Restoration Hardware 2015 Annual Report Download - page 96

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93
The Company recorded stock-based compensation expense for restricted stock awards of $13.8 million, $10.2 million and $2.7
million in fiscal 2015, fiscal 2014 and fiscal 2013, respectively. As of fiscal 2015, the total unrecognized compensation expense
related to unvested restricted stock awards was $40.4 million, which is expected to be recognized on a straight-line basis over a
weighted-average period of 3.46 years.
2012 Equity Replacement Plan
In connection with the Reorganization, the Board of Directors adopted the Restoration Hardware 2012 Equity Replacement Plan
(the “Replacement Plan”), and outstanding units under the Team Resto Ownership Plan were replaced with vested and unvested shares
of common stock under the Replacement Plan, in some cases subject to selling restrictions.
A portion of the shares issued under the Replacement Plan, which are fully vested, are subject to resale restrictions whereby the
holder may not sell the shares until the earlier of 20 years after the initial public offering, or with respect to 818,209 of these shares,
such resale restrictions will lapse over time in accordance with the dates set forth in the applicable award agreement.
A portion of the shares issued under the Replacement Plan are unvested restricted shares issued to Mr. Friedman and Mr.
Alberini in replacement of certain of their performance-based units granted under the Team Resto Ownership Plan. With respect to the
1,331,548 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 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 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 as of the end of 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.
NOTE 16—EMPLOYEE BENEFIT PLANS
The Company has a 401(k) plan for its employees who meet certain service and age requirements. Participants may contribute
up to 50% of their salaries limited to the maximum allowed by the Internal Revenue Service regulations. The Company, at its
discretion, may contribute funds to the 401(k) plan. The Company made no contributions to the 401(k) plan during fiscal 2015, fiscal
2014, or fiscal 2013.