Pier 1 2012 Annual Report Download - page 108

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to ensure the measures we use internally translate into similar success with those external measures. We were
pleased to see once again the strong alignment with our chosen metric to other external measures, such as TSR. Pier
1 Imports has implemented a third long-term incentive equity award for fiscal 2013 that will use relative TSR
rankings against a broadened peer group. This new equity incentive will be in addition to the time-based and
performance-based equity incentives Pier 1 Imports used in fiscal 2012 and the overall proportion of target shares
will shift from the 50% performance-based shares and 50% time-based shares used during fiscal 2012. For
executive officers and senior management that shift will be to 60% performance-based shares and 40% time-based
shares in fiscal 2013.
Advisory Vote on Executive Compensation
Pier 1 Imports conducted its first advisory vote on executive compensation last year at its 2011 annual meeting.
While this vote was not binding on Pier 1 Imports, our board of directors or our compensation committee, we
believe that it is important for our shareholders to have an opportunity to vote on this proposal on an annual basis as
a means to express their views regarding our executive compensation philosophy, our compensation policies and
programs, and our decisions regarding executive compensation, all as disclosed in our proxy statement. Our board
of directors and our compensation committee value the opinions of our shareholders and, to the extent there is any
significant vote against the compensation of our named executive officers as disclosed in the proxy statement, we
will consider our shareholders’ concerns and the compensation committee will evaluate whether any actions are
necessary to address those concerns.
At the 2011 annual meeting, 95% of the votes represented at the meeting and entitled to vote on the advisory
vote on executive compensation (Proposal No. 3 in last year’s proxy statement) approved our named executive
officer compensation as disclosed in the proxy statement. The board of directors and compensation committee
reviewed these final vote results and determined that, given the significant level of support, no significant changes
to our executive compensation policies and decisions were necessary based on the vote results.
We have determined that our shareholders should vote on a say-on-pay proposal each year, consistent with the
preference expressed by our shareholders at the 2011 annual meeting.
Executive Compensation Components
In addition to base salary, short-term incentives, and long-term incentives, Pier 1 Imports’ compensation
program in fiscal 2012 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 2012:
26