Williams-Sonoma 8-K 2010
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
3250 Van Ness Avenue, San Francisco, California 94109
(Address of principal executive offices)
Registrants telephone number, including area code (415) 421-7900
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On January 25, 2010, the independent members of the Board of Directors (the Board) of Williams-Sonoma, Inc. (the Company) approved the Companys entry into a Retirement and Consulting Agreement (the Agreement) with W. Howard Lester, the Companys Chairman and Chief Executive Officer. Pursuant to the terms of the Agreement, Mr. Lester will retire as Chairman and Chief Executive Officer and as a member of the Board on the date of the Companys 2010 annual shareholders meeting, currently expected to be on May 26, 2010. Mr. Lester will, however, provide consulting and advisory services in order to assist with the transition to a new Chief Executive Officer. Following his retirement, Mr. Lester will have the title of Chairman Emeritus.
Upon Mr. Lesters retirement, the Board intends to appoint Laura J. Alber as the Companys Chief Executive Officer. Ms. Alber, age 41, has served as the Companys President since July 2006, and served as President, Pottery Barn Brands from 2002 until 2006. Ms. Alber previously served as Executive Vice President, Pottery Barn, and as Senior Vice President, Pottery Barn Catalog and Pottery Barn Kids Retail. The Board intends to include Ms. Alber as a nominee to the Board at the 2010 annual shareholders meeting. Additionally, the Board intends to renominate Patrick J. Connolly, Director and Executive Vice President, Chief Marketing Officer, and to nominate Sharon L. McCollam, Executive Vice President, Chief Operating and Chief Financial Officer, to the Board at the 2010 annual shareholders meeting. The Board intends to appoint Adrian D.P. Bellamy, the current Lead Independent Director, as non-executive Chairman of the Board if he is re-elected at the 2010 annual shareholders meeting.
Pursuant to the terms of the Agreement, Mr. Lester will provide consulting services from his retirement through December 2012 and, during this consulting period, will receive an annualized payment of $500,000 per year, reasonable administrative support and reimbursement for reasonable expenses incurred in connection with his services. He will receive units representing the right to receive 125,000 shares of the Companys common stock in addition to receiving cash payments representing the value of 125,000 shares of the Companys common stock, in each case which will vest monthly over the consulting period. In the event the Company terminates the consulting agreement as a result of Mr. Lesters material breach of the Agreement, death, permanent disability or a change in control transaction in which the Agreement is not assumed, any unvested portion of these stock units or cash payments will be forfeited. During the consulting period, Mr. Lester will, at the request of the Company, advise and assist on such matters as store real estate strategy, negotiations with real estate lessors, seasonal assortments and layouts, and outreach to shareholders. The Agreement also provides that Mr. Lester will not, among other things, compete with the Company or attempt to hire employees of the Company.
In recognition of his retirement and his contributions to the Company, and in exchange for a general release of claims against the Company, Mr. Lester will receive accelerated vesting of his currently outstanding stock options, stock appreciation rights and restricted stock units, as a result of which the Company expects a non-recurring charge of approximately $4.6 million or $.025 per diluted share, which will be realized principally in the first quarter of fiscal year 2010. He will also receive a lump sum payment of $175,000 (representing estimated costs of health benefits through December 2012) and continued lifetime employee discount privileges. As disclosed in the Companys most recent proxy statement, the Company has an aircraft lease agreement with a management company owned by Mr. Lester which will continue pursuant to its current economic terms through May 2011. Under the Agreement, Mr. Lester has agreed to give the Company an option to purchase this aircraft at the current estimated fair market value of $32 million.
Also, in conjunction with its review of fiscal 2009 performance and Mr. Lesters contribution to the Companys performance, and as part of its consideration of executive equity grants, on January 25, 2010, the Compensation Committee approved an award of 249,501 restricted stock units to Mr. Lester (representing an initial value of $5,000,000, or a charge of approximately $0.03 per diluted share, based
on the closing price of the Companys stock on the preceding business day). This award will vest upon his retirement, which is defined in the award agreement as leaving the Companys employment having attained the age of 70 with at least 10 years of service. This award will be expensed in the Companys fourth quarter of fiscal year 2009.
Certain Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause the Companys results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements related to the Companys intended executive and Board changes, and the amount and timing of charges related to the Agreement and Mr. Lesters equity and other awards. The risks and uncertainties that could cause the Companys results to differ materially from those expressed or implied by such forward-looking statements include the risk that the intended executive and Board changes, and the amount and timing of charges related to the Agreement and Mr. Lesters equity and other awards, will not occur as currently expected, and other risks and uncertainties described more fully in the Companys public announcements, reports to shareholders and other documents filed with or furnished to the Securities and Exchange Commission, including the Companys Annual Report on Form 10-K for the fiscal year ended February 1, 2009 and all subsequent current reports on Form 8-K and quarterly reports on Form 10-Q. All forward-looking statements in this Current Report on Form 8-K are based on information available to the Company as of the date hereof, and the Company assumes no obligation to update these forward-looking statements.
Item 9.01. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
INDEX TO EXHIBITS