Pier 1 2009 Annual Report Download - page 119

ITEM 2—Proposal to Approve an Amendment of the Certificate of Incorporation of Pier 1
Imports, Inc. to Effect a Reverse Stock Split of Pier 1 Imports’ Common Stock Having a
Split Ratio Between, and Including, 1-for-2 and 1-for-20, as will be Selected by the Board of
Directors Prior to the Time of Filing Such Certificate of Amendment with the Delaware
Secretary of State
The board of directors has unanimously adopted a resolution seeking shareholder approval to
amend Pier 1 Imports’ Certificate of Incorporation to effect a reverse stock split of Pier 1 Imports’
common stock. If this proposal is approved by the shareholders, the board of directors may
subsequently effect, in its sole discretion, the reverse stock split using a split ratio of between, and
including, 1-for-2 and 1-for-20 (e.g., 1-for-2, 1-for-10, 1-for-15, or 1-for-20). Approval of this proposal by
the shareholders would give the board of directors authority to implement the reverse stock split at any
time on or before the day prior to the 2010 annual meeting of shareholders. In addition,
notwithstanding the approval of this proposal by the shareholders, the board of directors may, in its
sole discretion, determine not to effect and abandon the reverse stock split without further action by
the shareholders.
The form of the proposed amendment to our Certificate of Incorporation to effect the reverse
stock split is attached to this proxy statement as Appendix A. The amendment will effect a reverse
stock split of Pier 1 Imports’ common stock using a split ratio between, and including, 1-for-2 and
1-for-20, where the actual ratio within this range will be selected by the board of directors following
shareholder approval. The board of directors believes that shareholder approval of a range of potential
exchange ratios (rather than a single exchange ratio) provides the board of directors with the flexibility
to achieve the desired results of the reverse stock split. If the shareholders approve this proposal, the
reverse stock split will be effected only upon a determination by the board of directors that the reverse
stock split is in the best interests of the shareholders at that time. In connection with any determination
to effect a reverse stock split, the board of directors will set the timing for such a split and select the
specific ratio from within the range of ratios set forth herein. If the board of directors does not
implement the reverse stock split on or before the day prior to the 2010 annual meeting of
shareholders, the authority granted in this proposal to implement the reverse stock split on these terms
will terminate. The board of directors reserves its right to elect not to proceed and abandon the reverse
stock split if it determines, in its sole discretion, that this proposal is no longer in the best interests of
the shareholders. No further action by the shareholders will be required for the board of directors to
either implement or abandon the reverse stock split.
In determining which reverse stock split ratio to implement, if any, following the receipt of
shareholder approval, the board of directors may consider, among other things, factors such as:
• the historical trading price and trading volume of Pier 1 Imports’ common stock,
• the then prevailing trading price and trading volume of Pier 1 Imports’ common stock and the
anticipated impact of the reverse stock split on the trading market for Pier 1 Imports’ common
stock,
• our ability to continue our listing on the NYSE,
• which of the alternative reverse split ratios would result in the greatest overall reduction in our
administrative costs, and
• prevailing general market and economic conditions.
To avoid the existence of fractional shares of Pier 1 Imports’ common stock, shareholders who
would otherwise hold fractional shares as a result of the reverse stock split will be entitled to receive
cash (without interest or deduction) in lieu of such fractional shares from the exchange agent and,
where shares are held in certificated form, the surrender of all old certificate(s) and receipt by the
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