Exhibit 10.2

Orchard Supply Hardware Stores Corporation

Director Compensation Policy

This sets forth the Director Compensation Policy (the “Policy”) of Orchard
Supply Hardware Stores Corporation (the “Company”), as adopted by the Board of
Directors of the Company (the “Board”), which shall remain in effect until
amended, replaced or rescinded by further action of the Board. The cash
compensation and equity grants described in this Policy shall be paid or be
made, as applicable, automatically and without further action of the Board, to
each member of the Board who is not an employee of the Company or any subsidiary
(each, an “Eligible Director”) who may be eligible to receive such cash
compensation or equity award. Members of the Board shall not be entitled to
receive any compensation for service on the Board other than as described in
this Policy.

 

  1. Cash Compensation.

Payment Amount. Each Eligible Director elected to serve as a member of the Board
at the Company’s Annual Stockholders’ Meeting each year shall be eligible to
receive an “annual” retainer of $50,000 for service on the Board. For purposes
of this policy, “annual” means from Annual Stockholders’ Meeting to Annual
Stockholders’ Meeting each year. In addition, such an Eligible Director serving
as:

 

  •  

Chairman of the Board shall be eligible to receive an additional annual retainer
of $25,000 for such service.

 

  •  

Chairman of the Audit Committee shall be eligible to receive an additional
annual retainer of $15,000 for such service.

 

  •  

Chairman of the Compensation Committee shall be eligible to receive an
additional annual retainer of $10,000 for such service.

 

  •  

Chairman of the Nominating and Corporate Governance Committee shall be eligible
to receive an additional annual retainer of $6,250 for such service.

Payment Schedule and Vesting. The annual retainers for service on the Board and
as chairman of committees of the Board as set forth above shall be paid by the
Company in four equal quarterly installments, the first installment being paid
on the date of the three month anniversary of the Annual Stockholders’ Meeting
and the remaining installments being paid on each successive three month
anniversary date (each such payment date, a “Quarterly Payment Date”); provided,
however, that if the Company’s Annual Stockholders’ Meeting for the following
year occurs prior to the end of the one year period, the final Quarterly Payment
Date shall be paid on the day of such Annual Stockholders’ Meeting. If any
Eligible Director holds office as a director of the Board for less than a full
annual period, such Eligible Director shall only be entitled to the portion of
the annual retainer payable through the Quarterly Payment Date for the three
month period for which the Eligible Director shall have served.

New Directors. In the event a new Eligible Director is elected or appointed to
the Board, such Eligible Director shall be eligible to receive as compensation
for service as a member of the Board or as chairman of committees of the Board
as set forth above a pro-rated amount of their applicable annual retainer as
measured from the date of appointment or election through the next scheduled
Quarterly Payment Date and thereafter shall be paid in conformity with the other
Eligible Directors.

 

     

Effective as of 12/21/11

Amended 6/21/12

Amended 6/25/12

 

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Furthermore, Board members have the one-time option prior to the end of the
trading day of each Annual Stockholders’ Meeting to elect to take a stock grant
of shares of the Company’s Class A Common Stock, par value $0.01 (the “Common
Stock”), in lieu of any portion of the cash compensation of their “annual”
retainer (i.e., $50,000). The number of shares of Common Stock to be granted
under the Company’s 2011 Equity Incentive Plan (the “Plan”) will be issued and
vest in the same manner as described below under “Equity Compensation.”

 

  2. Equity Compensation.

Grant Amount. Eligible Directors who are elected by the Company’s stockholders
to serve as a director of the Company at the Company’s Annual Stockholders’
Meeting other than those who are elected by the holders of the Class B Common
Stock and Class C Common Stock, voting as a separate class, shall be entitled to
receive an annual grant (the “Annual Grant”) of the Common Stock having an
aggregate value of $50,000, subject to the terms and conditions of the Plan and
the Company’s standard restricted stock award agreement for directors (which
shall contain the vesting provisions described below). The “Date of Grant” shall
be the date of the Company’s Annual Stockholders’ Meeting. The number of shares
of Common Stock included in the Annual Grant will be determined on the Date of
Grant by dividing $50,000 by the Fair Market Value (as defined in the Plan) of
the Common Stock on the Date of Grant.

Each year the Board shall discuss and review the appropriateness of the size of
the Annual Grant and make any adjustments as it may deem appropriate.

Date of Grant and Vesting. The Company shall make the Annual Grant to Eligible
Directors on the date of the Company’s Annual Stockholders’ Meeting each year.
The Annual Grant shall vest over a one year period in four equal installments,
with 25% of the shares of Common Stock awarded thereunder vesting on the
Quarterly Payment Date, subject to the Eligible Director’s continued Board
service on each such date; provided, however, that if the Company’s Annual
Stockholders’ Meeting for the following year occurs prior to the end of the one
year period, the Annual Grant for such Eligible Directors who serve until such
Annual Stockholders’ Meeting shall become fully vested upon such Annual
Stockholders’ Meeting. In addition, the Annual Grant shall become fully vested
upon the occurrence of a Change in Control (as defined in the Plan).

New Directors. In the event a new Eligible Director is elected or appointed to
the Board on a date other than the Company’s Annual Stockholders’ Meeting, the
Board shall have authority to determine, at its sole discretion, such Eligible
Director’s eligibility to receive a pro-rated portion of any Annual Grant.

Directors Elected by Holders of Class B Common Stock and Class C Common Stock.
Eligible Directors elected by the holders of the Class B Common Stock and Class
C Common Stock, voting as a separate class, shall receive $50,000 in lieu of the
equity consideration described above. This $50,000 shall be paid in the same
manner as the annual cash retainer described in paragraph 1.

 

  3. Expense Reimbursement. All directors, including, for the avoidance of
doubt, non-Eligible Directors, will be reimbursed for all reasonable
out-of-pocket expenses incurred by such directors in connection with their
participation in meetings of the Board (and committees thereof) and the boards
of directors (and committees thereof) of the subsidiaries of the Company. The
Company shall make reimbursement to directors within a reasonable amount of time
following submission by the directors of reasonable written substantiation for
the expenses.

 

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