Restoration Hardware 2014 Annual Report Download - page 109

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replacement of certain of their performance-based units, such shares began to vest during the period following
the initial public offering when the price of the Company’s common stock reached a 10-day average closing price
per share of $31.00 for at least 10 consecutive trading days, and such shares fully vested when the price of the
Company’s common stock reached a 10-day average closing price per share of $46.50 for at least 10 consecutive
trading days. In addition, with respect to the 512,580 shares received by Mr. Friedman and Mr. Alberini in
replacement of certain of their performance-based units, such shares began to vest during the period following
the initial public offering when the 10-day average closing price of the Company’s common stock exceeded the
initial public offering price of $24.00 per share for at least 10 consecutive trading days, and such shares fully
vested when the 10-day average closing price of the Company’s common stock reached a price per share of
$31.00 for at least 10 consecutive trading days.
In connection with Mr. Friedman’s resignation and new role as the Creator and Curator in fiscal 2012 and
prior to his reappointment as Chairman and Co-Chief Executive Officer in fiscal 2013, 1,185,511 shares of
unvested stock he received in replacement of certain performance-based units were marked to market every
period until the required vesting criteria were met in accordance with ASC 718.
During fiscal 2012, all 512,580 shares received by Mr. Friedman and Mr. Alberini in replacement of certain
of their performance-based units met the performance objective of $31.00 per share for at least 10 consecutive
trading days. The Company recorded a non-cash compensation charge of $12.5 million related to these awards in
fiscal 2012. During fiscal 2012, 442,932 shares of the 1,331,548 shares received by Mr. Friedman and
Mr. Alberini in replacement of certain of their performance-based units had vested in accordance with the
performance objective as described above. The Company recorded a non-cash compensation charge of $10.6
million related to these awards in fiscal 2012.
During fiscal 2013, 888,616 shares of the 1,331,548 shares received by Mr. Friedman and Mr. Alberini in
replacement of certain of their performance-based units vested in accordance with the performance objectives
described above. The Company recorded a non-cash compensation charge of $29.9 million related to these
awards in fiscal 2013. As all shares received by Mr. Friedman and Mr. Alberini in replacement of certain of their
performance-based units had vested during fiscal 2012 and fiscal 2013, no additional compensation expense will
be recorded in future periods related to these awards.
Aside from the awards described above, no other awards will be granted under the Replacement Plan.
Team Resto Ownership Plan
Home Holdings established the Team Resto Ownership Plan in fiscal 2009. Awards under the Team Resto
Ownership Plan were granted by the Home Holdings and were made up of the following:
• Time-based units—time-based units vested in annual installments, generally over a five-year graded
vesting period.
• Performance-based units—performance-based units vested based on a return on equity investment to
the Company’s investors between either two times and three times such investment or three times and
five times such investment.
All stock-based compensation expense associated with the grants of units by Home Holdings to the
Company’s directors, executive officers and employees was recorded by the Company. The Company recorded
stock-based compensation expense for time-based units of $1.1 million in fiscal 2012. In connection with its
initial public offering, the Company recorded $0.8 million related to the vested performance-based units in fiscal
2012.
On November 7, 2012, the Company completed its initial public offering and at the time of the initial public
offering, outstanding units under the Team Resto Ownership Plan, were replaced with common stock of the
Company.
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