Pier 1 2009 Annual Report Download - page 155

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participant’s compensation deferral, and (ii) 50% of the next four percent of the participant’s
compensation deferral.
Each participant’s deferral and matched amounts are credited at least quarterly with an amount
of interest at an annual rate equal to Moody’s Corporate Bond Index plus 1%. Over the last
three fiscal years, the annual interest rates have ranged from 6.63% to 7.39%. During fiscal
2009, the interest rates were 7.03% through December 31, 2008 and 7.39% January 1, 2009
through February 28, 2009. Participants’ accounts are paid to them upon separation from Pier 1
Imports in a lump-sum amount unless the participant has previously elected and qualified for a
five-year installment form of payment. Participants may also elect an in-service lump-sum
distribution with a 10% penalty for early withdrawal. Participants’ deferral amounts and the
interest earned on those amounts are fully vested. No loans are permitted. Matching
contributions and the interest earned on those contributions are subject to the same vesting
requirements as Pier 1 Imports’ 401(k) retirement plan regardless of whether the participant is
actually participating in the 401(k) plan. The 401(k) vesting schedule is 20% per year of service
(as defined in the plan) beginning with two years of service. Participants are fully vested in
Pier 1 Imports matching contributions plus earnings after six years of service with Pier 1
Imports.
Effective December 31, 2004, the BRP was closed to further contributions by participants. The
plan was renamed the BRP I and Pier 1 Imports offered after that date the BRP II plan
described below. Only vested account balances remain in the BRP I along with the interest
continuing to be earned on those amounts.
•Pier 1 Imports Benefit Restoration Plan II—All unvested BRP I amounts were transferred to
the Pier 1 Imports BRP II. The BRP II has the same purpose as the BRP I, but was adopted to
separate the portion of the BRP that became subject to new deferred compensation taxation
laws effective January 1, 2005 generally referred to as 409A.
BRP II participants may defer pre-tax amounts of up to 20% of their compensation (generally
W-2 earnings). Participants’ contributions and the interest earned on those contributions are
fully vested. No loans are permitted. Pier 1 Imports’ matching contribution is (i) 100% of the
first one percent of the participant’s compensation deferral, and (ii) 50% of the next four
percent of the participant’s compensation deferral. Matching contributions and the interest
earned on those contributions are subject to the same vesting requirements as Pier 1 Imports’
401(k) retirement plan regardless of whether the participant is actually participating in the
401(k) plan. The 401(k) vesting schedule is 20% per year of service (as defined in the plan)
beginning with two years of service. Participants are fully vested in Pier 1 Imports’ matching
contributions plus earnings after six years of service with Pier 1 Imports.
Each participant’s deferral amount plus the Pier 1 Imports match is credited at least quarterly
with an amount of interest at an annual rate equal to Moody’s Corporate Bond Index plus 1%.
Over the last three fiscal years, the annual interest rates have ranged from 6.63% to 7.39%.
During fiscal 2009, the interest rates were 7.03% through December 31, 2008 and 7.39%
January 1, 2009 through February 28, 2009. The BRP II allows for an in-service lump-sum
distribution for an unforeseen emergency. Unless participants elect to have their account balance
paid out to them in five annual installments, then upon separation from Pier 1 Imports their
current balance is paid out to them in a lump-sum distribution, subject to delay as required by
409A.
Trusts have been established for the purpose of setting aside funds to be used to settle obligations
under the benefit restoration plans. The trusts assets are consolidated in Pier 1 Imports’ financial
statements and consist of interest yielding investments aggregating $247,000 at February 28, 2009. The
trusts also own and are the beneficiaries of a number of insurance policies on the lives of current and
57