Pier 1 2009 Annual Report Download - page 130

cumulative, that is, whether dividends must first be paid on outstanding preferred shares that are issued
before common share dividends are paid, liquidation prices, redemption rights and prices, any sinking
fund requirements, any conversion rights and any restrictions on the issuance of any series of preferred
shares. Subject to the exercise of its fiduciary duties to Pier 1 Imports, Inc. and its shareholders, the
board of directors will not issue any of the newly authorized 20,000,000 available shares of preferred
stock, without prior shareholder approval, for any defensive or anti-takeover purposes. At this current
time, we do not have any plans, proposals or arrangements to issue any of the newly available shares of
preferred stock, and the authorization of the preferred shares is not in response to any takeover
attempt or any other expression of interest indicated by a third party.
The board of directors’ present authority to issue the shares of preferred stock generally repeats in
their entirety various provisions of the General Corporation Law of the State of Delaware. Such a
long-form provision is not necessary under the General Corporation Law of the State of Delaware, and
the board of directors has recommended that a shorter form be substituted in place of the long-form
authority. No substantive change to the board of directors’ authority to issue the authorized preferred
stock in series will occur if this part of the amendment is or is not adopted.
The issuance of shares of preferred stock pursuant to the board of directors’ authority described
above may adversely affect the rights of holders of common stock. For example, preferred stock issued
by Pier 1 Imports may rank prior to the common stock as to dividend rights, liquidation preference, or
both, may have full or limited voting rights, and may be convertible into shares of common stock.
Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a
premium or may otherwise adversely affect the market price of the common stock.
The form of the proposed amendment to our Certificate of Incorporation to authorize an increase
in the number of authorized shares of preferred stock from 5,000,000 shares to 20,000,000 shares, to
shorten the description of the authority of the board of directors to issue such shares, and to eliminate
the terms and provisions of the Formula Rate Preferred Stock is attached to this proxy statement as
Appendix B. Appendix B will be appropriately modified to delete the proposed amendment if this
proposal is not approved by the requisite vote of the shareholders. If the proposed amendment is
approved, all 20,000,000 shares will be available for future issuance. The approval of this proposal is
not conditioned on the approval of Item 2 or Item 3 above.
The affirmative vote of a majority of the outstanding shares of common stock entitled to vote is
required to approve the amendment of the Certificate of Incorporation of Pier 1 Imports, Inc. to
increase the authorized number of shares of preferred stock from 5,000,000 shares to 20,000,000 shares,
to shorten the description of the authority of the board of directors to issue such shares, and to
eliminate the terms and provisions of the Formula Rate Preferred Stock. No shares of our preferred
stock are outstanding. If a proxy card is signed and returned but no direction is made, the persons
named in your proxy will vote your shares ‘‘FOR’’ this proposal. Any shares not voted (whether by
abstention or otherwise) will have the same effect as a vote ‘‘AGAINST’’ this proposal.
The board of directors has declared it advisable and unanimously recommends a vote ‘‘FOR’’
approval of the amendment of the Certificate of Incorporation of Pier 1 Imports, Inc. to increase the
authorized number of Pier 1 Imports’ shares of preferred stock from 5,000,000 shares to
20,000,000 shares, to shorten the description of the authority of the board of directors to issue such
shares, and to eliminate the terms and provisions of the Formula Rate Preferred Stock currently set
forth in the Certificate of Incorporation.
ITEM 5—Proposal to Ratify the Audit Committee’s Approval to Engage Ernst & Young LLP as Pier 1
Imports’ Independent Registered Public Accounting Firm for Fiscal 2010
At a recent meeting of the audit committee, the committee approved engaging Ernst &
Young LLP as Pier 1 Imports’ independent registered public accounting firm for fiscal 2010. Ernst &
Young served as Pier 1 Imports’ independent registered public accounting firm for fiscal 2009.
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