Pier 1 2012 Annual Report Download - page 107

• invested capital of $62.3 million in store development and technology initiatives compared to capital
expenditure levels of $31.0 million in fiscal 2011;
• increased sales per retail square foot to $184 for fiscal 2012, up 9.5% from $168 per retail square foot
for fiscal 2011;
• completed its $100 million initial share repurchase program in September 2011, repurchasing
approximately 8% of its common stock outstanding; and
• authorized a second $100 million share repurchase program in October 2011, all of which remained
available for repurchase at the end of fiscal 2012.
Compensation Policies, Principles, Objectives and Practices
Pier 1 Imports’ proven success and continuation of that success depends, in large part, on our ability to
successfully attract, motivate and retain a qualified management team. Sourcing qualified candidates to fill
important positions within Pier 1 Imports is challenging given the highly competitive retail environment.
Accordingly, Pier 1 Imports’ overall compensation philosophy is that our executive compensation program should
be structured to attract and retain highly skilled and motivated individuals who will lead Pier 1 Imports to successful
performance that is consistent with shareholders’ expectations. Pier 1 Imports accomplishes this by creating total
compensation packages which are competitive in the retail industry, fair and equitable among the executives, and
which provide strong incentives for the long-term success and performance of Pier 1 Imports.
Pier 1 Imports provides both short-term and long-term incentives to our executives for the effective
management of major functions, teamwork, and effective expense control. Success on these fronts leads to the
overall success of Pier 1 Imports. Pier 1 Imports believes that as an executive’s level of responsibility increases, a
greater portion of that executive’s potential total compensation should come from performance-based plans. Pier 1
Imports also believes that the majority of an executive’s compensation should be “at-risk” and tied to Pier 1
Imports’ performance. This aligns management’s interests with shareholders’ interests as the executive’s potential
total compensation should only increase when Pier 1 Imports’ performance improves.
Pier 1 Imports generally targets total compensation packages for executive officers at the 50th percentile of Pier
1 Imports’ peer group when Pier 1 Imports achieves planned financial and operational goals. Pier 1 Imports designs
its total compensation packages to provide pay above the 50th percentile of pay compared to its peer group when
Pier 1 Imports’ results significantly exceed planned financial and operational goals.
At the beginning of fiscal 2012, Pier 1 Imports used a group of peer companies to benchmark base pay, short-
term incentive and long-term incentive elements of total executive compensation. The peer group included the
following companies which at that time were publicly traded and were direct competitors, retail industry
competitors, and/or local area competitors for executive talent:
• Bed Bath & Beyond Inc.
• Charming Shoppes, Inc.
• Dick’s Sporting Goods, Inc.
• Fossil, Inc.
• J.Crew Group, Inc.
• Jo-Ann Stores, Inc.
• Kirkland’s, Inc.
• PetSmart, Inc.
• RadioShack Corporation
• Ross Stores, Inc.
• Stein Mart, Inc.
• Williams-Sonoma, Inc.
Data for these companies was provided by Pay Governance LLC, the compensation committee’s executive
compensation consultant.
While Pier 1 Imports did not in fiscal 2012 use total shareholder return, or TSR, as a performance measure for
its short- or long-term incentive plans, the compensation committee, the compensation consultant to the committee
and management review Pier 1 Imports’ performance against many other external financial measures including TSR
25