliates, including the Principal Equity Holders. If Home Holdings or its
affiliates, including the Principal Equity Holders, participate in any such corporate opportunity, Thomas Mottola
and Barry Sternlicht, two of our directors, will also be afforded a waiver of the corporate opportunity doctrine in
connection with any participation by them in any such corporate opportunity.
Our Principal Equity Holders are also in the business of making investments in companies and may from
time to time acquire and hold interests in businesses that compete directly or indirectly with us. Our Principal
Equity Holders may also pursue acquisition opportunities that are complementary to our business and, as a result,
those acquisition opportunities may not be available to us. So long as Home Holdings or our Principal Equity
Holders, or other funds controlled by or associated with our Principal Equity Holders, continue to indirectly own
a significant amount of our outstanding common stock, even if such amount represents less than a majority,
Home Holdings and our Principal Equity Holders will continue to be able to strongly influence our decisions.
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