Pier 1 2008 Annual Report Download - page 112

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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 2008:
Long-Term Incentive
% of Total
Long-Term Incentive
Stock Options .................................................. 68%
Restricted Stock — Time Based ..................................... 32%
The value of this long-term incentive mix was determined using Black-Scholes methodology. Pier 1 Imports
believes that long-term incentives should consist solely of equity to tie the executives’ long-term compensation
potential with increased shareholder value. The above mix allocates Pier 1 Imports’ long-term incentives in a
manner designed to meet this goal. 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 2008, 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 — During fiscal 2008 Pier 1 Imports paid its named executive officers a pre-determined
monthly sum to cover the cost of club dues, automobile expenses, financial planning and tax preparation
services, and reimbursed those individuals for certain medical expenses. In light of 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 reimburse-
ment 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 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 under the caption
“Pension Benefits Table for the Fiscal Year Ended March 1, 2008” below.
Pier 1 Imports also offers a non-qualified deferred compensation plan known as the Pier 1 Imports
Benefit Restoration Plan to its executives and key members of management. Like the supplemental retirement
plan, 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 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 under the caption “Non-Qualified Deferred Compensation Table for the Fiscal Year
Ended March 1, 2008” below.
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.
Post-employment consulting agreements allow executives to provide certain services to Pier 1 Imports after a
qualified termination of employment.
31