RSTO » Topics » Meetings and Committees of the Board of Directors

These excerpts taken from the RSTO 10-K filed Jun 2, 2008.

Meetings and Committees of the Board of Directors

Our board of directors held ten formal meetings during the fiscal year ended February 2, 2008. Our board of directors also acted by written consent on several occasions and held numerous informal meetings during the fiscal year ended February 2, 2008. Our board of directors has the following four standing committees: an audit committee, a compensation committee, a nominating committee and a secondary committee under the 2007 Stock Incentive Plan. Each director attended or participated in 75% or more of the aggregate of (i) the total number of meetings of our board of directors, and (ii) the total number of meetings held by all committees of our board on which such director served, during the fiscal year ended February 2, 2008.

 

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Our board of directors has adopted a Code of Ethics for Chief Executive and Senior Financial Officers which applies to our chief executive officer and senior financial officers, and our board of directors has adopted a Code of Business Conduct which applies to all of our employees, officers and directors. Both codes are posted on our web site at www.RestorationHardware.com and any amendments or waivers to either code, to the extent they occur, shall also be posted on our web site, pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the rules thereunder promulgated by the Securities and Exchange Commission. Each code satisfies the requirements under Item 406 of Regulation S-K, and the Code of Business Conduct satisfies the NASDAQ rules applicable to issuers listed on the NASDAQ Global Market.

The board of directors has adopted an audit committee charter, which sets the qualifications of the audit committee members and the responsibilities and duties of the audit committee. A current copy of the audit committee charter was attached as Annex A to the proxy statement for our annual meeting of stockholders held on July 20, 2005.

Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, our audit committee of the board of directors currently consists of Messrs. Hamer, Hemmig and Young, with Mr. Young as the chairman of the committee. The audit committee’s primary purpose is to assist our board of directors in overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company. The audit committee also reviews the policies and procedures adopted by the Company to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles. The audit committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of the Company’s independent auditors. Additionally, the audit committee must preapprove all audit and non-audit services performed by the Company’s independent auditors. The audit committee also has been designated by our board of directors as a qualified legal compliance committee. Our audit committee held 10 meetings during the fiscal year ended February 2, 2008. Our audit committee also acted by written consent on several occasions and held additional informal meetings during the fiscal year ended February 2, 2008. After considering relationships between each member of the audit committee and the Company and our subsidiaries and reviewing the qualifications of the members of the audit committee, our board of directors has determined that all current members of the audit committee are: (1) “independent” as that term is defined in Section 10A of the Securities Exchange Act of 1934, as amended, and Rule 10A-3(b)(1) thereunder; and (2) “independent” as that term is defined in Marketplace Rules 4200 and 4350(d) of the listing standards of NASDAQ. Furthermore, our board of directors has determined that Mr. Young qualifies as an audit committee financial expert, as defined by the applicable rules of the Securities Exchange Act of 1934, as amended, and has current and past employment experience in finance which results in his financial sophistication for purposes of Marketplace Rule 4350(d) of the listing standards of NASDAQ.

Our compensation committee currently consists of Mr. Hemmig and Ms. Rhoades, with Mr. Hemmig as chairman of the committee. Our board of directors has determined that all current members of the compensation committee are “independent” as that term is defined in Rule 4200 of the listing standards of NASDAQ. The compensation committee’s function is to assist our board of directors in discharging its responsibilities relating to compensation of our directors and officers, in particular, by reviewing and determining the salaries and incentives of our executive officers, including the Chief Executive Officer, and establishing the general compensation goals and objectives for such individuals. Our compensation committee also has concurrent authority with our secondary committee to administer aspects of our 2007 Stock Incentive Plan. With regard to our executive officers, our compensation committee has sole and exclusive authority to administer aspects of the plan and to make discretionary option grants under the plan to such persons. Our compensation committee held six formal meetings during the fiscal year ended February 2, 2008. Our compensation committee also acted by written consent on several occasions and held numerous informal meetings during the fiscal year ended February 2, 2008. A current copy of the compensation committee charter was attached as Appendix B to the proxy statement for our annual meeting of stockholders held on July 12, 2007.

The sole member of our nominating committee is currently Mr. Krevlin. Our board of directors has determined that Mr. Krevlin is “independent” as that term is defined in Rule 4200 of the listing standards of NASDAQ. The nominating committee’s function is to assist the board in all matters relating to the establishment, implementation and monitoring of policies and processes regarding the recruitment and nomination of candidates to the board and committees of the board and to review, and to make recommendations to the board of directors regarding, the composition of the board and committees of the board. Additional duties and responsibilities of the nominating committee are set forth in its charter, which was adopted and approved in May 2004 and a copy of which is available on our web site at www.RestorationHardware.com. Our nominating committee did not hold any formal meetings during the fiscal year ended February 2, 2008. In accordance with NASDAQ Marketplace Rule 4350(c), director nominees will either be selected, or recommended for the Board’s selection, by a majority of the independent directors or a nominating committee comprised solely of independent directors.

 

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Our secondary committee under the 2007 Stock Incentive Plan currently consists of Mr. Friedman. Although the compensation committee retains plenary authority with respect to equity grants under our 2007 Incentive Plan, the secondary committee has the authority to make certain discretionary equity grants under our 2007 Stock Incentive Plan to eligible individuals other than our executive officers pursuant to guidelines issued from time to time by our board. The secondary committee held 11 meetings during the fiscal year ended February 2, 2008.

The board may from time to time form special or other committees to consider particular matters that arise. During fiscal year 2007, a separate independent committee was created comprised of all directors that are independent with respect to the proposed merger transaction between the Company and certain affiliates of Catterton Partners, which is described further below in Item 13 under the heading “Agreement and Plan of Merger.” The members of the independent committee are Mr. Camp, Mr. Hamer, Mr. Hemmig, Ms. Rhoades and Mr. Young, with Mr. Hemmig serving as the chairman of the independent committee. The independent committee established a working group of the independent committee, with such working group being comprised of Mr. Hamer, Mr. Hemmig and Mr. Young.

Meetings and Committees of the Board of Directors

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Our board of directors held ten formal meetings during the fiscal year ended February 2, 2008. Our board of directors also acted by written consent
on several occasions and held numerous informal meetings during the fiscal year ended February 2, 2008. Our board of directors has the following four standing committees: an audit committee, a compensation committee, a nominating committee and
a secondary committee under the 2007 Stock Incentive Plan. Each director attended or participated in 75% or more of the aggregate of (i) the total number of meetings of our board of directors, and (ii) the total number of meetings held by
all committees of our board on which such director served, during the fiscal year ended February 2, 2008.

 


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Our board of directors has adopted a Code of Ethics for Chief Executive and Senior Financial Officers
which applies to our chief executive officer and senior financial officers, and our board of directors has adopted a Code of Business Conduct which applies to all of our employees, officers and directors. Both codes are posted on our web site at
www.RestorationHardware.com and any amendments or waivers to either code, to the extent they occur, shall also be posted on our web site, pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the rules
thereunder promulgated by the Securities and Exchange Commission. Each code satisfies the requirements under Item 406 of Regulation S-K, and the Code of Business Conduct satisfies the NASDAQ rules applicable to issuers listed on the NASDAQ
Global Market.

The board of directors has adopted an audit committee charter, which sets the qualifications of the audit committee members
and the responsibilities and duties of the audit committee. A current copy of the audit committee charter was attached as Annex A to the proxy statement for our annual meeting of stockholders held on July 20, 2005.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, our audit committee of the board of directors
currently consists of Messrs. Hamer, Hemmig and Young, with Mr. Young as the chairman of the committee. The audit committee’s primary purpose is to assist our board of directors in overseeing the accounting and financial reporting
processes of the Company and audits of the financial statements of the Company. The audit committee also reviews the policies and procedures adopted by the Company to fulfill its responsibilities regarding the fair and accurate presentation of
financial statements in accordance with generally accepted accounting principles. The audit committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of the Company’s independent auditors.
Additionally, the audit committee must preapprove all audit and non-audit services performed by the Company’s independent auditors. The audit committee also has been designated by our board of directors as a qualified legal compliance
committee. Our audit committee held 10 meetings during the fiscal year ended February 2, 2008. Our audit committee also acted by written consent on several occasions and held additional informal meetings during the fiscal year ended
February 2, 2008. After considering relationships between each member of the audit committee and the Company and our subsidiaries and reviewing the qualifications of the members of the audit committee, our board of directors has determined that
all current members of the audit committee are: (1) “independent” as that term is defined in Section 10A of the Securities Exchange Act of 1934, as amended, and Rule 10A-3(b)(1) thereunder; and
(2) “independent” as that term is defined in Marketplace Rules 4200 and 4350(d) of the listing standards of NASDAQ. Furthermore, our board of directors has determined that Mr. Young qualifies as an audit committee financial
expert, as defined by the applicable rules of the Securities Exchange Act of 1934, as amended, and has current and past employment experience in finance which results in his financial sophistication for purposes of Marketplace Rule 4350(d) of
the listing standards of NASDAQ.

Our compensation committee currently consists of Mr. Hemmig and Ms. Rhoades, with
Mr. Hemmig as chairman of the committee. Our board of directors has determined that all current members of the compensation committee are “independent” as that term is defined in Rule 4200 of the listing standards of NASDAQ. The
compensation committee’s function is to assist our board of directors in discharging its responsibilities relating to compensation of our directors and officers, in particular, by reviewing and determining the salaries and incentives of our
executive officers, including the Chief Executive Officer, and establishing the general compensation goals and objectives for such individuals. Our compensation committee also has concurrent authority with our secondary committee to administer
aspects of our 2007 Stock Incentive Plan. With regard to our executive officers, our compensation committee has sole and exclusive authority to administer aspects of the plan and to make discretionary option grants under the plan to such persons.
Our compensation committee held six formal meetings during the fiscal year ended February 2, 2008. Our compensation committee also acted by written consent on several occasions and held numerous informal meetings during the fiscal year ended
February 2, 2008. A current copy of the compensation committee charter was attached as Appendix B to the proxy statement for our annual meeting of stockholders held on July 12, 2007.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The sole member of our nominating committee is currently Mr. Krevlin. Our board of directors has determined that Mr. Krevlin is
“independent” as that term is defined in Rule 4200 of the listing standards of NASDAQ. The nominating committee’s function is to assist the board in all matters relating to the establishment, implementation and monitoring of
policies and processes regarding the recruitment and nomination of candidates to the board and committees of the board and to review, and to make recommendations to the board of directors regarding, the composition of the board and committees of the
board. Additional duties and responsibilities of the nominating committee are set forth in its charter, which was adopted and approved in May 2004 and a copy of which is available on our web site at www.RestorationHardware.com. Our
nominating committee did not hold any formal meetings during the fiscal year ended February 2, 2008. In accordance with NASDAQ Marketplace Rule 4350(c), director nominees will either be selected, or recommended for the Board’s selection,
by a majority of the independent directors or a nominating committee comprised solely of independent directors.

 


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Our secondary committee under the 2007 Stock Incentive Plan currently consists of Mr. Friedman.
Although the compensation committee retains plenary authority with respect to equity grants under our 2007 Incentive Plan, the secondary committee has the authority to make certain discretionary equity grants under our 2007 Stock Incentive Plan to
eligible individuals other than our executive officers pursuant to guidelines issued from time to time by our board. The secondary committee held 11 meetings during the fiscal year ended February 2, 2008.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The board may from time to time form special or other committees to consider particular matters that arise. During fiscal year 2007, a separate
independent committee was created comprised of all directors that are independent with respect to the proposed merger transaction between the Company and certain affiliates of Catterton Partners, which is described further below in Item 13
under the heading “Agreement and Plan of Merger.” The members of the independent committee are Mr. Camp, Mr. Hamer, Mr. Hemmig, Ms. Rhoades and Mr. Young, with Mr. Hemmig serving as the chairman of the
independent committee. The independent committee established a working group of the independent committee, with such working group being comprised of Mr. Hamer, Mr. Hemmig and Mr. Young.

STYLE="margin-top:18px;margin-bottom:0px">Director Nomination Process

Our amended and restated
bylaws provides that nominations for election to our board of directors must be made by the board of directors or by a committee appointed by the board of directors for such purpose or by any stockholder of any outstanding class of our capital stock
entitled to vote for the election of directors. Nominations by stockholders must be preceded by notification in writing received by our Secretary, Chris Newman, not less than 120 days prior to any meeting of stockholders called for the
election of directors. A stockholder’s notice must contain the written consent of each proposed nominee to serve as a director if so elected and the following information as to each proposed nominee and as to each person, acting alone or in
conjunction with one or more other persons as a partnership, limited partnership, syndicate or other group, who participates or is expected to participate in making the nomination or in organizing, directing or financing the nomination or
solicitation of proxies to vote for the nominee: (a) the name, age, residence, address, and business address of each proposed nominee and of each such person; (b) the principal occupation or employment, the name, type of business and
address of the corporation or other organization in which such employment is carried on of each proposed nominee and of each such person; (c) the amount of our stock owned beneficially, either directly or indirectly, by each proposed nominee
and each such person; and (d) a description of any arrangement or understanding of each proposed nominee and of each such person with each other or any other person regarding future employment or any future transaction to which the Company will
or may be a party.

With respect to director nominees by our board of directors, our board of directors has resolved that director nominees
are to be recommended for the board’s selection either by a majority of the independent directors on the board or by our nominating committee, provided that our nominating committee is comprised solely of independent directors in accordance
with the NASDAQ rules applicable to issuers listed on the NASDAQ Global Market. However, such authority to select or to recommend to the board of directors for selection the director nominees shall not apply in cases where the right to nominate a
director legally belongs to a third party or parties.

Our board of directors has adopted a policy pursuant to which our board of
directors, our nominating committee and the independent directors of the board of directors recommending director nominees shall consider any director candidates recommended by our stockholders, provided the information regarding director candidates
recommended by stockholders is submitted to our board of directors, the nominating committee or the independent directors of the board recommending director nominees, as applicable, in compliance with the following requirements. Director candidate
nominations from stockholders must be provided in writing and must include (a)(1) the candidate’s name, age, business address and residence address, (2) the candidate’s biographical information, including educational information,
principal occupation or employment, past work experience (including all positions held during the past five years), personal references, and service on boards of directors or other material positions that the candidate currently holds or has held
during the prior three years, (3) the number of shares of the Company which are beneficially owned by the candidate, (4) any potential conflicts of interest that might prevent or otherwise limit the candidate from serving as an effective
member, and (5) any other information pertinent to the qualification of the candidate, and (b)(1) the name and record address of the stockholder making the recommendation, and (2) the number of shares of the Company which are beneficially
owned by such stockholder and the period of time such shares have been held, including whether such shares have been held for in excess of one year prior to the date of the recommendation. These director candidate recommendation materials are to be
sent to our Secretary, Chris Newman, at our principal executive offices, and may be submitted at any time. Since the issuance of our proxy statement for our 2003 annual meeting of stockholders, we have not received a director nominee recommendation
from any stockholder (or group of stockholders) that beneficially owns more than five percent of our common stock.

 


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The process for identifying and evaluating nominees for director, including nominees recommended by
stockholders, involves (with or without the assistance of a retained search firm) compiling names of potentially eligible candidates, vetting candidates’ qualifications, conducting background and reference checks, conducting interviews with
candidates and/or others (as schedules permit), meeting to consider and recommend final candidates to the board of directors and, as appropriate, preparing and presenting to the board of directors an analysis with regard to particular, recommended
candidates. Our nominating committee or the independent directors of the board of directors recommending director nominees also will identify director nominees who have the highest personal and professional integrity, have demonstrated exceptional
ability and judgment, and, together with other director nominees and members of our board of directors, shall effectively serve our stockholders’ long-term interests and contribute to the Company’s overall corporate goals. There are no
differences in the manner in which our nominating committee or the independent directors of the board of directors recommending director nominees evaluate nominees for director based on whether the nominee is recommended by a stockholder.

There are no specific, minimum qualifications that our nominating committee or the independent directors of the board of directors
recommending director nominees shall require to be met by a committee/independent director-recommended nominee for a position on our board of directors, nor are there any specific qualities or skills that are necessary for one or more of our
directors to possess, other than as are necessary to meet specific requirements under the rules of the Securities and Exchange Commission and NASDAQ for NASDAQ-listed issuers. Our nominating committee and the independent directors of the board of
directors recommending director nominees shall consider a potential candidate’s experience, areas of expertise, and other factors relative to the overall composition of our board of directors.

STYLE="margin-top:18px;margin-bottom:0px">Compensation Committee Interlocks and Insider Participation

SIZE="2">During the fiscal year ended February 2, 2008, the members of the compensation committee of our board of directors were Mr. Hemmig and Ms. Rhoades. None of the individuals on our compensation committee were officers or
employees of the Company at any time during the fiscal year ended February 2, 2008, or at any other time. None of our current executive officers served as members of the board of directors or compensation committee of any other entity which has
one or more executive officers serving as a member of our board of directors or compensation committee.

This excerpt taken from the RSTO DEF 14A filed Jun 4, 2007.

Meetings and Committees of the Board of Directors

Our board of directors held seven formal meetings during the fiscal year ended February 3, 2007. Our board of directors also acted by written consent on several occasions and held numerous informal meetings during the fiscal year ended February 3, 2007. Our board of directors has an audit committee, a compensation committee, a nominating committee and a secondary committee under the 1998 Stock Incentive Plan. Each director attended or participated in 75% or more of the aggregate of (i) the total number of meetings of our board of directors, and (ii) the total number of meetings held by all committees of our board on which such director served, during the fiscal year ended February 3, 2007.

In March 2005, the board of directors voted to create the position of lead independent director of the board of directors and adopted a lead independent director charter. The charter provides that the lead independent director shall serve in a lead capacity to coordinate the activities of the other non-employee directors and to perform such other duties and functions as directed by the board from time to time. None of our directors currently serves as lead independent director.

Our board of directors has adopted a Code of Ethics for Chief Executive and Senior Financial Officers which applies to our chief executive officer and senior financial officers, and our board of directors has adopted a Code of Business Conduct which applies to all of our employees, officers and directors. Both codes are posted on our web site at www.RestorationHardware.com and any amendments or waivers to either code, to the extent they occur, shall also be posted on our web site, pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the rules thereunder promulgated by the Securities and Exchange Commission. Each code satisfies the requirements under Item 406 of Regulation S-K, and the Code of Business Conduct satisfies the NASDAQ rules applicable to issuers listed on the NASDAQ Global Market.

The board of directors has adopted an audit committee charter, which sets the qualifications of the audit committee members and the responsibilities and duties of the audit committee. A current copy of the audit committee charter was attached as Annex A to our 2005 proxy statement.

Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, our audit committee of the board of directors currently consists of Messrs. Hamer, Hemmig and Young, with Mr. Young as the chairman of the committee. During the fiscal year ended February 3, 2007, the audit committee of the board of directors consisted of Messrs. Damon H. Ball, Hemmig and Young, with Mr. Young as the chairman of the committee. The audit committee’s primary purpose is to assist our board of directors in overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company. The audit committee also reviews the policies and procedures adopted by the Company to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles. The audit committee is directly responsible for,

 

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among other things, the appointment, compensation, retention and oversight of the Company’s independent auditors. Additionally, the audit committee must preapprove all audit and non-audit services performed by the Company’s independent auditors. The audit committee also has been designated by our board of directors as a qualified legal compliance committee. Our audit committee held 12 meetings during the fiscal year ended February 3, 2007. Our audit committee also acted by written consent on several occasions and held additional informal meetings during the fiscal year ended February 3, 2007. After considering relationships between each member of the audit committee and the Company and our subsidiaries and reviewing the qualifications of the members of the audit committee, our board of directors has determined that all current members of the audit committee are: (1) “independent” as that term is defined in Section 10A of the Securities Exchange Act of 1934, as amended, and Rule 10A-3(b)(1) thereunder; and (2) “independent” as that term is defined in Marketplace Rules 4200 and 4350(d) of the listing standards of the National Association of Securities Dealers, Inc. Furthermore, our board of directors has determined that Mr. Young qualifies as an audit committee financial expert, as defined by the applicable rules of the Securities Exchange Act of 1934, as amended, and has current and past employment experience in finance which results in his financial sophistication for purposes of Marketplace Rule 4350(d) of the listing standards of the National Association of Securities Dealers, Inc.

Our compensation committee currently consists of Mr. Hemmig and Ms. Rhoades, with Mr. Hemmig as chairman of the committee. Our board of directors has determined that all current members of the compensation committee are “independent” as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers, Inc. The compensation committee’s function is to assist our board of directors in discharging its responsibilities relating to compensation of our directors and officers, in particular, by reviewing and determining the salaries and incentives of our executive officers, including the Chief Executive Officer, and establishing the general compensation goals and objectives for such individuals. Our compensation committee also has concurrent authority with our secondary committee to administer aspects of our 1998 Stock Incentive Plan. With regard to our executive officers, our compensation committee has sole and exclusive authority to administer aspects of the plan and to make discretionary option grants under the plan to such persons. Our compensation committee held 11 formal meetings during the fiscal year ended February 3, 2007. Our compensation committee also acted by written consent on several occasions and held numerous informal meetings during the fiscal year ended February 3, 2007. A current copy of the compensation committee charter is attached as Appendix B hereto.

The sole member of our nominating committee is currently Mr. Krevlin. During the fiscal year ended February 3, 2007, our nominating committee was comprised of Messrs. Ball and Krevlin. Our board of directors has determined that Mr. Krevlin is “independent” as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers, Inc. The nominating committee’s function is to assist the board in all matters relating to the establishment, implementation and monitoring of policies and processes regarding the recruitment and nomination of candidates to the board and committees of the board and review, and to make recommendations to the board of directors regarding, the composition of the board and committees of the board. Additional duties and responsibilities of the nominating committee are set forth in its charter, which was adopted and approved in May 2004 and a copy of which is available on our web site at www.RestorationHardware.com. Our nominating committee did not hold any formal meetings during the fiscal year ended February 3, 2007, but informal meetings between the two members of the nominating committee during the fiscal year ended February 3, 2007 were held throughout the fiscal year and the nominating committee acted by written consent on one occasion during the fiscal year. In accordance with NASDAQ Marketplace Rule 4350(c), director nominees will either be selected, or recommended for the Board’s selection, by a majority of the independent directors or a nominating committee comprised solely of independent directors.

Our secondary committee under the 1998 Stock Incentive Plan currently consists of Mr. Friedman and has concurrent authorization with the compensation committee to make discretionary option grants under our 1998 Stock Incentive Plan to eligible individuals other than our executive officers pursuant to guidelines issued from time to time by our board. The committee held 20 meetings during the fiscal year ended February 3, 2007.

 

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This excerpt taken from the RSTO DEF 14A filed May 30, 2006.

Meetings and Committees of the Board of Directors

Our board of directors held seven meetings during the fiscal year ended January 28, 2006. Our board of directors has an audit committee, a compensation committee, a nominating committee and a secondary committee under the 1998 stock incentive plan. Each director, other than Mr. Krevlin, attended or participated in 75% or more of the aggregate of (i) the total number of meetings of our board of directors, and (ii) the total number of meetings held by all committees of our board on which such director served, during the fiscal year ended January 28, 2006.

In March 2005, the board of directors voted to create the position of lead independent director of the board of directors and adopted a lead independent director charter. The charter provides that the lead independent director shall serve in a lead capacity to coordinate the activities of the other non-employee directors and to perform such other duties and functions as directed by the board from time to time. Mr. Ball currently serves as lead independent director.

Our board of directors has adopted a Code of Ethics for Chief Executive and Senior Financial Officers and a Code of Business Conduct which applies to all of our employees, officers and directors. Both codes are posted on our web site at www.RestorationHardware.com and any amendments or waivers to either code, to the extent they occur, shall also be posted on our web site, pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the rules thereunder promulgated by the Securities and Exchange Commission. Each code satisfies the requirements under Item 406 of Regulation S-K, and the Code of Business Conduct satisfies the Nasdaq rules applicable to issuers listed on the Nasdaq National Market.

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The board of directors has adopted an audit committee charter, which sets for the qualifications of the audit committee members and the responsibilities and duties of the audit committee. A current copy of the audit committee charter was attached as Annex A to our 2005 proxy statement.

Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, our separately-designated standing audit committee of the board of directors currently consists of Messrs. Ball, Hemmig, and Young, with Mr. Young as the chairman of the committee. The audit committee’s primary purpose is to assist our board of directors in overseeing the accounting and financial reporting processes of the company and audits of the financial statements of the company. The audit committee also reviews the policies and procedures adopted by the company to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles. The audit committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of the company’s independent auditors. Additionally, the audit committee must preapprove all audit and non-audit services performed by the company’s independent auditors. The audit committee also has been designated by our board of directors as a qualified legal compliance committee. Our audit committee held 10 meetings during the fiscal year ended January 28, 2006. After considering relationships between each member of the audit committee and our company and our subsidiaries and reviewing the qualifications of the members of the audit committee, our board of directors has determined that all current members of the audit committee are: (1) ”independent” as that term is defined in Section 10A of the Securities Exchange Act of 1934, as amended, and Rule 10A-3(b)(1) thereunder; and (2) ”independent” as that term is defined in Marketplace Rules 4200 and 4350(d) of the listing standards of the National Association of Securities Dealers, Inc. Furthermore, our board of directors has determined that Mr. Young qualifies as an audit committee financial expert, as defined by the applicable rules of the Securities Exchange Act of 1934, as amended, and has current and past employment experience in finance which results in his financial sophistication for purposes of Marketplace Rule 4350(d) of the listing standards of the National Association of Securities Dealers, Inc.

Our compensation committee currently consists of Mr. Hemmig and Ms. Rhoades, with Mr. Hemmig as chairman of the committee. Our board of directors has determined that all current members of the compensation committee are “independent” as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers, Inc. The compensation committee’s function is to assist our board of directors in discharging its responsibilities relating to compensation of our directors and officers, in particular, by reviewing and determining the salaries and incentives of our executive officers, including the Chief Executive Officer, and establishing the general compensation goals and objectives for such individuals. Our compensation committee also has concurrent authority with our secondary committee to administer aspects of our 1998 stock incentive plan. With regard to our executive officers, our compensation committee has sole and exclusive authority to administer aspects of the plan and to make discretionary option grants under the plan to such persons. Our compensation committee held four formal meetings during the fiscal year ended January 28, 2006, although there were numerous informal meetings between the two members of the compensation committee.

Our nominating committee currently consists of Messrs. Ball and Krevlin. Our board of directors has determined that all current members of the nominating committee are “independent” as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers, Inc. The nominating committee is to assist the board in all matters relating to the establishment, implementation and monitoring of policies and processes regarding the recruitment and nomination of candidates to the board and committees of the board and review and making of recommendations to the board of directors regarding the composition of the board and committees of the board. Additional duties and responsibilities of the nominating committee are set forth in its charter, which was adopted and approved in May 2004 and a copy of which is available on our web site at www.RestorationHardware.com. Our nominating committee

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held one meeting during the fiscal year ended January 28, 2006, although there were numerous informal meetings between the two members of the nominating committee.

Our secondary committee under the 1998 stock incentive plan currently consists of Mr. Friedman and has concurrent authorization with the compensation committee to make discretionary option grants under our 1998 stock incentive plan to eligible individuals other than our executive officers pursuant to guidelines issued from time to time by our board. The committee held 26 meetings during the fiscal year ended January 28, 2006.

This excerpt taken from the RSTO DEF 14A filed May 31, 2005.
Meetings and Committees of the Board of Directors

Our board of directors held 11 meetings during the fiscal year ended January 29, 2005. Our board of directors has an audit committee, a compensation committee, a nominating committee and a secondary committee under the 1998 stock incentive plan and a special purpose committee for non-plan option grants. Each director attended or participated in 75% or more of the aggregate of (i) the total number of meetings of our board of directors, and (ii) the total number of meetings held by all committees of our board on which such director served, during the fiscal year ended January 29, 2005.

In March 2005, the board of directors voted to create the position of lead independent director of the board of directors and adopted a lead independent director charter. The charter provides that the lead independent director shall serve in a lead capacity to coordinate the activities of the other non-employee directors and to perform such other duties and functions as directed by the board from time to time. Mr. Ball currently serves as lead independent director.

Our board of directors has adopted a Code of Ethics for Chief Executive and Senior Financial Officers and a Code of Business Conduct which applies to all of our employees, officers and directors. Both codes are posted on our web site at www.RestorationHardware.com and any amendments or waivers to either code, to the extent they occur, shall also be posted on our web site, pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the rules thereunder promulgated by the Securities and Exchange Commission. Each code satisfies the requirements under Item 406 of Regulation S-K, and the Code of Business Conduct satisfies the Nasdaq rules applicable to issuers listed on the Nasdaq National Market.

The board of directors has adopted an audit committee charter, which sets for the qualifications of the audit committee members and the responsibilities and duties of the audit committee. A current copy of the audit committee charter is attached as Annex A to this proxy statement.

Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, our separately-designated standing audit committee of the board of directors currently consists of Messrs. Ball, Hemmig, Krevlin and Young, with Mr. Young as the chairman of the committee. The audit committee’s primary purpose is to assist our board of directors in overseeing the accounting and financial reporting processes of the company and audits of the consolidated financial statements of the company. The audit committee also reviews the policies and procedures adopted by the company to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles. The audit committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of the company’s independent auditors. Additionally, the audit committee must preapprove all audit and non-audit services performed by the company’s independent auditors. The audit committee also has been designated by our board of directors as a qualified legal compliance committee. Our audit committee held 13 meetings during the fiscal year ended January 29, 2005. After considering relationships between each member of the audit committee and our company and our subsidiaries and reviewing the qualifications of the members of the audit committee, our board of directors has determined that all current members of the audit committee are: (1) “independent” as that term is defined in Section 10A of the Securities Exchange Act of 1934, as

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amended, and Rule 10A-3(b)(1) thereunder; and (2) “independent” as that term is defined in Marketplace Rules 4200 and 4350(d) of the listing standards of the National Association of Securities Dealers, Inc. Furthermore, our board of directors has determined that Mr. Young qualifies as an audit committee financial expert, as defined by the applicable rules of the Securities Exchange Act of 1934, as amended, and has current and past employment experience in finance which results in his financial sophistication for purposes of Marketplace Rule 4350(d) of the listing standards of the National Association of Securities Dealers, Inc.

Our compensation committee currently consists of Messrs. Hemmig and Schwartz and Ms. Rhoades, with Mr. Hemmig as chairman of the committee. Our board of directors has determined that all current members of the compensation committee are “independent” as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers, Inc. The compensation committee’s function is to assist our board of directors in discharging its responsibilities relating to compensation of our directors and officers, in particular, by reviewing and determining the salaries and incentives of our executive officers, including the Chief Executive Officer, and establishing the general compensation goals and objectives for such individuals. Our compensation committee also has concurrent authority with our secondary committee to administer aspects of our 1998 stock incentive plan. With regard to our executive officers, our compensation committee has sole and exclusive authority to administer aspects of the plan and to make discretionary option grants under the plan to such persons. Our compensation committee held nine formal meetings during the fiscal year ended January 29, 2005, although there were numerous informal meetings between the members of the compensation committee during fiscal 2004.

Our nominating committee currently consists of Messrs. Ball, Krevlin and Schwartz. Our board of directors has determined that all of the current members of our nominating committee are “independent” as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers, Inc. The nominating committee is to assist the board in all matters relating to the establishment, implementation and monitoring of policies and processes regarding the recruitment and nomination of candidates to the board and committees of the board and review and making of recommendations to the board of directors regarding the composition of the board and committees of the board. Additional duties and responsibilities of the nominating committee are set forth in its charter, which was adopted and approved in May 2004 and a copy of which is available on our web site at www.RestorationHardware.com. Our nominating committee held two meetings during the fiscal year ended January 29, 2005.

Our secondary committee under the 1998 stock incentive plan currently consists of Mr. Friedman and has concurrent authorization with the compensation committee to make discretionary option grants under our 1998 stock incentive plan to eligible individuals other than our executive officers pursuant to guidelines issued from time to time by our board. The committee held 23 meetings during the fiscal year ended January 29, 2005.

Our special purpose committee for non-plan option grants currently consists of Mr. Friedman. The special purpose committee was established in May 2001 and has concurrent authorization with our board to make option grants exercisable for up to an aggregate 1,000,000 shares of common stock outside of the 1998 stock incentive plan to eligible individuals other than our executive officers pursuant to guidelines issued from time to time by our board. Our board or the compensation committee also may, in either’s sole discretion and at any time, restrict or withdraw from the special purpose committee, as to any particular matters or categories of matters, the authority to make any or certain option grants. The special purpose committee did not hold any meetings during the fiscal year ended January 29, 2005.

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