Pier 1 2012 Annual Report Download - page 128

BRP II participants could defer pre-tax amounts of up to 20% of their compensation (generally W-2
earnings). Participants’ contributions and the interest earned on those contributions are fully vested. No
loans are permitted. Pier 1 Imports’ matching contribution was (i) 100% of the first one percent of the
participant’s compensation deferral, and (ii) 50% of the next four percent of the participant’s
compensation deferral. Matching contributions and the interest earned on those contributions are subject
to the same vesting requirements as Pier 1 Imports’ 401(k) retirement plan regardless of whether the
participant is actually participating in the 401(k) plan. The 401(k) vesting schedule is 20% per year of
service (as defined in the plan) beginning with two years of service. Participants are fully vested in Pier 1
Imports’ matching contributions plus earnings at six years of service with Pier 1 Imports.
Each participant’s deferral amount plus the Pier 1 Imports match is credited at least quarterly with an
amount of interest at an annual rate equal to a daily average Moody’s Corporate Bond Index plus 1%.
Over the last three fiscal years, the annual interest rates have ranged from 5.81% to 7.47%. During fiscal
2012, the interest rates were 5.99% through December 31, 2011 and 5.81% January 1, 2012 through
February 25, 2012. Unless participants elect to have their account balance paid out to them in five annual
installments, then upon separation from Pier 1 Imports their current balance is paid out to them in a
lump-sum distribution, subject to delay as required by the deferred compensation taxation laws generally
referred to as 409A.
During fiscal 2011, BRP II was closed to further deferral elections by participants. The final participant
contributions and Pier 1 Imports matching contributions to BRP II were for deferrals from the fiscal 2011
short-term incentive annual cash awards and were credited to the plan in fiscal 2012. Account balances in
BRP II will continue to earn interest at an annual rate as described above. Effective January 1, 2011, the
Pier 1 Imports, Inc. Deferred Compensation Plan (“DCP”) described below was adopted.
•Pier 1 Imports, Inc. Deferred Compensation Plan – The DCP permits select members of management
and highly compensated employees of Pier 1 Imports to defer up to 50% of their compensation (generally
W-2 earnings). Participants’ compensation deferrals and earnings on those deferrals are fully vested. No
loans are permitted. Pier 1 Imports’ matching contribution is (i) 100% of the first one percent of the
participant’s compensation deferral, and (ii) 50% of the next four percent of the participant’s
compensation deferral. Matching contributions and the earnings on those contributions are subject to the
same vesting requirements as Pier 1 Imports’ 401(k) retirement plan regardless of whether the participant
is actually participating in the 401(k) plan. The 401(k) plan’s vesting schedule is 20% per year of service
(as defined in the plan) beginning with two years of service. Participants are fully vested in Pier 1
Imports’ matching contributions plus earnings at six years of service with Pier 1 Imports.
Each participant may allocate their deferral amounts and Pier 1 Imports matching contributions among
different deemed investment crediting options, which cover various asset classes. Participant accounts are
credited with the same earnings or losses as the deemed investment crediting option and are subject to the
same investment risk as an actual investment in the deemed investment crediting options. Subject to plan
rules, participants may elect to have their deferral account balance paid to them while employed or after
separation from Pier 1 Imports; provided, however, that upon separation of employment, any unpaid
amounts elected to be paid while employed will be paid after separation of employment. Vested matching
account balances are distributed to participants only after separation from Pier 1 Imports.
Trusts have been established for the purpose of setting aside funds to be used to settle obligations under BRP II
and the DCP. The trusts’ assets are consolidated in Pier 1 Imports’ financial statements and consisted of investments
aggregating $1,214,000 at February 25, 2012. The trusts also own and are the beneficiaries of a number of insurance
policies on the lives of current and past key executives. At February 25, 2012, the cash surrender value of these
policies was $4,785,000. These investments are restricted and may only be used to satisfy BRP II and DCP
obligations. Contributions to the trusts are made at the discretion of the board of directors and may be made in the
form of cash or other assets such as life insurance policies.
46