Pier 1 2016 Annual Report Download - page 107

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COMPENSATION
Pier 1 Imports generally targets total compensation packages using a combination of fixed and “at-risk” pay comprised of base salary,
short-term incentives and long-term incentives for executive officers to reflect the 50th percentile of Pier 1 Imports’ peer group when
planned financial and operational goals are achieved. Pier 1 Imports designs its total compensation packages to provide pay above the
50th percentile compared to its peer group when results exceed planned financial and operational goals. Additional details of how each
component of our executive compensation program work together are discussed below:
PAY ELEMENT OBJECTIVE PERFORMANCE REWARDED
FIXED
Annual Base Pay
To provide competitive fixed pay that is tied to
the market and allows Pier 1 Imports to attract,
retain and motivate executives within the national
retail market
Based on individual skills,
experience, responsibilities
and performance over time
Long-Term Time-based
Restricted Stock To closely align executive and shareholder
interests and aid in retention Improved stock price
PERFORMANCE BASED
Annual Short-Term Incentive To increase profitability and Pier 1 Imports
performance every year
Achievement of fiscal year
Profit Goal and e-Commerce
sales
Long-Term Profit Goal
Performance Shares To increase multi-year profitability and stock
price
Achievement of Profit Goal
growth over a three-year
period
Long-Term TSR
Performance Shares
To measure internal performance and subsequent
stock performance relative to Pier 1 Imports’
peers
Relative TSR performance
versus a broader retail peer
group over a three-year
period
Below is a summary of compensation practices Pier 1 Imports has adopted which it believes drive performance, thereby increasing
shareholder value:
Best practices in executive compensation
✔WE DO ✖WE DON’T
✓Have stock ownershipguidelines that reinforce alignment
between shareholders and our executive officers
✓Set aggressive short-term performance metrics and have
amajority of targeted pay for executives tied to
performance
✓Use long-term incentives to encourage management
continuity
✓Have an independent compensation consultant reporting
directly to the compensation committee
✓Tie a portion of executives’ pay to relative performance
metrics
✓Mitigate undue risk by using a cap on maximum payouts
for short- and long-term plans and performing an annual
internal risk assessment of compensation programs
✓Maintain a clawback policy
✖Have employment agreements other than for the CEO
✖Allow hedging, short sales, option trading or pledging of
Pier 1 Imports common stock
✖Apply across-the-board base salary increases
✖Pay dividends on unvested restricted stock or above-
market earnings on deferred compensation
arrangements
✖Re-price underwater stock options
✖Pay discretionary bonuses to executives when
performance metrics are not met
✖Have tax gross-ups upon change in control
✖Automatically vest equity awards under stock incentive
plans upon a change in control
PIER 1 IMPORTS, INC. | 2016 Proxy Statement 25