Pier 1 2011 Annual Report Download - page 115

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Executive Compensation Components
In addition to base salary, short-term incentives, and long-term incentives, Pier 1 Imports’ compensation program in
fiscal 2011 included retirement plans and Mr. Smith’s employment agreement, which is discussed separately below under the
caption “Chief Executive Officer Employment Agreement.” The following table (Table 1) explains the intended purposes
and specific features of the direct compensation components of Pier 1 Imports’ executive compensation program for fiscal
2011:
Table 1
Compensation
Component Intended Purpose Specific Features for Pier 1 Imports Executives
Targeted Proportion of Total
Direct Compensation
CEO Other NEO’s
Base Salary
To provide a fixed amount
of compensation that is
commensurate with
market conditions for
similar jobs and to aid in
the attraction and
retention of key
executives.
Pier 1 Imports recognizes individual
experience, skill, level of responsibility and
performance over time to set base pay levels
and generally targets the 50th percentile or “at
market” within the context of the national
retail market.
Changes to base pay may be made based on
individual and company performance, pay in
relation to other peers and the external labor
market, and increased responsibility.
Depending on the position, base pay is
approximately 23% - 45% of total target
compensation for executive officers and is in
alignment with our philosophy of putting the
majority of pay at risk based on corporate
performance.
23% 42%
Short-Term
Incentive
To motivate executives to
achieve maximum
quarterly and annual
financial and operational
goals and to reward
executives for their
contributions when those
goals are achieved.
Annual short-term
incentives are also used to
align competitive pay
levels on an annual basis.
Provides alignment of our executive team
interests with our short-term corporate
operating objectives. These annual objectives
are tied to the overall strategic mission and
long-term plan.
Design allows incentive targets for executive
officers to vary by individual after
consideration of relevant market and peer
group compensation information, individual
job responsibilities and other relevant
information as appropriate given the needs of
the business.
Designed to capitalize on the previous
financial turnaround efforts of Pier 1 Imports,
and focus management on increasing
operating profitability on a year-over-year
basis, with no payouts in fiscal 2011 unless
Pier 1 Imports achieved significantly higher
results when compared to fiscal 2010.
Annual incentive awards help Pier 1 Imports
achieve quarterly financial and operating
objectives since a portion of the total annual
incentive is tied to quarterly financial and
operating results.
23% 32%
31