SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Williams-Sonoma, Inc
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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WILLIAMS-SONOMA, INC.
3250 VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94109
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Williams-Sonoma, Inc., a California
corporation (the "Company"), will be held at the Company's offices, 3250 Van
Ness Avenue, San Francisco, California 94109, Wednesday, May 29, 2002,
commencing at 10:00 a.m. (Pacific Daylight Time) for the following purposes:
(1) To elect W. Howard Lester, Charles E. Williams, Dale W. Hilpert, Adrian
D.P. Bellamy, Patrick J. Connolly, Michael R. Lynch, James A. McMahan,
Edward A. Mueller, Heather M. Reisman and Richard T. Robertson to serve
until the next annual meeting of shareholders and until their
respective successors shall be elected and qualified.
(2) To ratify the selection of Deloitte & Touche LLP as independent
auditors for the fiscal year ending February 2, 2003.
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 2, 2002 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting or any adjournment or postponement thereof.
Financial and other information concerning the Company is contained in the
enclosed Annual Report for the fiscal year ended February 3, 2002.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
STAMPED ENVELOPE. YOU MAY WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN THOUGH
YOU HAVE RETURNED YOUR PROXY CARD.
By Order of the Board of Directors
Charles K. Birkett
Assistant Secretary
San Francisco, California
April 29, 2002
PROXY STATEMENT
WILLIAMS-SONOMA, INC.
3250 VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94109
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 29, 2002
------------------------
GENERAL INFORMATION
This proxy statement (the "Proxy Statement") and the enclosed proxy card
(the "Proxy Card") are furnished in connection with the solicitation of proxies
by the Board of Directors of Williams-Sonoma, Inc., a California corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company,
to be held on Wednesday, May 29, 2002, and any adjournment or postponement of
that meeting (the "Annual Meeting"). The Annual Report to the shareholders of
the Company for the fiscal year ended February 3, 2002, including the financial
statements of and other information concerning the Company, is also enclosed.
This Proxy Statement and the accompanying Proxy Card are first being mailed
or given to the Company's shareholders on or before April 29, 2002. The address
of the principal executive offices of the Company is 3250 Van Ness Avenue, San
Francisco, CA 94109.
RECORD DATE; QUORUM
Only shareholders of record at the close of business on April 2, 2002 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting.
As of the close of business on the Record Date, there were 57,395,408 shares of
the Company's common stock (the "Common Stock") outstanding and entitled to
vote, held of record by 519 shareholders. On April 15, 2002, the Board of
Directors approved a two-for-one stock split of the outstanding shares of Common
Stock. All numbers in this Proxy Statement relating to shares of the Company's
Common Stock reflect pre-split numbers.
The presence of persons entitled to vote a majority of all of the shares of
Common Stock entitled to vote at the Annual Meeting is required to constitute a
quorum for the transaction of business at the Annual Meeting. For the purpose of
determining whether a quorum is present at the Annual Meeting, shares
represented in person or by properly executed proxy, including shares that
abstain from voting on any proposal and shares held by brokers that are not
voted because the brokers do not have discretionary authority, will be counted.
VOTING; PROXIES
On any matter submitted to the vote of the shareholders, each holder of
Common Stock will be entitled to one vote, in person or by proxy, for each share
of Common Stock in his or her name on the books of the Company as of the Record
Date, except that shareholders may have cumulative voting rights with respect to
the election of directors. Cumulative voting rights entitle each shareholder of
record to cast as many votes as are equal to the number of directors to be
elected multiplied by the number of votes to which that shareholder's shares are
entitled as of the Record Date, which votes may be cast for one nominee or
distributed among two or more nominees. For cumulative voting rights to be
applicable, a candidate's or candidates' name(s) must have been properly placed
in nomination prior to the voting and one or more shareholders must give notice
at the Annual Meeting of the intention to cumulate votes prior to the
commencement of voting. If any shareholder gives such notice, then every
shareholder entitled to vote may cumulate votes for nominees. The ten nominees
receiving the highest number of votes at the Annual Meeting will be elected. If
additional persons are properly nominated for election, the proxyholders named
in the enclosed Proxy Card will vote the shares covered by such proxies so as to
elect the maximum number of nominees listed below as may be elected by
cumulative voting (if applicable). In this event, the allocation of votes to
specific nominees will be determined by the proxy holders in their discretion.
All shares of Common Stock that are entitled to vote and are represented at
the Annual Meeting by properly executed proxies received prior to or at the
Annual Meeting, and not revoked, will be voted at the Annual Meeting in
accordance with the instructions indicated on such proxies. IF AN EXECUTED PROXY
IS RETURNED WITHOUT ANY SPECIFICATIONS AS TO HOW SHARES SHOULD BE VOTED, VOTES
WILL BE CAST FOR THE ELECTION OF THE DIRECTORS NAMED IN THIS PROXY STATEMENT AND
FOR THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
The Board of Directors does not know of any matters other than those
described in the Notice of Annual Meeting that are to come before the Annual
Meeting. Since the Company did not receive notice prior to March 6, 2002 of any
other matter to come before the Annual Meeting, as to such other matter that may
properly come before the Annual Meeting, including any motion made for
adjournment of the Annual Meeting, by signing the Proxy Cards, shareholders
confer discretionary authority on the proxyholders (who are persons designated
by the Board of Directors) to vote all shares covered by the Proxy Cards on any
such matter in their discretion.
Any proxy given pursuant to this solicitation may be revoked by filing with
the Secretary of the Company a written notice of revocation or a duly executed
proxy bearing a later date, or by attending the Annual Meeting and voting in
person. Attendance in person at the Annual Meeting does not itself revoke an
otherwise valid proxy; however, any shareholder who attends such meeting may
orally revoke his or her proxy at the Annual Meeting and vote in person.
VOTES REQUIRED; ABSTENTIONS AND BROKER NON-VOTES
Elections of directors are determined by a plurality of shares of Common
Stock represented in person or by proxy and voting at the Annual Meeting. The
proposals to ratify the selection of Deloitte & Touche LLP as independent
auditors requires approval by the affirmative vote of the holders of a majority
of the shares of Common Stock represented in person or by proxy and voting at
the Annual Meeting, which shares voting affirmatively must constitute at least a
majority of the required quorum. Abstentions and shares held by brokers that are
present in person or represented by proxy but that are not voted because the
brokers were prohibited from exercising discretionary authority ("broker
non-votes") will be counted for the purpose of determining whether a quorum is
present for the transaction of business. While abstentions and broker non-votes
will have no effect on the outcome of the election of directors, abstentions and
broker non-votes can have the effect of preventing approval of the proposal to
ratify the selection of independent auditors where the number of affirmative
votes, though a majority of the votes cast, does not constitute a majority of
the required quorum.
SOLICITATION OF PROXIES AND EXPENSES
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed will be paid by the Company. Copies of
solicitation materials will be furnished to brokers and others holding Common
Stock of the Company to forward to their principals, and the Company will
reimburse them for reasonable expenses in doing so. The Company expects that
some of its officers or employees (none of whom will receive special
compensation) will solicit proxies personally and by telephone or other means.
In addition, the Company has retained the services of Skinner & Company to
assist in the solicitation of proxies at an estimated cost of $5,000.
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PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, ten directors are to be elected to serve until the
next annual meeting of shareholders and until the election and qualification of
their successors. The ten nominees receiving the highest number of votes from
holders of shares of Common Stock represented and voting at the Annual Meeting
will be elected to the Board of Directors. Abstentions and broker non-votes will
have no effect on the election of the nominees below. Unless otherwise
instructed, the proxyholders will vote the proxies received by them for the ten
nominees named below. If any of the listed nominees is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for such person or persons as the proxyholders may designate. The Board of
Directors has no reason to believe that any of the nominees will be unable or
decline to serve as a director.
The Company's Restated Bylaws presently provide for not less than seven nor
more than thirteen directors, the exact number of directors following this
Annual Meeting having been fixed by the Board of Directors at ten. The proxies
cannot be voted for a greater number of persons than the number of nominees
named.
There are no family relationships between any director, nominee or
executive officer and any other director, nominee or executive officer of the
Company. There are no arrangements or understandings between any director,
nominee or executive officer and any other person pursuant to which he or she
has been or will be selected as a director and/or executive officer of the
Company. See "Information Regarding the Director Nominees of the Company."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF ALL OF THE
NOMINEES LISTED BELOW.
INFORMATION REGARDING THE DIRECTOR NOMINEES OF THE COMPANY
The following table sets forth information, as of April 2, 2002, with
respect to each person nominated for election as a director. All nominees
currently serving on the Board of Directors were elected directors at the Annual
Meeting of Shareholders held on May 23, 2001. Each nominee has furnished the
biographical information set forth below as to his or her principal occupation.
<Table>
<Caption>
DIRECTOR
NOMINEE AGE POSITION WITH THE COMPANY AND BUSINESS EXPERIENCE SINCE
------- --- ------------------------------------------------- --------
W. Howard Lester............... 66 Chairman since 1986 and Chief Executive Officer 1979
from 1979 - April 2001. Member of the Nominations
and Corporate Governance Committee. Director of
Harold's Department Stores, Inc.
Dale W. Hilpert................ 59 Chief Executive Officer since April 2001. Chairman 2001
and Chief Executive Officer of Venator Group
(retail stores) from 2000 - 2001. President and
Chief Executive Officer of Venator Group from
1999 - 2000. President and Chief Operating Officer
of Venator Group from 1995 - 1999. Chairman and
Chief Executive Officer of Payless Shoe Source
Division of The May Department Stores Company
(retail stores) from 1985 - 1995.
Charles E. Williams............ 86 Founder and Vice Chairman since 1986. 1973
Adrian D.P. Bellamy............ 60 Chairman of the Compensation Committee and member 1997
of the Nominations and Corporate Governance
Committee. Chairman and Director of The Body Shop
Inc., The Body Shop International PLC (personal
care products) and Gucci Group N.V. (luxury goods).
Director of The Gap, Inc. (clothing retailer), and
Reckitt Benckiser PLC (household, personal and
health products).
</Table>
3
<Table>
<Caption>
DIRECTOR
NOMINEE AGE POSITION WITH THE COMPANY AND BUSINESS EXPERIENCE SINCE
------- --- ------------------------------------------------- --------
Patrick J. Connolly............ 55 Executive Vice President and Chief Marketing 1983
Officer since 2000. Executive Vice President,
General Manager, Catalog from 1995 - 2000. Senior
Vice President, Mail Order from 1991 - 1995. Vice
President, Mail Order from 1979 - 1990.
Michael R. Lynch............... 50 Chairman of the Nominations and Corporate 2000
Governance Committee and member of the Audit
Committee. Current position -- Managing Director of
Goldman, Sachs & Co. Employed at Goldman, Sachs &
Co. (investment banking) since 1976.
James A. McMahan............... 79 Chief Executive Officer of McMahan Furniture Stores 1979
(furniture retailer) from 1947 - 1999.
Edward A. Mueller.............. 54 Chairman of the Audit Committee and Member of the 1999
Nominations and Corporate Governance Committee.
President and Chief Executive Officer of Ameritech
(telecommunications) since 2000. President of SBC
Int'l Operations (telecommunications) from
1999 - 2000. President of Pacific Bell
(telecommunications) from 1997 - 1999. President of
Southwestern Bell (telecommunications) from
1994 - 1997.
Heather M. Reisman............. 53 Member of the Audit Committee. Chairman, Chief 2000
Executive Officer and President, Indigo Books &
Music, Inc. (book and music retailer) since August
2001. Chief Executive Officer of Chapters, Inc.
(book retailer) 2001. President and Chief Executive
Officer of Indigo Books and Music, Inc. from
1996 - 2001.
Richard T. Robertson........... 56 Member of the Compensation Committee. President of 2000
Warner Bros. Domestic Television Distribution
(entertainment) since 1989.
</Table>
COMPENSATION OF DIRECTORS
The Company's directors do not receive any cash compensation for services
provided as members of the Board. Directors are awarded nonqualified stock
options annually under either the Company's 1993 Stock Option Plan or the
Company's 2001 Stock Option Plan. Eligible directors are each awarded an option
to purchase 13,500 shares of Common Stock upon their initial election to the
Board and an option to purchase 10,500 shares of Common Stock each time they are
re-elected to the Board. The exercise price of these options is fixed at the
fair market value of the Common Stock on the date of the annual meeting at which
the directors are elected.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended February 3, 2002, the Board of Directors of
the Company held a total of four meetings and did not act by unanimous written
consent. The Board of Directors has three standing Committees: an Audit
Committee, a Compensation Committee, and a Nominations and Corporate Governance
Committee.
During the last fiscal year, the Audit Committee of the Board of Directors
(the "Audit Committee") held five meetings. The Audit Committee at the beginning
of such fiscal year was comprised of Messrs. Nathan Bessin (chairman), Mueller
and John E. Martin. The Audit Committee at the end of such fiscal year was
comprised of Messrs. Mueller (Chairman), Martin, Lynch and Ms. Reisman. Mr.
Bessin resigned from the Board of Directors in April 2001 and Mr. Martin chose
not to seek reelection to the Board of Directors for fiscal year 2002. Messrs.
Bessin, Mueller, Martin and Lynch and Ms. Reisman are independent as that term
is defined in Section 303.01 of the New York Stock Exchange listing standards.
The Audit Committee's primary responsibilities fall into three broad categories:
(1) to serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; (2) to review and
appraise the audit efforts of the Company's independent auditors and internal
audit department;
4
and (3) to provide an open avenue of communication among the independent
auditors, financial and senior management, the Company's internal audit
department and the Board of Directors. The Board of Directors has adopted a
written Charter for the Audit Committee.
During the last fiscal year, the Compensation Committee of the Board of
Directors (the "Compensation Committee") met twice. The Compensation Committee
at the beginning of such fiscal year was comprised of Messrs. Bellamy
(chairman), Martin, McMahan and Lynch. The Compensation Committee at the end of
such fiscal year was comprised of Messrs. Bellamy (Chairman), McMahan, Robertson
and Martin. Mr. Martin chose not to seek reelection to the Board of Directors
for fiscal year 2002 and Mr. McMahan resigned from the Compensation Committee on
February 6, 2002. The Compensation Committee is primarily responsible for
officers' compensation matters and for administering the Company's compensation
plans.
The Nominations and Corporate Governance Committee of the Board of
Directors (the "Nominations and Corporate Governance Committee") met twice
during the last fiscal year. The Nominations and Corporate Governance Committee
at the beginning and end of such fiscal year was comprised of Messrs. Lynch
(Chairman), Bellamy, Lester and Mueller. The Nominations and Corporate
Governance Committee is primarily responsible for determining the qualifications
of and selecting director nominees, and for setting policies regarding corporate
governance responsibilities of the Board and management. The Nominations and
Corporate Governance Committee generally considers nominees recommended by the
Company's shareholders. The procedures for submitting nominees are detailed in
the section entitled "Proposals of Shareholders".
During the fiscal year ended February 3, 2002, each incumbent director
attended at least 75% of the aggregate of the meetings of the Board of
Directors. Each director attended at least 75% of the aggregate of the total
number of meetings held by all committees upon which such director served during
the periods that such director served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bellamy, Martin and McMahan served on the Compensation Committee
from January 29, 2001 to February 3, 2002. Mr. Robertson served on the
Compensation Committee from May 23, 2001 to February 3, 2002. None of the
current or former members of the Compensation Committee are or were officers or
employees or former officers or employees of the Company or its subsidiaries.
Mr. McMahan, who had a material interest in certain transactions with the
Company as described under "Certain Relationships and Related Transactions",
resigned from the Compensation Committee on February 6, 2002.
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulations 14A or 14C of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or to the liabilities of Section 18 of
the Exchange Act. The Report shall not be deemed incorporated by reference into
any other Company filing under the Exchange Act or the Securities Act of 1933,
as amended (the "Securities Act"), except to the extent that the Company
specifically incorporates it by reference.
The Audit Committee assists the Board of Directors in overseeing and
monitoring the Company's financial reporting process and the quality of the
internal and external audit process. The following is the report of the Audit
Committee with respect to the Company's audited financial statements for the
fiscal year ended February 3, 2002.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended February 3, 2002 with
management. In addition, the Audit Committee has discussed with Deloitte &
Touche LLP, the Company's independent auditors, the matters required to be
discussed pursuant to Statement on Auditing Standards No. 61 (Communications
with Audit Committees), which includes, among other items, the auditors'
responsibilities, any significant issues arising during the audit and any other
matters relating to the conduct of the audit of the Company's financial
statements. The Audit
5
Committee has also received the written disclosures and the letter from Deloitte
& Touche LLP regarding its independence from the Company, as required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and has discussed with Deloitte & Touche LLP its independence from
the Company. The Audit Committee also considered whether the provision of
services covered in all "All Other Fees" below is compatible with maintaining
independence of Deloitte & Touche LLP. On the basis of these reviews and
discussions, the Audit Committee recommended to the Board of Directors that the
Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended February 3, 2002, for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE
Edward Mueller, Chairman
Michael Lynch
John Martin
Heather Reisman
AUDIT AND RELATED FEES
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for professional
services for the audit of the Company's consolidated financial statements for
the fiscal year ended February 3, 2002 and reviews of the condensed,
consolidated financial statements included in the Company's Quarterly Reports on
Forms 10-Q for the fiscal year ended February 3, 2002 were approximately
$329,000.
Financial Information Systems Design and Implementation Fees
There were no fees billed by Deloitte & Touche LLP to the Company for
financial information systems design and implementation for the fiscal year
ended February 3, 2002.
All Other Fees
The aggregate fees billed by Deloitte & Touche for services rendered to the
Company, other than the services described above under "Audit Fees" for the
fiscal year ended February 3, 2002 were $1,125,500. Such fees were comprised of
(i) audit related services of $71,500, (ii) tax planning services of $511,600,
(iii) inventory management consulting services of $341,000 billed by Deloitte
Consulting, and (iv) other non-audit services of $201,400. Deloitte & Touche has
recently announced its intent to separate Deloitte Consulting from the firm.
The Audit Committee has considered whether the provision of these services
is compatible with maintaining Deloitte & Touche LLP's independence.
6
INFORMATION CONCERNING EXECUTIVE OFFICERS
Executive officers of the Company are elected by the Board of Directors and
serve at the pleasure of the Board, subject to rights, if any, under contracts
of employment. Certain information concerning such executive officers is set
forth below:
<Table>
<Caption>
NAME AGE POSITION WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- -------------------------------------------------
W. Howard Lester..................... 66 *
Charles E. Williams.................. 86 *
Laura J. Alber....................... 33 President, Pottery Barn Brands since February 2002.
Executive Vice President, Pottery Barn Brand,
2000 - February 2002. Senior Vice President, Pottery
Barn Catalog and Pottery Barn Kids Retail,
1999 - 2000. Divisional Vice President, Pottery Barn
Catalog, 1997 - 1999. Director, Pottery Barn Catalog,
1996 - 1997.
James E. Boike....................... 55 Executive Vice President and Chief Operating Officer
since 2001. Executive Vice President, Premium Brands,
2000 - 2001. Executive Vice President, Stores and
Operations, 1997 - 2000. Senior Vice President,
Stores, 1995 - 1997. Vice President, Stores,
1994 - 1995. Vice President, Merchandise Operations,
1993 - 1994.
John S. Bronson...................... 54 Senior Vice President, Human Resources since 1999.
Pepsi-Cola Worldwide (soft drinks) 1979 - 1999,
Executive Vice President of Human Resources,
1997 - 1999.
James A. Brownell.................... 44 Senior Vice President, Chief Information Officer since
2001. Vice President of Information Technology of Toys
R Us.com (toy retailer), 2000. The Gap, Inc. (clothing
retailer) 1979 - 2000, Vice President of Distribution
Systems and Supply Chain, 1995 - 2000.
Patrick J. Connolly.................. 55 *
Patrick Cowell....................... 52 President, Williams-Sonoma Brand since March 2002.
President, Cowell Development (real estate
development), 1999 - present. President and CEO
Airport Group International (management and
development), 1996 - 1999. President, Americas and
Caribbean, Sun International Hotels and Resorts (hotel
chain), 1994 - 1996. Hyatt Hotels Corporation (hotel
chain) 1972 - 1994, Divisional Vice President Western
Division, 1993 - 1994.
Dale W. Hilpert...................... 59 *
Donna H. Isralsky.................... 46 Senior Vice President, Product Supply Chain and
International Operations since 1999. Vice President,
Product Supply Chain, 1996 - 1999. Vice President,
Operations, Production and Sourcing of Reebok
International Ltd. (shoe manufacturer), 1994 - 1996.
Ronald M. Loeb....................... 69 Senior Vice President, General Counsel since 1999.
Irell & Manella (law firm) 1959 - 1997, Senior Partner
1972 - 1997. Retired 1997 - 1999.
Sharon L. McCollam................... 39 Senior Vice President, Chief Financial Officer since
2000. Vice President, Finance, 2000. Chief Financial
Officer of Dole Fresh Vegetables, Inc. (food
producer), 1996 - 2000.
</Table>
- ---------------
* Biographical information can be found in the table under the section entitled
"Information Regarding the Director Nominees of the Company".
7
EXECUTIVE COMPENSATION
The following tables set forth the annual and long-term compensation of,
and stock options and restricted stock held by, the Company's Chief Executive
Officer and its four other most highly compensated executive officers who served
as executive officers during the fiscal year ended February 3, 2002 and whose
total annual salaries and bonuses exceeded $100,000 during such fiscal year
(collectively, the "Named Executive Officers"). None of the Named Executive
Officers held stock appreciation rights during the years represented in the
tables.
Summary Compensation Table
<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS
ANNUAL ------------------------
COMPENSATION(2) ALL RESTRICTED SECURITIES
-------------------- OTHER STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS(#) COMPENSATION($)
--------------------------- ------- --------- -------- --------------- ---------- ---------- ---------------
W. Howard Lester.................. 2001 $899,787 $400,000 -- -- 50,000 $ 7,754(3)
Chairman of the Board of
Directors 2000 893,796 -- -- -- 200,000 10,034
(CEO through April 1, 2001) 1999 750,656 -- -- -- 100,000 12,660
Dale W. Hilpert................... 2001 754,038 355,000 $25,000 $7,725,000(4) 500,000 954(5)
Chief Executive Officer 2000 -- -- -- -- -- --
(commencing April 2, 2001) 1999 -- -- -- -- -- --
Laura J. Alber.................... 2001 407,700 175,000 -- -- 200,000 7,523(6)
President, Pottery Barn Brands 2000 278,291 -- -- -- -- 7,319
(commencing February 11, 2002) 1999 236,438 -- -- -- -- 7,681
James E. Boike.................... 2001 544,462 225,000 -- -- 100,000 5,403(7)
Executive Vice President and
Chief 2000 375,680 -- -- -- 50,000 5,784
Operating Officer 1999 297,842 -- -- -- 25,000 5,363
Patrick J. Connolly............... 2001 506,065 140,000 -- -- 20,000 7,754(8)
Executive Vice President, Chief 2000 482,923 -- -- -- 200,000 9,304
Marketing Officer, and Director 1999 385,958 75,000 -- -- 40,000 8,024
</Table>
- ---------------
(1) Rows specified "2001," "2000" and "1999" represent fiscal years ended
February 3, 2002, January 28, 2001 and January 30, 2000, respectively.
(2) While the Named Executive Officers enjoy certain perquisites, the aggregate
value of such perquisites for the fiscal years shown did not exceed or equal
the lesser of $50,000 or 10% of each such officer's salary and bonus for the
applicable fiscal year.
(3) Comprised of (i) premiums in the amount of $954 paid by the Company for term
life insurance in excess of $50,000 and (ii) the Company's matching
contribution of $6,800 under the Company's Associate Stock Incentive Plan,
which amounts are subject to vesting.
(4) Mr. Hilpert owned 250,000 shares of restricted stock having an aggregate
value of $11,195,000 at the end of the fiscal year ending February 3, 2002.
The shares will vest on March 30, 2004 (provided that Mr. Hilpert continues
to be employed by the Company) unless they earlier vest upon Mr. Hilpert's
death, disability, termination without cause or for good reason (as defined
in Mr. Hilpert's employment agreement) or upon a change of control. Mr.
Hilpert is entitled to receive dividends payable in respect of the shares.
(5) Comprised of premiums in the amount of $954 paid by the Company for term
life insurance in excess of $50,000.
(6) Comprised of (i) premiums in the amount of $954 paid by the Company for term
life insurance in excess of $50,000 and (ii) the Company's matching
contribution of $6,569 under the Company's Associate Stock Incentive Plan,
which amounts are subject to vesting.
(7) Comprised of (i) premiums in the amount of $954 paid by the Company for term
life insurance in excess of $50,000 and (ii) the Company's matching
contribution of $4,449 under the Company's Associate Stock Incentive Plan,
which amounts are subject to vesting.
(8) Comprised of (i) premiums in the amount of $954 paid by the Company for term
life insurance in excess of $50,000 and (ii) the Company's matching
contribution of $6,800 under the Company's Associate Stock Incentive Plan,
which amounts are subject to vesting.
8
Option Grants in Last Fiscal Year
The following table sets forth the information noted for all grants of
stock options made to the Named Executive Officers during the fiscal year ended
February 3, 2002, based on the Company's performance in fiscal year 2000:
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR(%) ($/SH) DATE 5%($) 10%($)
---- ---------- -------------- ----------- ---------- ---------- -----------
W. Howard Lester........... 50,000 2.06% $27.32 3/27/11 $ 859,070 $ 2,177,052
Laura J. Alber............. 200,000 8.25 27.70 3/19/11 3,484,076 8,829,333
James E. Boike............. 100,000 4.13 27.32 3/27/11 1,718,140(1) 4,354,104
Patrick J. Connolly........ 20,000 0.83 27.32 3/27/11 343,628 870,821
</Table>
- ---------------
(1) Mr. Boike's stock options may vest earlier upon the occurrence of certain
conditions pursuant to Mr. Boike's employment agreement with the Company, as
described more fully below.
Aggregate Option Exercises in the Last Fiscal Year and Fiscal Year-End Option
Value
The following table sets forth information with respect to the exercise of
stock options during the fiscal year ended February 3, 2002 and the fiscal
year-end value of unexercised options held by the Named Executive Officers:
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) FISCAL YEAR-END($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#)(1) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
W. Howard Lester........ -- $ -- 826,500 358,000 $28,242,255 $7,970,460
Dale W. Hilpert......... -- -- 100,000 400,000 2,065,500 8,262,000
Laura J. Alber.......... 20,480 413,952 27,100 319,880 495,251 6,233,668
James E. Boike.......... 30,000 769,518 -- 165,000 -- 3,292,100
Patrick J. Connolly..... -- -- 185,250 250,000 4,821,265 4,537,840
</Table>
- ---------------
(1) Figures have been adjusted to reflect stock splits.
(2) Represents the difference between the closing market price of the Company's
common stock on February 1, 2002 ($44.78 per share) and the exercise price
of the options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Hilpert's Employment with the Company
The Company entered into a five-year employment agreement (the "Hilpert
Agreement") with Mr. Dale W. Hilpert, the term of which commenced April 2, 2001
and pursuant to which Mr. Hilpert serves as the Chief Executive Officer of the
Company and as a director. Pursuant to the agreement, Mr. Hilpert receives an
annual base salary of $950,000, subject to future increases, plus $25,000
annually as a miscellaneous allowance. He is also eligible to receive a bonus
under the Company's 2001 Incentive Bonus Plan. In addition, Mr. Hilpert was
granted 250,000 shares of restricted stock pursuant to a Restricted Stock
Agreement, which shares are subject to vesting requirements.
If the Company terminates Mr. Hilpert's employment without "cause," or if
Mr. Hilpert terminates his employment with the Company for "good reason" (as
both are defined in the Hilpert Agreement), Mr. Hilpert would be entitled to
receive continuation of his base salary until the later of March 31, 2006 or the
second anniversary of the date of termination of Mr. Hilpert's employment with
the Company, unless Mr. Hilpert earlier dies or violates certain post-employment
requirements as described in the Hilpert
9
Agreement. Mr. Hilpert's health insurance coverage would also continue until Mr.
Hilpert commences other employment or is no longer entitled to such coverage,
and his stock options would become fully exercisable and his restricted stock
would vest.
In the event of a "change in control" (as defined in the Hilpert
Agreement), Mr. Hilpert's stock options would become fully exercisable and his
restricted stock would vest. Also, Mr. Hilpert would have the right to terminate
his employment by written notice to the Company within the 30-day period
following the date which is three months after the change in control. Upon the
giving of such notice, or in the event the Company terminates Mr. Hilpert's
employment without cause or Mr. Hilpert terminates his employment for good
reason during the two-year period after the change in control, the Company would
pay to Mr. Hilpert a lump sum equal to the greater of (a) the aggregate amount
Mr. Hilpert would have received if he had terminated his employment for good
reason in the absence of a change in control and (b) the amount which is three
times the sum of Mr. Hilpert's base salary in effect immediately before the
change in control and Mr. Hilpert's bonus target in the year of his termination
of employment, plus, in each case, the amount of any excise tax to which Mr.
Hilpert becomes subject under Section 4999 of the Internal Revenue Code as a
result of such payment. On Mr. Hilpert's death or disability, his restricted
stock would vest and his stock options would become fully exercisable.
Ms. Alber's Employment with the Company
The Company entered into an employment agreement (the "Alber Agreement")
with Ms. Laura J. Alber, effective as of March 19, 2001, pursuant to which Ms.
Alber serves as the Executive Vice President of Pottery Barn. The Alber
Agreement provides for a three-year term, commencing on March 19, 2001, with
additional one year terms until terminated by Ms. Alber or by the Company.
Pursuant to the Alber Agreement, Ms. Alber will receive an annual base salary no
less than $400,000. If the Company terminates Ms. Alber's employment without
cause, or if Ms. Alber terminates her employment with the Company for "good
reason" (as defined in the Alber Agreement) she would be entitled to receive
continuation of her base salary and health insurance coverage for up to three
years, so long as she does not breach certain post-termination obligations under
the Alber Agreement. Ms. Alber was elected President, Pottery Barn Brands
effective February 11, 2002.
Mr. Boike's Employment with the Company
The Company entered into an agreement (the "Boike Agreement") with Mr.
James E. Boike, the Company's Chief Operating Officer, effective as of May 8,
2001, pursuant to which the Company agreed to pay to Mr. Boike a "guaranteed
spread" on certain unvested stock options owned by Mr. Boike. The guaranteed
spreads are subject to a cap, and the spreads and the cap are dependent on
whether Mr. Boike's employment terminates after the first or after the second
year of the Boike Agreement.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Report of the Compensation Committee covering the Company's
fiscal year ended February 3, 2002 shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission or
subject to Regulations 14A or 14C of the Exchange Act, or to the liabilities of
Section 18 of the Exchange Act. The Report shall not be deemed incorporated by
reference into any other Company filing under the Exchange Act or the Securities
Act except to the extent that the Company specifically incorporates it by
reference.
General
The Compensation Committee is responsible for setting the Company's policy
on executive compensation, making recommendations to the Board regarding
compensation paid to executive officers of the Company, including the Named
Executive Officers, and providing assistance and recommendations with respect to
compensation plans. The Compensation Committee is comprised of the directors
named below, none of whom has ever served as an officer of the Company.
10
Philosophy on Executive Compensation
The Compensation Committee believes that officers and other key employees
should have a significant stake in the Company's stock price performance under
compensation programs that link executive compensation to shareholder value. For
this reason, the Company's executive compensation programs are designed to
enable the Company to attract, retain, motivate and reward highly qualified
executives while maintaining strong and direct links between executive pay,
individual performance, the Company's financial performance and shareholder
returns.
In establishing and evaluating the Company's executive compensation
programs, the Compensation Committee focuses on the competitiveness of the
Company's compensation programs. The compensation practices of many different
companies, both within and outside the retail industry, are relevant to the
analysis. Specifically, the Compensation Committee considers both pay practices
at retailers of comparable size who are part of the Center for Research in
Security Prices ("CRSP") Index for NASDAQ Retail Trade Stocks, one of the
indices used in the Performance Graph, as well as pay practices at other
companies considered comparable based on the industry, revenues and other
factors (together, the "Comparable Companies") when assessing the
competitiveness of the Company's compensation programs. In addition, the
Compensation Committee utilizes an independent executive compensation advisor
for information on competitive compensation levels.
Implementation of Philosophy
The Compensation Committee considers three major elements in the Company's
compensation program -- base salary, annual incentive opportunities, and
long-term incentives.
Base Salary
Base salaries are generally positioned competitively with the third
quartile (i.e., top 50 - 75%) of Comparable Companies, and adjusted for
individual performance and contributions to the Company's success. The
Compensation Committee reviews the salaries of the Company's executive officers,
including the Named Executive Officers, on an annual basis. For the Company's
fiscal year 2001, this review occurred in February 2002. Base salaries generally
were based on the Company's performance in fiscal year 2001 (and, with respect
to Mr. Hilpert, based on the terms of his employment agreement with the
Company).
Annual Incentives
The second component of the Company's executive compensation program is
annual incentives in the form of cash bonuses, which promote outstanding
performance by rewarding participants for extraordinary annual results. Cash
bonuses are paid only when the Company exceeds a minimum corporate earnings
objective as established by the Compensation Committee in the first quarter of
each fiscal year. Actual bonus payments are based upon the Company's performance
against pre-established goals, as well as individual performance. When coupled
with base salary, the targets for cash bonuses position the executives' annual
cash compensation in the third quartile of the Comparable Companies.
Key performance criteria for evaluating the Company and individual
performance include business and financial objectives, people and organizational
goals, and other relevant factors as determined by the Compensation Committee,
with input from senior management. These criteria are weighted each year based
upon current priorities and may be changed from year to year. In the first
quarter of each fiscal year, a performance review report is presented to the
Compensation Committee that summarizes management's view regarding whether, and
to what extent, the key performance criteria were attained. The performance
review report also discusses any other significant but unforeseen factors that
positively or negatively affected the Company's performance.
The Compensation Committee verifies the Company's actual earnings for each
performance period, reviews management's recommendation for the resulting
aggregate bonus awards and approves the aggregate amount. Generally, the
Compensation Committee also reviews the individual recommendations for the
11
Company's executive officers, and the CEO approves the recommendations for all
other participants. Based on the Company's performance in fiscal year 2001,
incentive awards were paid to the Named Executive Officers, as follows:
<Table>
Mr. Lester................................................ $400,000
Mr. Hilpert............................................... $355,000
Ms. Alber................................................. $175,000
Mr. Boike................................................. $225,000
Mr. Connolly.............................................. $140,000
</Table>
Long-Term Incentive Compensation
The third component of the Company's executive compensation program,
long-term incentive compensation, is designed to tie executive performance
directly to the creation of shareholder value. This component consists of stock
option grants provided on an annual basis through the Company's stock option
plans.
Under the Company's existing stock option plans, stock options are granted
with an exercise price equal to the fair market value of the Company's Common
Stock on the date of grant and generally vest annually over five years. This
approach is intended to motivate executive officers and other employees of the
Company to increase shareholder value over the long term. The Compensation
Committee believes that stock options granted to the Company's executive
officers, including the Named Executive Officers, reflect competitive practices
of Comparable Companies and their assessment of the individual contributions.
Based on the Company's performance in fiscal year 2001, no stock option awards
were granted to Named Executive Officers (other than Mr. Hilpert, who received
options pursuant to his employment agreement, as described below in "Chief
Executive Officer Compensation").
It is the Company's policy not to reprice stock options held by executive
officers or other Company employees, in the event that the fair market value of
the Common Stock falls below the exercise price of the stock options.
Chief Executive Officer Compensation
As part of an annual process, the Compensation Committee applies the
executive compensation philosophy to the total compensation packages of the CEO
and the other executive officers. Mr. Hilpert was hired as Chief Executive
Officer of Williams-Sonoma, Inc. effective April 2, 2001. In connection with
recruiting Mr. Hilpert to Williams-Sonoma, Inc., the Company granted Mr. Hilpert
500,000 stock options of the Company's Common Stock. As part of his employment
agreement, Mr. Hilpert was granted 250,000 restricted shares in 2001, which
shares are subject to vesting requirements. The grant was based, in part, on
amounts Mr. Hilpert forfeited by leaving his then current employer. The Company
also paid Mr. Hilpert a $20,000 starting bonus, reimbursed specified relocation
costs and reimbursed Mr. Hilpert's legal fees (capped at $15,000) in connection
with the negotiation of the Hilpert Agreement.
Mr. Hilpert's annual salary for fiscal year 2001 was $950,000 in accordance
with the terms of his employment agreement. Mr. Hilpert was awarded $355,000
under the Company's 2001 Incentive Bonus Plan based on the achievement of
certain Company objectives during performance year 2001. The amounts of the
incentive bonus opportunity, the stock option grant, and the restricted shares
were determined in part based on a review of competitive market pay data.
A portion of Mr. Lester's compensation for fiscal year 2001 was based upon
his services as Chief Executive Officer prior to April 1, 2001.
12
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code could, depending on future
compensation levels, limit the Company's ability to deduct compensation in
excess of $1,000,000 paid to certain executive officers. Exceptions to this
deductibility limit may be made for various forms of "performance-based"
compensation. Based on 2001 compensation levels, no such limits on the
deductibility of compensation were applicable for any officer of the Company.
The Company has not adopted a policy specifically prohibiting compensation at a
level that would limit deductions. While the Compensation Committee cannot
predict how the deductibility limit may impact the Company's compensation
program in future years, the Compensation Committee intends to maintain an
approach to executive compensation that strongly links pay to performance. Based
on this approach and with the intent of preserving the deductibility of
executive compensation, the Compensation Committee recommended, and the Board of
Directors approved, the 2001 Stock Option Plan and the 2001 Bonus Plan, both of
which were approved by shareholders in 2001.
COMPENSATION COMMITTEE
Adrian Bellamy, Chairman
John Martin
James A. McMahan
Richard Robertson
13
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return for
the Company's Common Stock with those for the Center for Research in Security
Prices ("CRSP") Index for the New York Stock Exchange and the CRSP Index for the
NASDAQ Retail Trade Stocks, the Company's peer index group. The Company's peer
group includes over 150 companies. The Cumulative Total Return listed below
assumed an initial investment of $100 and reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS OF THE COMPANY,
CRSP* INDEX FOR THE NYSE STOCK MARKET (U.S. COMPANIES) AND
CRSP INDEX FOR NASDAQ RETAIL TRADE STOCKS
(PERFORMANCE LINE GRAPH)
<Table>
<Caption>
- --------------------------------------------------------------------------------
2/2/97 2/1/98 1/31/99 1/30/00 1/28/01 2/3/02
- --------------------------------------------------------------------------------
Williams-Sonoma,
Inc. 100.0 134.6 219.4 199.2 167.5 283.2
NYSE Stock Market 100.0 118.0 184.7 284.9 207.0 140.2
NASDAQ Retail Trade 100.0 116.6 142.3 114.1 87.0 104.5
- --------------------------------------------------------------------------------
</Table>
The above graph shows historical stock price performance (including
reinvestment of dividends) and is not necessarily indicative of future
performance.
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 2/2/97.
- ---------------
* Center for Research in Security Prices, The University of Chicago, Graduate
School of Business.
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an operating lease for a distribution facility in Memphis,
Tennessee with a term expiring August 2004. The lessor is a general partnership
("Partnership 1") comprised of W. Howard Lester, Chairman of the Board of
Directors and a significant shareholder of the Company and James A. McMahan, a
director and significant shareholder of the Company. Partnership 1 does not have
operations separate from leasing of this distribution facility to the Company
and does not have lease agreements with any unrelated third parties.
Partnership 1 financed the construction of this distribution facility
through the sale of a total of $9,200,000 of industrial development bonds in
1983 and 1985. Annual principal payments and monthly interest payments are
required through maturity in December 2010. The Partnership 1 Industrial
Development Bonds are secured by the distribution facility and the individual
partners guaranteed the bond repayments. As of February 3, 2002, $3,633,000 was
outstanding under the Partnership 1 Industrial Development Bonds.
The operating lease for this distribution facility requires the Company to
pay annual rent of $618,000 plus interest on the bonds calculated at a variable
rate determined monthly (2.75% at February 3, 2002), applicable taxes, insurance
and maintenance expenses. After August 2004, the Company is obligated to renew
the operating lease until these bonds are fully repaid.
The Company has an operating lease for another distribution facility in
Memphis, Tennessee with a term of 15 years expiring August 2006, with three
optional five-year renewal periods. The lessor is a general partnership
("Partnership 2") comprised of W. Howard Lester, James A. McMahan and two
unrelated parties. Partnership 2 does not have operations separate from leasing
this distribution facility to the Company and does not have lease agreements
with any unrelated third parties.
Partnership 2 financed the construction of this distribution facility and
related addition through the sale of a total of $24,000,000 of industrial
development bonds in 1990 and 1994. Quarterly principal and interest payments
are required through maturity in August 2015. The Partnership 2 Industrial
Development Bonds are secured by the distribution facility and require
maintenance of certain financial covenants by the Company. As of February 3,
2002, $16,809,000 was outstanding under the Partnership 2 Industrial Development
Bonds.
The operating lease for this distribution facility requires the Company to
pay annual rent of approximately $2,700,000, applicable taxes, insurance and
maintenance expenses. The Company is obligated to renew this operating lease
until these bonds are fully repaid.
On March 4, 2002, the Company's Board of Directors authorized management to
obtain information, conduct negotiations, and enter into appropriate agreements
with the intent to pursue potential acquisitions of the distribution facilities
currently leased from Partnerships 1 and 2 prior to the end of fiscal 2002. Any
such acquisitions will be subject to the approval of the Board of Directors.
There can be no assurance that any such acquisitions will be completed on
acceptable terms to the Company or at all.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the copies of reports received by the Company
during or with respect to the fiscal year ended February 3, 2002, the Company
believes that all reports required to be filed by the Company's directors,
officers and 10% shareholders pursuant to Section 16(a) of the Exchange Act
during or with respect to the fiscal year ended February 3, 2002, were filed on
a timely basis, except that Mr. Robertson failed to file on a timely basis two
Forms 4 which reported seven sales of Common Stock, Mr. Connolly failed to file
on a timely basis one Form 4 which reported a gift of Common Stock and Ms.
McCollam failed to file on a timely basis one Form 3.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as to the beneficial ownership
of the Common Stock, as of April 2, 2002, by (a) each person known to the
Company to be the beneficial owner of more than 5% of the
15
Common Stock, (b) each director and nominee for director, (c) each Named
Executive Officer and (d) all current executive officers and directors as a
group. Unless otherwise noted, the persons listed below have sole voting and
investment power. Each director and executive officer has furnished the
information as to his or her beneficial ownership of Common Stock as of April 2,
2002.
<Table>
<Caption>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER POSITION WITH COMPANY BENEFICIAL OWNERSHIP CLASS(1)
- ------------------------------------ --------------------- -------------------- ----------
James A. McMahan..................... Director 5,706,700(2) 9.9%
2237 Colby Avenue
Los Angeles, CA 90064
W. Howard Lester..................... Chairman 5,073,790(3) 8.7%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
American Express Financial
Corporation........................ -- 4,047,075(4) 7.1%
200 AXP Financial Center
Minneapolis, MN 55474
Capital Group International, Inc. ... -- 3,778,420(5) 6.6%
11100 Santa Monica Boulevard
15th Floor
Los Angeles, CA 90025-3384
Patrick J. Connolly.................. Executive Vice President, 630,305(6) 1.1%
Chief Marketing Officer,
and Director
Charles E. Williams.................. Founder and 546,000 1.0%
Vice Chairman
Dale W. Hilpert...................... Chief Executive Officer 350,000(7) *
and Director
John E. Martin....................... Director 267,000(8) *
Laura J. Alber....................... President, 80,700(9) *
Pottery Barn Brands
James E. Boike....................... Executive Vice President and 71,000(10) *
Chief Operating Officer
Adrian D.P. Bellamy.................. Director 65,784(11) *
Richard T. Robertson................. Director 32,199(12) *
Edward A. Mueller.................... Director 29,999(13) *
Michael R. Lynch..................... Director 19,499(14) *
Heather M. Reisman................... Director 14,999(15) *
All current executive officers and
directors as a group (18
persons)........................... -- 13,204,845(16) 22.2%
</Table>
- ---------------
* Less than 1%.
(1) Assumes exercise of stock options beneficially owned by the named
individual or entity into shares of the Company's Common Stock. Based on
57,395,408 shares outstanding as of April 2, 2002.
(2) Includes 96,000 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(3) Includes 964,500 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days. Does not include
881,546 shares owned by a trust established by Mr. Lester for the benefit
of his children, in which shares Mr. Lester disclaims any beneficial
interest. Mr. Lester was Chief Executive Officer until April 2001.
(4) The information above and in this footnote is based on share information
taken from the Schedule 13G of American Express Financial Corporation,
filed February 7, 2002. American Express Financial Corporation, a parent
holding company and registered investment advisor, has shared dispositive
power
16
of 4,047,075 shares of Common Stock and shared voting power over 2,664,455
shares of Common Stock.
(5) The information above and in this footnote is based on share information
taken from the Schedule 13G of Capital Group International, Inc., filed
February 11, 2002. Capital Group International, Inc., a parent holding
company of a group of investment management companies, has sole dispositive
power over 3,778,420 shares of Common Stock and sole voting power over
2,990,150 shares of Common Stock.
(6) Includes 253,250 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days. Does not include 5,238
shares owned by a trust established for the benefit of Mr. Connolly's
children, in which shares Mr. Connolly disclaims any beneficial interest.
(7) Includes 100,000 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days, and 250,000 shares of
restricted stock which are subject to vesting requirements as set forth in
Mr. Hilpert's employment agreement with the Company.
(8) Includes 87,000 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(9) Includes 79,700 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(10) Includes 71,000 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(11) Includes 55,500 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(12) Includes 14,999 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(13) Includes 29,999 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(14) Includes 19,499 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(15) Includes 14,999 shares subject to nonqualified stock options, which are
currently exercisable or exercisable within 60 days.
(16) Includes 2,076,006 shares subject to nonqualified stock options which are
currently exercisable or exercisable within 60 days.
17
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
As recommended by its Audit Committee, the Board of Directors has selected
Deloitte & Touche LLP as independent auditors for the fiscal year ending
February 2, 2003, subject to ratification by the shareholders.
Deloitte & Touche LLP has audited the Company's financial statements for
the last twenty-two years and has no financial interest of any kind in the
Company except the professional relationship between auditor and client. It is
expected that their representative will be present at the Annual Meeting and
will have the opportunity to make a statement if he or she desires to do so. The
representative will be available to respond to appropriate questions.
In the event that the selection of Deloitte & Touche LLP as independent
auditors for the fiscal year ending February 2, 2003 is not ratified by the
shareholders, the Board of Directors will select other independent auditors.
Affirmative votes representing a majority of shares of the Common Stock
present in person or represented by proxy at the Annual Meeting and voting on
this proposal, which shares voting affirmatively must constitute at least a
majority of the required quorum, will be required to approve this proposal.
Abstentions and broker non-votes can have the effect of preventing approval of
this proposal where the number of affirmative votes, though a majority of the
votes cast, does not constitute a majority of the required quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITORS LISTED ABOVE.
PROPOSALS OF SHAREHOLDERS
Proposals intended to be presented by shareholders at the 2003 annual
meeting of shareholders and included in the Company's proxy statement for such
meeting must comply with two sets of requirements. First, shareholder proposals
must comply with the requirements contained in the Company's Restated Bylaws.
Under the Company's Restated Bylaws, a shareholder must give advance notice to
the Secretary of the Company of any business, including nominations of
candidates for the Board of Directors, that the shareholder wishes to bring
before a meeting of the Company's shareholders. To be timely, the notice must be
received by the Secretary not less than 45 days nor more than 75 days prior to
the first anniversary of the date of the mailing of proxy materials for the
preceding year's annual meeting of shareholders; provided, however, that if the
date of the annual meeting is advanced by more than 30 days prior to or delayed
by more than 30 days after the anniversary of the preceding year's annual
meeting, notice by the shareholder must be delivered not later than the close of
business on the later of the 90th day prior to such annual meeting and the 10th
day following the day on which public announcement of the date of such meeting
is first made by the Company. With respect to a shareholder's nomination of a
candidate for the Board of Directors, the shareholder notice to the Secretary
must contain certain information as set forth in the Company's Restated Bylaws
about both the nominee and the shareholder making the nomination. With respect
to any other business that the shareholder proposes to bring before an annual
meeting, the shareholder notice to the Secretary must contain a brief
description of such business, the reasons for conducting such business at the
meeting, as well as certain other information as set forth in the Company's
Restated Bylaws.
In addition, in order to be eligible for inclusion in the Company's proxy
statement and proxy card for the next annual meeting pursuant to Rule 14a-8
under the Exchange Act, shareholder proposals would have to be received by the
Secretary of the Company no later than December 30, 2002 if the next annual
meeting were held on or near May 29, 2003. In the event that the Company elects
to hold its next annual meeting at a different time of year than the time of
year of this Annual Meeting, such shareholder proposals would have to be
received by the Company a reasonable time before the Company's solicitation is
made. Shareholder nominations of directors are not shareholder proposals within
the meaning of Rule 14a-8 and are not eligible for inclusion in the Company's
proxy statement.
18
If the Company does not have notice of a matter to come before the next
annual meeting by the earlier of March 15, 2003 or the date specified in the
first paragraph of this section (or, in the event the next annual meeting is
held at a different time of year as described in such paragraph, then by the
date described in such paragraph), the Company's proxy for such meeting will
confer discretionary authority to vote for such matter.
All shareholder proposals sent to the Company should be sent to the
Secretary, Williams-Sonoma, Inc., 3250 Van Ness Avenue, San Francisco,
California 94109.
AVAILABILITY OF REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, FOR FISCAL YEAR 2001 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE UPON WRITTEN REQUEST AND
WITHOUT CHARGE TO ANY SHAREHOLDER BY WRITING TO:
Secretary
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, California 94109
San Francisco, California
April 29, 2002
19
DIRECTORS AND OFFICERS
W. HOWARD LESTER
Chairman of the
Board of Directors
DALE W. HILPERT
Director and Chief Executive Officer
CHARLES E. WILLIAMS
Founder and Vice Chairman of
the Board of Directors
ADRIAN D. P. BELLAMY
Director
Chairman and Director of
The Body Shop, Inc.,
The Body Shop International PLC,
Gucci Group N.V.
Director of The Gap, Inc., and Reckitt Benckiser PLC
PATRICK J. CONNOLLY
Director and Executive Vice President,
Chief Marketing Officer
MICHAEL R. LYNCH
Director
Managing Director,
Goldman, Sachs & Co.
JAMES A. MCMAHAN
Director
Chief Executive Officer,
McMahan Furniture Stores
EDWARD A. MUELLER
Director
President and Chief Executive Officer, Ameritech
HEATHER M. REISMAN
Director
Chairman, Chief Executive Officer and President,
Indigo Books & Music, Inc.
RICHARD T. ROBERTSON
Director
President, Warner Brothers Domestic Television Distribution
LAURA J. ALBER
President, Pottery Barn Brands
JAMES E. BOIKE
Executive Vice President and
Chief Operating Officer
JOHN S. BRONSON
Senior Vice President,
Human Resources
JAMES A. BROWNELL
Senior Vice President,
Chief Information Officer
PATRICK COWELL
President, Williams-Sonoma Brand
DONNA H. ISRALSKY
Senior Vice President, Product Supply Chain and International Operations
RONALD M. LOEB
Senior Vice President, General Counsel
SHARON L. MCCOLLAM
Senior Vice President,
Chief Financial Officer
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
STOCK EXCHANGE LISTING
New York Stock Exchange
Symbol: WSM
CORPORATE WEB SITE
www.williams-sonomainc.com
ANNUAL MEETING
The annual meeting of shareholders of Williams-Sonoma, Inc. will be held
Wednesday, May 29, 2002 starting at 10:00 am (Pacific Daylight Time) at
Williams-Sonoma, Inc., 3250 Van Ness Avenue, San Francisco, CA 94109.
TRANSFER AGENT
Mellon Investor Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
Web Site Address:
www.melloninvestor.com
Phone: 1-800-356-2017
INDEPENDENT AUDITORS
Deloitte & Touche LLP
50 Fremont Street
San Francisco, CA 94105
TRADEMARKS
A Catalog for Cooks, Chambers, Hold Everything, Pottery Barn, Pottery Barn Kids,
West Elm and Williams-Sonoma are trademarks of Williams-Sonoma, Inc.
STOCKHOLDER/INVESTOR INFORMATION
www.williams-sonomainc.com/inv
PROXY
WILLIAMS-SONOMA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned shareholder of Williams-Sonoma, Inc. (the "Company") hereby
appoints W. Howard Lester and Patrick J. Connolly, and each of them, with full
power of substitution to each, true and lawful attorneys, agents and
proxyholders of the undersigned, and hereby authorizes them to represent and
vote, as specified herein, all shares of Common Stock of the Company held of
record by the undersigned on April 2, 2002, at the 2002 Annual Meeting of
Shareholders of the Company, to be held on Wednesday, May 29, 2002 at 10:00 a.m.
(Pacific Daylight Time) at 3250 Van Ness Avenue, San Francisco, California
94109, and any adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED ON THIS
PROXY BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NAMED DIRECTORS AND FOR PROPOSAL 2.
(PLEASE DATE AND SIGN ON REVERSE SIDE.)
SEE REVERSE
SIDE
- FOLD AND DETACH HERE -
Please mark [X]
your votes as
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
FOR THE ELECTION AS
DIRECTORS OF ALL WITHHOLD
NOMINEES LISTED. AUTHORITY
1. ELECTION OF DIRECTORS (EXCEPT AS MARKED TO VOTE FOR ALL
TO THE CONTRARY). NOMINEES LISTED.
[ ] [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW):
01 Charles E. Williams 05 Patrick J. Connolly 09 Heather M. Reisman
02 W. Howard Lester 06 Adrian D.P. Bellamy 10 James A. McMahan
03 Edward A. Mueller 07 Richard T. Robertson
04 Dale W. Hilpert 08 Michael R. Lynch
FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE SELECTION OF [ ] [ ] [ ]
DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR THE 2002 FISCAL YEAR.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, THE
PROXYHOLDERS ARE AUTHORIZED TO VOTE IN THEIR DISCRETION FOR THE ELECTION OF THE
NAMED DIRECTORS AND FOR PROPOSAL 2. THIS PROXY ALSO CONFERS DISCRETIONARY
AUTHORITY ON THE PROXYHOLDERS TO VOTE AS TO ANY OTHER MATTER THAT IS PROPERLY
BROUGHT BEFORE THE ANNUAL MEETING THAT THE BOARD OF DIRECTORS DID NOT HAVE
NOTICE OF PRIOR TO THE DATE SPECIFIED IN THE PROXY STATEMENT.
NOTE: When stock has been issued in the name of two or
more persons, all should sign. When signing as
attorney, administrator, trustee or guardian, give
full title as such. A corporation should have the name
signed by its president or other authorized officer,
with the office held designated. The undersigned
hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, the Proxy Statement and the
Annual Report for the 2001 Fiscal Year furnished
herewith.
_____________________________________________________
Please Print Name(s)
Signature(s) _____________________________________ Date _________________, 2002
Please sign exactly as your name or names appear on this proxy and return it
promptly in the enclosed envelope.
- FOLD AND DETACH HERE -