RSTO » Topics » Setting Executive Compensation

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

Setting Executive Compensation

Based on the foregoing objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive compensation to motivate executive officers to achieve the business goals set by the Company and reward executive officers for achieving such goals.

In making compensation decisions, the Committee believes that information regarding pay practices at other peer companies is useful because the Committee recognizes that the Company’s compensation practices must be competitive in the marketplace.

In furtherance of these objectives, the Committee engages consulting firms from time to time to provide research regarding compensation programs and compensation levels among a peer group of publicly-traded and privately held retail companies. The Committee most recently engaged a consulting firm in 2006 in order to provide compensation levels of peer group companies. This information was used by the Committee in connection with certain of the Committee’s compensation decisions for fiscal year 2007. The consultant, which was a small independent outside human resources firm, reported directly to the Committee. The Committee’s charter grants the Committee the sole authority to retain and terminate any consultant that it uses to assist in the Committee’s evaluation of director or executive officer compensation. The independent consulting firm provided the Committee with relevant market data and alternatives to consider when making compensation decisions for the executive officers. The companies comprising the peer group were as follows: Cost Plus, Sharper Image, Williams-Sonoma, Pier 1 Imports, Bombay Companies, Kirkland’s, and Gap, Inc.

For fiscal year 2007, there was no pre-established policy or target for the allocation of cash and non-cash or short-term and long-term incentive compensation. Among other factors, the Committee relies upon its judgment and, when appropriate, management’s judgment of each individual in determining the amount and mix of compensation elements and whether each particular payment or award provides an appropriate incentive and reward for performance that sustains and enhances stockholder value. Key factors affecting this judgment include:

 

   

performance compared to the financial, operational and strategic goals established for the executive officer or the Company at the beginning of the year;

 

   

nature, scope and level of responsibilities;

 

   

contribution to the Company’s financial results, particularly with respect to key metrics such as cash flow, revenue and earnings; and

 

   

effectiveness in leading Company initiatives.

In addition, the Committee considers each executive officer’s current salary and prior-year bonus, the appropriate balance between incentives for long-term and short-term performance, the compensation paid to the executive officer’s peers within the Company and the compensation paid to similarly-situated executive officers at peer companies.

The Committee also has engaged consulting firms from time to time to help evaluate the Company’s executive compensation program. The Committee most recently engaged Mercer Consulting in 2006, which advised the Committee during fiscal years 2006 and 2007 on the Company’s compensation mix and the structure of the Company’s equity program for fiscal year 2007 and provided the Committee with comparison information on compensation practices followed by other comparable companies.

Setting Executive Compensation

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Based on the foregoing objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive
compensation to motivate executive officers to achieve the business goals set by the Company and reward executive officers for achieving such goals.

FACE="Times New Roman" SIZE="2">In making compensation decisions, the Committee believes that information regarding pay practices at other peer companies is useful because the Committee recognizes that the Company’s compensation practices must
be competitive in the marketplace.

In furtherance of these objectives, the Committee engages consulting firms from time to time to provide
research regarding compensation programs and compensation levels among a peer group of publicly-traded and privately held retail companies. The Committee most recently engaged a consulting firm in 2006 in order to provide compensation levels of peer
group companies. This information was used by the Committee in connection with certain of the Committee’s compensation decisions for fiscal year 2007. The consultant, which was a small independent outside human resources firm, reported directly
to the Committee. The Committee’s charter grants the Committee the sole authority to retain and terminate any consultant that it uses to assist in the Committee’s evaluation of director or executive officer compensation. The independent
consulting firm provided the Committee with relevant market data and alternatives to consider when making compensation decisions for the executive officers. The companies comprising the peer group were as follows: Cost Plus, Sharper Image,
Williams-Sonoma, Pier 1 Imports, Bombay Companies, Kirkland’s, and Gap, Inc.

For fiscal year 2007, there was no pre-established
policy or target for the allocation of cash and non-cash or short-term and long-term incentive compensation. Among other factors, the Committee relies upon its judgment and, when appropriate, management’s judgment of each individual in
determining the amount and mix of compensation elements and whether each particular payment or award provides an appropriate incentive and reward for performance that sustains and enhances stockholder value. Key factors affecting this judgment
include:

 







  

performance compared to the financial, operational and strategic goals established for the executive officer or the Company at the beginning of the year;

 







  

nature, scope and level of responsibilities;

 







  

contribution to the Company’s financial results, particularly with respect to key metrics such as cash flow, revenue and earnings; and

 







  

effectiveness in leading Company initiatives.

FACE="Times New Roman" SIZE="2">In addition, the Committee considers each executive officer’s current salary and prior-year bonus, the appropriate balance between incentives for long-term and short-term performance, the compensation paid to the
executive officer’s peers within the Company and the compensation paid to similarly-situated executive officers at peer companies.

SIZE="2">The Committee also has engaged consulting firms from time to time to help evaluate the Company’s executive compensation program. The Committee most recently engaged Mercer Consulting in 2006, which advised the Committee during fiscal
years 2006 and 2007 on the Company’s compensation mix and the structure of the Company’s equity program for fiscal year 2007 and provided the Committee with comparison information on compensation practices followed by other comparable
companies.

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

Setting Executive Compensation

Based on the foregoing objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive compensation to motivate executive officers to achieve the business goals set by the Company and reward executive officers for achieving such goals.

In making compensation decisions, the Committee believes that information regarding pay practices at other peer companies is useful because the Committee recognizes that the Company’s compensation practices must be competitive in the marketplace.

In furtherance of these objectives, in 2006 the Committee engaged a small independent outside human resources consulting firm to provide research regarding compensation programs and compensation levels among a peer group of publicly-traded and privately held retail companies. The independent consulting firm reported directly to the Committee. The Committee’s charter grants the Committee the sole authority to retain and terminate any consultant that it uses to assist in the Committee’s evaluation of director or executive officer compensation.

The independent consulting firm provided the Committee with relevant market data and alternatives to consider when making compensation decisions for the executive officers. The companies comprising the peer group were as follows: Bombay Companies, Cost Plus, Sharper Image, Williams-Sonoma, Pier 1 Imports, Kirkland’s, and Gap, Inc.

For fiscal year 2006, there was no pre-established policy or target for the allocation of cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviewed the information provided by the independent consulting firm in determining the appropriate level and mix of incentive compensation.

The Committee also relies upon its judgment and, when appropriate, management’s judgment of each individual in determining the amount and mix of compensation elements and whether each particular payment or award provides an appropriate incentive and reward for performance that sustains and enhances stockholder value. Key factors affecting this judgment include:

 

   

performance compared to the financial, operational and strategic goals established for the executive officer or the Company at the beginning of the year;

 

   

nature, scope and level of responsibilities;

 

   

contribution to the Company’s financial results, particularly with respect to key metrics such as cash flow, revenue and earnings; and

 

   

effectiveness in leading Company initiatives.

In addition, the Committee considers each executive officer’s current salary and prior-year bonus, the appropriate balance between incentives for long-term and short-term performance, the compensation paid to the executive officer’s peers within the Company and the compensation paid to similarly-situated executive officers at peer companies.

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