RH Grants New Stock Option Award for CEO Gary Friedman

October 22, 2020  by Laurie Northington in Business Strategy, Industry   

The new 2020 award contains essentially the same terms and conditions as the last multi-year award granted to Friedman in 2017 by utilizing both time-based service period requirements and performance-based metrics. The 2020 award includes RH stock price performance targets of $500, $650 and $800 per share, which represent a substantial premium above the prevailing RH common stock price at the time of the grant.

The 2020 award is the third multi-year stock option award provided to Mr. Friedman since the 2012 initial public offering, with the previous two awards covering successive four year time periods from 2013 to 2017 and from 2017 to 2021, respectively. The time period for the new award commences in May, 2021 on the anniversary date of the 2017 stock option award providing a continuation of the stock price performance measurement period for each of the four successive performance years through May, 2025.

The RH stock price has substantially exceeded the performance hurdles under the 2017 award granted to Friedman. The Board of Directors and the compensation committee concluded that the 2017 award was a successful incentive structure for the CEO using a combination of both time-based restrictions and performance-based restrictions to create strong alignment between the CEO and the company’s shareholders. Since the original 2012 performance- based award at the time of the Company’s IPO price of $24 per share, RH stock has outperformed the vast majority of leading consumer and technology companies including Amazon, Apple, Google, LVMH, Lululemon, Home Depot, Nike, and Starbucks. The 2020 award provides for the continuation of this performance methodology at enhanced price levels that are substantially above the current RH stock price.