Restoration Hardware 2014 Annual Report Download - page 106

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. Friedman and
Mr. Alberini. 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 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 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 awards to certain of the Company’s directors under the Stock Incentive Plan. Such restricted
stock awards 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 in fiscal 2012.
On July 2, 2013, in connection with Mr. Friedman’s reappointment as Chairman and Co-Chief Executive
Officer, the Company granted a stock option to Mr. Friedman under the 2012 Stock Incentive Plan to purchase
1,000,000 shares of its common stock, with an exercise price of $75.43, which is equal to the closing price of the
Company’s common stock on the date of grant. This option is fully vested as of the date of grant but any shares
issued upon exercise of the option will be subject to selling restrictions which are scheduled to lapse in three
equal installments on the third, fourth and fifth anniversaries of the grant date. The fully vested option resulted in
a one-time non-cash stock-based compensation charge of $33.7 million in fiscal 2013.
As of February 1, 2014, there were a total of 12,660,024 shares issuable under the Option Plan and Stock
Incentive Plan. On February 3, 2014, an additional 782,495 shares became issuable under the Stock Incentive
Plan in accordance with the Stock Incentive Plan evergreen provision, increasing the total number of shares
issuable under the Option Plan and Stock Incentive Plan to 13,442,519. Awards under the plans reduce the
number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under
the Stock Incentive Plan increase the number of shares available for future issuance. Cancellations and forfeitures
of awards previously granted under the Option Plan are immediately retired and are no longer available for future
issuance. The number of shares available for future issuance under the Stock Incentive Plan as of January 31,
2015 was 1,952,273. There are no more shares available for issuance under the Option Plan. Shares issued as a
result of award exercises under the Option Plan and Stock Incentive Plan will be funded with the issuance of new
shares.
On February 2, 2015, an additional 797,851 shares became issuable under the Stock Incentive Plan in
accordance with the Stock Incentive Plan evergreen provision.
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