Pier 1 2009 Annual Report Download - page 140

For each named executive officer, other than the chief executive officer, Pier 1 Imports established the
following mix of long-term incentive awards for fiscal 2009:
% of Total
Long-Term Incentive Long-Term Incentive
Stock Options ................................ 59%
Restricted Stock—Time-Based .................... 41%
The value of this long-term incentive mix was determined using Black-Scholes methodology. For its
chief executive officer, Pier 1 Imports provided long-term incentives pursuant to his employment
agreement as discussed below.
Pier 1 Imports distributes long-term incentive awards as soon as possible following receipt of all
required approvals. Stock options are granted at the closing price of Pier 1 Imports’ common stock on
the date of the grant. Pier 1 Imports’ practice is for the grants of stock options and restricted stock to
be made on the day following board of directors approval allowing Pier 1 Imports to provide
information to the market, if any, that may require disclosure as a result of Pier 1 Imports’ board of
directors meeting at which the grants were approved. Delays in the grant date may occur pending
quarterly earnings releases and conference calls or as otherwise directed by the board of directors. For
fiscal 2009, the grant date was delayed pending Pier 1 Imports’ fourth quarter and year-end earnings
release and conference call. Pier 1 Imports does not grant equity compensation awards in anticipation
of the release of material non-public information. Similarly, Pier 1 Imports does not time the release of
material non-public information based on equity award grant dates. Pier 1 Imports’ practice is for the
date of grants of stock options and restricted stock for named executive officers to be the same date as
grants for all other employees.
Perquisites—In light of then current trends regarding the payment of perquisites to executives,
Pier 1 Imports, at the beginning of fiscal 2009, discontinued the payment of allowances for club dues,
automobile expenses, financial planning and tax preparation, and the reimbursement for certain
medical expenses. In order to maintain a competitive position within the retail industry with respect to
total compensation and in consideration for the discontinuance of these benefits, there was a one-time
adjustment to the executive officers’ base salaries.
Retirement and Other Plans—Pier 1 Imports offers a supplemental retirement plan which is
designed to provide certain executives with post-employment financial security and to mitigate the
effects of deferral limitations on highly compensated individuals in qualified plans such as Pier 1
Imports’ 401(k) plan. The plan also assists Pier 1 Imports in attracting and retaining executives. The
plan is discussed and described below under the caption ‘‘Pension Benefits Table for the Fiscal Year
Ended February 28, 2009’’.
Pier 1 Imports also offers a non-qualified deferred compensation plan known as the Pier 1 Benefit
Restoration Plan to its executives and key members of management. This plan is also designed to
provide post-employment financial security and to mitigate the effects of deferral limitations on highly
compensated individuals in qualified plans such as Pier 1 Imports’ 401(k) plan. The plan also assists
Pier 1 Imports in attracting and retaining executives and key members of management. The plan is
described and discussed below under the caption ‘‘Non-Qualified Deferred Compensation Table for the
Fiscal Year Ended February 28, 2009’’.
Employment Agreements and Post-Employment Consulting Agreements—From time to time,
Pier 1 Imports utilizes employment agreements or post-employment consulting agreements to create
continuity of the executive’s services and to mitigate the executive’s risk of involuntary termination
(other than for cause) or the executive’s voluntary termination based on a good reason, both events as
defined in the respective agreements.
Pier 1 Imports entered into post-employment consulting agreements with Jay R. Jacobs, Executive
Vice President, Merchandising on September 13, 1995, Charles H. Turner, Executive Vice President and
Chief Financial Officer on September 19, 1994 and David A. Walker, Executive Vice President,
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