Pier 1 2007 Annual Report Download - page 92

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Board Committees
There are four standing committees of the board of directors. They are the executive committee, the
nominating and corporate governance committee, the audit committee and the compensation committee. A
brief description of each committee’s functions follows:
Executive Committee. The executive committee directs and manages Pier 1’s business and affairs in the
intervals between board meetings. In doing so, the committee has all of the powers and authority of the full
board in the management of Pier 1’s business, except for powers or authority that may not be delegated to the
committee as a matter of law or that are delegated by the board to another committee.
Nominating and Corporate Governance Committee. The nominating and corporate governance commit-
tee is responsible for considering and making recommendations to the board regarding nominees for election
to the board and the membership of the various board committees. The committee is also responsible for
establishing and overseeing Pier 1’s corporate governance guidelines. In fulfilling its purpose, the committee
established and oversees the Pier 1 Imports, Inc. Corporate Governance Guidelines described earlier in this
proxy statement and the director nomination process which is set forth above.
Audit Committee. The audit committee provides assistance to the board in overseeing Pier 1’s account-
ing, auditing, financial reporting and systems of internal controls regarding finance and accounting. As part of
its duties, the audit committee is directly responsible for the appointment, compensation, retention and
oversight of Pier 1’s independent auditors. The committee also reviews Pier 1’s quarterly and year-end
financial statements. The board of directors has determined that each member of the audit committee is an
audit committee financial expert, as defined by the Securities and Exchange Commission (“SEC”), and
therefore has accounting or related financial management expertise and is financially literate within the
meaning of NYSE listing standards.
Compensation Committee. The compensation committee oversees Pier 1’s administration of base pay,
short-term and long-term incentive compensation plans (including equity-based plans), perquisites, and
retirement plans for Pier 1’s executive officers. The committee has the authority to review and approve
corporate goals and objectives relevant to executive officer compensation programs, evaluate the performance
of executive officers in light of those goals and objectives, evaluate overall company performance and relative
shareholder return, and make recommendations to the board of directors on the establishment and amendment
of compensation programs for executive officers.
The compensation committee may, at any time, form and delegate authority to subcommittees of the
compensation committee with responsibility for establishing corporate goals and objectives relevant to
executive officer compensation programs and the design and administration of all elements of Pier 1’s
compensation program. The committee may retain and/or terminate outside compensation consulting firms to
assist in the evaluation of executive officer compensation. The committee also may recommend, at least every
other year, compensation for service to Pier 1 as a member of the board of directors. The committee has the
authority to obtain advice and assistance from internal or external legal, accounting, and other advisors.
The compensation committee and board of directors believe that attracting, retaining and motivating Pier 1
employees, and particularly Pier 1’s executive management, are essential to Pier 1’s performance and
enhancing shareholder value. The committee will continue to administer and develop Pier 1’s compensation
programs in a manner designed to achieve these objectives. The committee also believes that the total
compensation opportunity provided for the executive officers must be reasonable and consistent with
compensation of comparable peer group companies and in the Dallas/Fort Worth labor market.
Base pay, short-term incentive and long-term incentive compensation recommendations for the named
executive officers are presented to the compensation committee at their meeting in March of each year. The
presentation includes recommendations of Pier 1’s chief executive officer, human resources compensation
group, or both, on those elements of compensation, plus recommended plan design changes, if any, and a
summary of all awards to all eligible levels of management. That presentation also, from time to time, may
include survey data from a peer group of retail companies for the compensation committee’s consideration.
That data may include studies and recommendations from outside consultants. Generally, the compensation
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