Pier 1 2007 Annual Report Download - page 110

for 15 years, offset by Social Security retirement benefits and divided by 180. Mr. Girouard and Mr. Weatherly
both elected to receive the lump sum actuarial and financial equivalent of the monthly installment payments.
Mr. Girouard and Mr. Weatherly retired on February 19, 2007 and December 30, 2006, respectively. Their
lump sum payments are reported in the Pension Benefits table below. For certain participants the plan also
provides that in the event of disability or retirement, comparable major medical and hospitalization insurance
coverage as generally available to Pier 1 employees and their dependents is made available to the executive
and his dependents for his lifetime. If the executive elects such coverage he must pay a portion of the total
premium for such coverage. In the event of termination of employment prior to retirement eligibility, the
participant and his dependents have the right to participate in such comparable major medical and hospitaliza-
tion insurance coverage during the 15 years immediately after the date the participant attains age 65. If the
participant elects such coverage he must pay the total premium for such coverage. Termination of employment
in certain circumstances as a result of a change in control may constitute retirement under the plan.
The remaining named executive officers participate in a plan adopted by Pier 1 in 1995 known as the
Supplemental Retirement Plan. The plan provides upon death, disability, or retirement, or termination of
employment (including termination of employment in certain circumstances as a result of a change in control)
for reasons other than cause (as defined in the plan) each participant will receive a life annuity based on an
annual benefit which generally equals 60% of the participant’s highest three-year average of annual salary and
bonus offset by Social Security retirement benefits. The annual benefit as calculated cannot exceed $500,000.
For certain participants the plan also provides that in the event of disability or retirement, those participants
and their dependents have the lifetime right to participate in comparable major medical and hospitalization
insurance coverage as made available generally to Pier 1 employees and their dependents. If the executive
elects such coverage he must pay a portion of the total premium for such coverage. In the event of termination
of employment (for reasons other than cause) prior to retirement eligibility, the participant and his dependents
have the right to participate in such comparable major medical and hospitalization insurance coverage during
the 15 years immediately after the date the participant attains age 65. If the participant elects such coverage he
must pay the total premium for such coverage. Termination of employment in certain circumstances as a result
of a change in control may constitute retirement under the plan.
Pier 1 also offers a non-qualified deferred compensation plan known as the Pier 1 Benefit Restoration
Plan, to its executives and key members of management. Like the plans described above, this plan is 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’s 401(k) plan. The plan also assists Pier 1 in
attracting and retaining executives and key members of management. The plan is further described in the Non-
Qualified Deferred Compensation discussion below.
Employment Agreements and Post-Employment Consulting Agreements — From time to time, Pier 1
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.
Post-employment consulting agreements allow executives to provide certain services to Pier 1 after a qualified
termination of employment.
Pier 1 entered into post-employment consulting agreements with Mr. Girouard and Mr. Weatherly on
July 5, 1991. These agreements expired upon Mr. Girouard’s and Mr. Weatherly’s retirements.
Pier 1 has also entered into post-employment consulting agreements with Mr. Jacobs on September 13,
1995, Mr. Schneider on July 6, 1993, Mr. Turner on September 19, 1994 and Mr. Walker on November 17,
1999. These agreements provide that if Pier 1 terminates the executive’s employment prior to retirement for
reasons other than cause, or if the executive leaves employment with Pier 1 for good reason, (both events as
defined in the agreements) which generally includes circumstances beyond the executive’s control, then in
either such event Pier 1 will retain the executive as a consultant for up to two years, depending on the
executive’s number of years of service as an officer, and will pay the executive a monthly consulting fee equal
to one-twelfth of his annual base salary immediately prior to his termination. Pier 1 will also pay the executive
50% of his cost for continuing, during the consulting period, health and life insurance coverage comparable to
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