Pier 1 2012 Annual Report Download - page 58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
During fiscal 2012, the Company granted long-term incentive awards under the 2006 Plan to employees.
The fiscal 2012 long-term incentive awards were comprised of restricted stock grants that were equally divided
between time-based and performance-based shares. The time-based shares vest 33%, 33% and 34% each year
over a three-year period beginning on the first anniversary of the grant date provided that the participant is
employed on the vesting date. The performance-based shares vest 33% upon the Company satisfying a certain
performance target in fiscal 2012, and will vest 33% and 34% for each of the following two fiscal years,
respectively, upon the Company satisfying a certain performance target for the respective fiscal year, provided
that vesting for each fiscal year is conditioned upon the participant being employed on the date of filing of the
Company’s annual report on Form 10-K with the SEC for the applicable fiscal year. Over each three-year
performance (vesting) period, if a performance target is not satisfied in any fiscal year, those shares that do not
vest may still vest if the sum of consecutive years’ actual performance equals or exceeds the sum of the
individual consecutive fiscal year performance targets.
As of February 25, 2012 and February 26, 2011, the Company had 1,681,278 and 1,657,984 unvested
shares of restricted stock awards outstanding, respectively. During fiscal 2012, 671,600 shares of restricted stock
were granted, 609,581 shares of restricted stock vested, and 38,725 shares of restricted stock were cancelled.
During fiscal 2011, 836,000 shares of restricted stock were granted, 371,612 shares of restricted stock vested, and
44,214 shares of restricted stock were cancelled. The weighted average fair market value at the date of grant of
the restricted stock shares granted during fiscal 2012 was $10.79 and is being expensed over the requisite service
period. This amount does not include performance-based restricted shares that the Company will begin expensing
in future fiscal years when performance targets are set, but does include performance-based restricted shares
granted in the previous fiscal year that were based on a fiscal 2012 performance target which the Company began
expensing in fiscal 2012.
Compensation expense for restricted stock was $5,737,000, $3,802,000, and $1,762,000 in fiscal 2012,
2011 and 2010, respectively. As of February 25, 2012, there was $5,299,000 of total unrecognized compensation
expense related to restricted stock that will be recognized over a weighted average period of 1.28 years. The total
fair value of restricted stock awards vested was $8,016,000, $2,454,000 and $1,648,000 in fiscal 2012, 2011 and
2010, respectively.
The Company recognized a tax benefit related to stock-based compensation of $1,679,000 during fiscal
2012 and no net tax benefit during fiscal years 2011 or 2010 as a result of the Company’s valuation allowance on
all deferred tax assets. See Note 9 of the Notes to Consolidated Financial Statements for additional discussion of
income taxes.
Director deferred stock units – The 2006 Plan and the 1999 Stock Plan also authorize director deferred
stock unit awards to non-employee directors. During fiscal 2012, directors could elect to defer all or a portion of
their director’s cash fees into a deferred stock unit account. The annual retainer fees deferred (other than
committee chairman and chairman of the board annual retainers) received a 25% matching contribution from the
Company in the form of director deferred stock units. As of February 25, 2012 and February 26, 2011, there were
800,670 shares and 747,262 shares deferred, but not delivered, under the 2006 Plan and the 1999 Stock Plan,
respectively. All future deferred stock unit awards will be from shares available for grant under the 2006 Plan.
During fiscal 2012, approximately 53,409 director deferred stock units were granted and no units were delivered
or cancelled. Compensation expense for the director deferred stock awards was $642,000, $579,000 and
$149,000 in fiscal 2012, 2011 and 2010, respectively.
Stock purchase plan – Substantially all Company employees and all non-employee directors are eligible
to participate in the Pier 1 Imports, Inc. Stock Purchase Plan under which the Company’s common stock is
purchased on behalf of participants at market prices through regular payroll deductions. Each employee may
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