Pier 1 2007 Annual Report Download - page 71

were cancelled. During fiscal 2006, 218,000 shares of restricted stock were granted and 15,000 shares were
cancelled. A portion of the restricted stock grant in fiscal 2007 vests over a three-year period of continued
employment and the remainder of the grant vests if certain cumulative defined earnings targets are met at the
end of three fiscal years. The fair market value at the date of grant of the restricted stock shares granted
during fiscal 2007 pursuant to the 2006 Plan was $7.55 and is being expensed over the requisite vesting period
for the time-based grant. No expense has been recognized for the grant with a defined earnings target as the
target was not considered probable of being met during fiscal 2007. The fair market value at the date of grant
of the restricted stock shares granted during fiscal 2006 pursuant to the Management Restricted Stock Plan
was $14.25 and is being expensed over the vesting period. As of fiscal 2007 year end, no shares were available
for future grant under the Management Restricted Stock Plan since all future grants, if any, will be made from
shares available under the 2006 Plan.
Compensation expense for the restricted stock grant was $970,000 or $0.01 per share and $636,000 or
$0.01 per share, in fiscal 2007 and 2006, respectively. There was no compensation expense related to this plan
for fiscal 2005. As of March 3, 2007, there was $2,486,000 of total unrecognized compensation expense
related to restricted stock that may be recognized over a weighted average period of 1.4 years if all
performance targets are met.
Director deferred stock units — The 2006 Plan and the 1999 Stock Plan also authorize director deferred
stock unit awards to be granted to non-employee directors. During fiscal 2007, each director was required to
defer a minimum of 50% and could elect to defer up to 100% of their director’s cash fees into a deferred
stock unit account. The fees deferred received a 50% matching contribution from the Company in the form of
director deferred stock units. As of March 3, 2007, there were 246,208 shares deferred, but not delivered,
under the 2006 Plan and the 1999 Stock Plan. All future grants will be awarded from shares available for
grant under the 2006 Plan. As of February 25, 2006, there were 175,327 shares deferred, but not delivered
under the 1999 Stock Plan and 68,497 shares available for grant, which were subsequently included in the
shares available for grant at the inception of the 2006 Plan. During fiscal 2007, approximately 70,881 director
deferred stock units were granted and no shares were cancelled. Compensation expense for the director
deferred stock awards was $557,000, $465,000 and $429,000 in fiscal 2007, 2006 and 2005, respectively.
Stock purchase plan — Substantially all Company employees are eligible to participate in the Pier 1
Imports, Inc. Stock Purchase Plan under which the Company’s common stock is purchased on behalf of
employees at market prices through regular payroll deductions. Each participant may contribute up to 10% of
the eligible portions of compensation. The Company contributes from 10% to 100% of the participants’
contributions, depending upon length of participation and date of entry into the plan. Company contributions
to the plan were $1,143,000, $1,267,000 and $1,266,000 in fiscal years 2007, 2006 and 2005, respectively.
Shares reserved for future issuances — As of March 3, 2007, the Company had approximately
17,240,000 shares reserved for future issuances under the stock plans. This amount includes stock options
outstanding, director deferred units and shares available for future grant.
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Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)