Pier 1 2011 Annual Report Download - page 120

Retirement and Other Plans – Pier 1 Imports offers a supplemental retirement plan which is designed to
provide certain 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 described and discussed below under the caption
“Pension Benefits Table for the Fiscal Year Ended February 26, 2011.”
In addition, Pier 1 Imports offered a non-qualified deferred compensation plan known as the Pier 1 Benefit
Restoration Plan II to its executives and key members of management. 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. During fiscal 2011, Pier 1 Imports closed the Pier 1 Benefit
Restoration Plan II to further deferral elections by participants and established a new non-qualified deferred
compensation plan, known as the Pier 1 Imports, Inc. Deferred Compensation Plan. Both plans are described and
discussed below under the caption “Non-Qualified Deferred Compensation Table for the Fiscal Year Ended
February 26, 2011.”
Chief Executive Officer Employment Agreement – Mr. Smith and Pier 1 Imports have entered into an
employment agreement for Mr. Smith’s employment as Pier 1 Imports’ president and chief executive officer. Pier 1
Imports utilizes an employment agreement to create continuity of Mr. Smith’s services and to mitigate Mr. Smith’s
risk of involuntary termination (other than for cause) or Mr. Smith’s voluntary termination based on a good reason,
both events as defined in the agreement.
On December 15, 2009, Mr. Smith and Pier 1 Imports entered into a renewal and extension of the employment
agreement that expired on February 27, 2010. The renewal and extension was effective February 28, 2010, the first
day of fiscal 2011. The term of the employment agreement is for three fiscal years ending on March 2, 2013, and is
renewable one fiscal year at a time beginning on March 3, 2013 unless Pier 1 Imports or Mr. Smith gives notice of
non-renewal at least 60 days prior to that date.
Pursuant to the renewal and extension, Mr. Smith’s base salary is $1,050,000 per year, which amount may be
adjusted from time-to-time by the compensation committee. He also is eligible to participate in Pier 1 Imports’
short-term and long-term incentive cash awards during the renewal term.
Also, pursuant to the renewal and extension, Mr. Smith received a grant of 375,000 shares of time-based
restricted stock on December 18, 2009, under the Pier 1 Imports, Inc. 2006 Stock Incentive Plan, with one-third of
such shares vesting on December 18, 2010 and the remaining shares vesting one-third per year on the second and
third anniversary of the grant date, provided Mr. Smith is employed on such dates.
Also, pursuant to the agreement a grant of 375,000 shares of restricted stock was made to Mr. Smith on
February 28, 2010 and February 27, 2011, and an additional grant of 375,000 shares of restricted stock will be made
to Mr. Smith on February 26, 2012, provided Mr. Smith is employed on such date. These restricted stock grants vest
as follows: (i) one-half of the 375,000 shares of restricted stock are time-based and vest 62,500 shares per year on
the last day of the fiscal year in which the grant was made and on the last day of the following two fiscal years,
provided Mr. Smith is employed on the last day of each such fiscal year; and (ii) the other one-half of the 375,000
shares of restricted stock are performance-based and vest 62,500 shares upon Pier 1 Imports satisfying the Profit
Goal target established by the compensation committee for the fiscal year in which the grant was made and 62,500
shares in each of the following two fiscal years upon Pier 1 Imports satisfying the Profit Goal target established by
the compensation committee for the respective fiscal year (each Profit Goal achievement to be determined upon the
filing of Pier 1 Imports’ annual report on Form 10-K for the applicable fiscal year) and provided that for each fiscal
year Mr. Smith is employed on the last day of each such fiscal year. If the targeted Profit Goal for a particular fiscal
year is partially met, then the number of shares that could vest is adjusted as follows (with interpolation between the
target levels):
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