Pier 1 2013 Annual Report Download

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Annual Meeting of Shareholders
July 2, 2013
another year of growth 2013 Annual Report

Table of contents

  • Page 1
    Annual Meeting of Shareholders July 2, 2013 another year of growth 2013 Annual Report

  • Page 2
    ... of Pier 1 Imports' e-Commerce site has yielded an important source of new revenues already. More importantly, it has deepened customers' engagement with our brand, as the site drives traffic to stores and stores direct customers to the site. New stores, new markets With a disciplined strategy for...

  • Page 3
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  • Page 4

  • Page 5
    ... (State or other jurisdiction of incorporation or organization) 100 Pier 1 Place Fort Worth, Texas (Address of principal executive offices) Company's telephone number, including area code: (817) 252-8000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock...

  • Page 6
    ... 14. Directors, Executive Officers and Corporate Governance. Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Certain Relationships and Related Transactions, and Director Independence. Principal Accounting Fees and Services. PART...

  • Page 7
    ...near Baltimore, Maryland; Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma, Washington. At the end of July 2012, the Company successfully executed the launch of its new e-Commerce enabled website, Pier1.com. The Company has an arrangement to supply Grupo Sanborns...

  • Page 8
    ...accents, lamps, vases, dried and artificial flowers, baskets, ceramics, dinnerware, bath and fragrance products, candles, seasonal and gift items. FURNITURE - This merchandise group consists of furniture and furniture cushions to be used in living, dining, office, kitchen and bedroom areas, sunrooms...

  • Page 9
    ...," "projects" and other similar expressions. Management's expectations and assumptions regarding planned store openings and closings, financing of Company obligations from operations, success of its marketing, merchandising and store operations strategies, its e-Commerce business, and other future...

  • Page 10
    ... of Home Goods, Marshalls, TJ Maxx, and a number of corporate functions. He was instrumental in the development of the TK Maxx stores in Great Britain and also ran their international operations. CHARLES H. TURNER, age 56, was named Senior Executive Vice President of the Company in April 2012 and...

  • Page 11
    ... predicted. A majority of the Company's merchandise is manufactured, purchased and imported from countries around the world and may be ordered well in advance of the applicable selling season. Extended lead times may make it difficult to respond rapidly to changes in consumer demand, and as...

  • Page 12
    ...'s supply chain, including the e-Commerce business, could impact its ability to deliver merchandise to its stores and customers, which could impact its sales and results of operations. The Company maintains regional distribution centers in Maryland, Ohio, Texas, California, Georgia and Washington...

  • Page 13
    ... customer traffic in order to gain sales momentum in its stores and drive traffic to the Company's website. Successful marketing efforts require the ability to reach customers through their desired mode of communication utilizing various media outlets. Media placement decisions are generally...

  • Page 14
    ... specialty stores and mass merchandising discounters. Management believes that as it is competing for sales, it does so on the basis of pricing and quality of products, constantly changing merchandise assortment, visual presentation of its merchandise and customer service. The Company could also...

  • Page 15
    ... manage the merchandise supply chain, sell merchandise, accomplish payment functions, report financial data or manage labor and staffing. Although the Company maintains off-site data backups, a concentration of technology-related risk exists in the Company's headquarters located in Fort Worth, Texas...

  • Page 16
    ...with it significant costs. The Company is subject to oversight by many governmental agencies in the course of operating its business because of its numerous locations, large number of employees, contact with consumers and importation and exportation of product. In addition, the Company is subject to...

  • Page 17
    ... barriers in international trade to be beneficial to its business. Any type of sanction on imports is likely to increase the Company's import costs or limit the availability of merchandise purchased from sanctioned countries. In that case, the Company may be required to seek similar merchandise from...

  • Page 18
    ... discounted at 10% totaled approximately $798.7 million. The following table sets forth the distribution of Pier 1 Imports' U.S. and Canadian stores by state and province as of March 2, 2013: United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia...

  • Page 19
    ... to time through short-term leases. As of March 2, 2013, the Company owned or leased under operating leases the following warehouse properties in or near the following cities: Location Baltimore, Maryland (1) Columbus, Ohio Fort Worth, Texas Ontario, California Savannah, Georgia Tacoma, Washington...

  • Page 20
    ...Issuer Purchases of Equity Securities. Market Prices of Common Stock The following table shows the high and low closing sale prices of the Company's common stock on the New York Stock Exchange (the "NYSE"), as reported in the consolidated transaction reporting system for each quarter of fiscal 2013...

  • Page 21
    ...common stock of the Company made during the three months ended March 2, 2013, by Pier 1 Imports, Inc. or any "affiliated purchaser" of Pier 1 Imports, Inc., as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934. Total Number of Shares Purchased as Part of Publicly Announced Plans...

  • Page 22
    ... returns shown on the graph represent the value that such investments would have had on March 2, 2013. The information used in the graph below was obtained from Bloomberg L.P. PIER 1 IMPORTS, INC. STOCK PERFORMANCE GRAPH 500 450 400 350 300 250 200 150 100 50 0 3/1/2008 2/28/2009 2/27/2010 2/26/2011...

  • Page 23
    ... valuation allowance. In fiscal 2010, the Company recorded and received a $55.9 million tax benefit as a result of a tax law change allowing additional carryback of the Company's net operating losses. In fiscal years 2011, 2010, and 2009, the Company recorded minimal state and foreign tax provisions...

  • Page 24
    ... States and Canada under the name Pier 1 Imports. As of March 2, 2013, the Company operated 1,062 stores in the United States and Canada. Fiscal 2013 consisted of a 53-week year and fiscal 2012 and 2011 were 52-week years. In April 2012, the Company announced a new three-year growth plan designed...

  • Page 25
    ... common stock were repurchased at a weighted average cost of $17.18 per share for a total cost of $100.0 million. As a result of the Company's continued strong financial performance during fiscal 2013, the Company's Board of Directors announced a new $100 million share repurchase program on December...

  • Page 26
    ...in store traffic and average ticket compared to the prior year. Comparable store sales increased 7.5% for the year. As of March 2, 2013, the Company operated 1,062 stores in the United States and Canada, compared to 1,052 stores at the end of fiscal 2012. The Company's net sales from Canadian stores...

  • Page 27
    ... which sells Pier 1 Imports merchandise primarily in a "store within a store" format. At the end of fiscal 2013, there were 49 of these locations in Mexico and one in El Salvador. These locations are excluded from the table above. Cost of Sales and Gross Profit Cost of sales were 56.4% expressed as...

  • Page 28
    ... resulting from the change in the Company's tax valuation allowance, earnings per share were $0.94 for fiscal 2012. FISCAL YEARS ENDED FEBRUARY 25, 2012 AND FEBRUARY 26, 2011 Net Sales Net sales consisted primarily of sales to retail customers, net of discounts and returns, but also included...

  • Page 29
    ... gains related to prior transactions with Chase as appropriate. A summary reconciliation of the Company's stores open at the beginning of fiscal 2012, 2011 and 2010 to the number open at the end of each period is as follows (openings and closings include relocated stores): United States Open at...

  • Page 30
    ....8% a year ago. Merchandise margins were 59.8% as a percentage of sales, an increase of 120 basis points over 58.6% in fiscal 2011. This improvement was the result of strong input margins, the right balance of regular and promotional pricing, and well-managed inventory levels. Store occupancy costs...

  • Page 31
    ... the end of fiscal 2012 due to additional inventory to support the new e-Commerce business and slightly larger purchases of select merchandise to support higher sales in the first quarter of fiscal 2014. The Company continues to focus on strategically managing inventory levels and closely monitoring...

  • Page 32
    ... stock were repurchased at a weighted average cost of $17.18 per share for a total cost of $100.0 million. On December 13, 2012, the Company's Board of Directors announced a new $100 million share repurchase program. As of March 2, 2013, no shares had been repurchased under the new program and $100...

  • Page 33
    ... of the Company's minimum future operating lease commitments discounted at 10% was $798.7 million at fiscal 2013 year end, compared to $638.6 million at fiscal 2012 year end. As part of the sale of the Company's home office building and accompanying land during fiscal 2009, the Company entered into...

  • Page 34
    ... credit and purchase obligations discussed above, the Company has no off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of the Company's consolidated financial statements in accordance with accounting principles generally accepted in the United States requires...

  • Page 35
    ... average cost or market value. Cost is calculated based upon the actual landed cost of an item at the time it is received in the Company's warehouse using vendor invoices, the cost of warehousing and transporting product to the stores and other direct costs associated with purchasing products...

  • Page 36
    ...its current and former executive officers. The Plans provide that upon death, disability, reaching retirement age or certain termination events, a participant will receive benefits based on highest compensation, years of service and years of plan participation. These benefit costs are dependent upon...

  • Page 37
    ... of operations as such contracts are not designated as hedges under the applicable accounting guidance. Forward contracts that hedge merchandise purchases generally have maturities not exceeding six months. Changes in the fair value and settlement of these forwards are included in cost of sales and...

  • Page 38
    ...each of the three years in the period ended March 2, 2013, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Pier 1 Imports, Inc.'s internal control over financial...

  • Page 39
    Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) Year Ended 2012 $ 1,533,611 882,449 651,162 475,162 21,240 154,760 (12,434) 3,087 (9,347) 164,107 (4,831) $ $ $ 168,938 1.50 1.48 112,534 114,390 $ $ $ $ 2013 Net sales Cost of sales Gross profit ...

  • Page 40
    Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Twelve Months Ended March 2, February 25, February 26, 2013 2012 2011 Net income Other comprehensive income (loss) Foreign currency translation adjustments Pension adjustments Other comprehensive loss, net of tax ...

  • Page 41
    Pier 1 Imports, Inc. CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) March 2, 2013 ASSETS Current assets: Cash and cash equivalents, including temporary investments of $191,568 and $248,624, respectively Accounts receivable, net of allowance for doubtful accounts of $497 and $502, ...

  • Page 42
    ... of treasury stock Proceeds from stock options exercised, stock purchase plan and other, net Repayment of long-term debt Debt issuance costs Net cash used in financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of...

  • Page 43
    ...' Equity Balance February 27, 2010 Net income Other comprehensive income Stock-based compensation expense Exercise of stock options, directors deferred, stock purchase plan and other Balance February 26, 2011 Net income Other comprehensive income Purchases of treasury stock Stock-based compensation...

  • Page 44
    ... of North America's largest specialty retailers of imported decorative home furnishings and gifts, with retail stores located in the United States and Canada. Additionally, the Company has merchandise primarily in "store within a store" locations in Mexico and El Salvador that are operated by Sears...

  • Page 45
    ... value of both types of forward contracts would be included in the Company's consolidated statements of operations. The changes in fair value and settlement of these contracts were not material and were included in cost of sales for forwards related to merchandise purchases, and in selling, general...

  • Page 46
    ... depreciation), and store occupancy expenses. The costs incurred by the Company for shipping and handling are recorded in cost of sales. Gift cards - Revenue associated with gift cards is recognized when merchandise is sold and a gift card is redeemed as payment. Gift card breakage is estimated...

  • Page 47
    ...first time the advertising takes place. Advertising costs were $71,214,000, $62,405,000 and $55,723,000 in fiscal 2013, 2012 and 2011, respectively. Prepaid advertising at the end of fiscal years 2013 and 2012 was $2,426,000 and $2,008,000, respectively. Defined benefit plans - The Company maintains...

  • Page 48
    ... the fiscal 2013, 2012 and 2011 earnings per share, respectively, as the effect would be antidilutive. Stock-based compensation - The Company's stock-based compensation relates to stock options, restricted stock awards and director deferred stock units. Accounting guidance requires all companies to...

  • Page 49
    ...bond interest rates, which are market driven, reset weekly and are similar to other tax-exempt municipal debt issues. The Company's weighted average effective interest rate, including standby letter of credit fees, was 2.4%, 2.7% and 3.8% for fiscal 2013, 2012 and 2011, respectively. $ 60,867 22,608...

  • Page 50
    ...personnel who are at least 18 years old and have been employed for a minimum of six months. During fiscal 2013, 2012 and 2011, employees contributing 1% to 5% of their compensation received a matching Company contribution of up to 3%. Company contributions to the plan were $2,119,000, $1,869,000 and...

  • Page 51
    ... age or certain termination events, a participant will receive benefits based on highest compensation, years of service and years of plan participation. The Company recorded expenses related to the Plans of $3,423,000, $2,759,000 and $2,458,000 in fiscal 2013, 2012 and 2011, respectively. The Plans...

  • Page 52
    ...of the Plans as of March 2, 2013 and February 25, 2012 (in thousands): 2013 Change in projected benefit obligation: Projected benefit obligation, beginning of year Service cost Interest cost Actuarial loss Benefits paid (including settlements) Projected benefit obligation, end of year Reconciliation...

  • Page 53
    ...' EQUITY On March 23, 2006, the Board of Directors approved the adoption of the Pier 1 Imports, Inc. 2006 Stock Incentive Plan (the "2006 Plan"). The 2006 Plan was approved by the shareholders on June 22, 2006. The aggregate number of shares available for issuance under the 2006 Plan included a new...

  • Page 54
    ... 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. In accordance with accounting guidelines, onethird of the fiscal 2013 performance-based shares had a grant date...

  • Page 55
    ... 1,147,500 and 2,430,250 shares were exercisable under the 1999 Stock Plan at fiscal years ended 2013 and 2012, respectively. Under the Pier 1 Imports, Inc. 1989 Employee Stock Option Plan, options vest over a period of four to five years and have a term of ten years from the grant date. As of...

  • Page 56
    ...a result of the expiration of the plan during fiscal 2005, no shares are available for future grant. A summary of stock option transactions related to the Company's stock option grants during the three fiscal years ended March 2, 2013 is as follows: Weighted Average Exercise Price 12.36 8.64 7.77 15...

  • Page 57
    ..., 2012 and 2011, 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 an average of market...

  • Page 58
    ... fiscal 2013, 2012 and 2011, respectively. In addition, the Company and Chase entered into a private-label credit card program agreement with an original term of ten years. Under this agreement, the Company continued to support the card through marketing programs and receive additional payments over...

  • Page 59
    ... were comprised of the following (in thousands): 2013 Deferred tax assets: Deferred compensation Net operating loss carryforward Accrued average rent Properties, net Self insurance reserves Deferred gain on credit card transactions Cumulative foreign currency translation Deferred revenue and revenue...

  • Page 60
    .... On a quarterly and annual basis, the Company accrues for the effects of open uncertain tax positions. A summary of amounts recorded for unrecognized tax benefits at the beginning and end of fiscal 2013 and 2012 are presented below, in thousands: Unrecognized Tax Benefits - February 26, 2011 Gross...

  • Page 61
    ... and $205,000, based upon a percentage of sales, and net of sublease incomes totaling $278,000, $269,000 and $272,000 in fiscal 2013, 2012 and 2011, respectively. During fiscal 2009, the Company sold its corporate headquarters building and accompanying land to Chesapeake Plaza, L.L.C., an affiliate...

  • Page 62
    ... the Exchange Act is (a) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is (b) accumulated and communicated to the Company's management, including the Chief Executive Officer and...

  • Page 63
    ... registered public accounting firm, has audited the Company's internal control over financial reporting as of March 2, 2013, as stated in their report which is included in this Annual Report on Form 10-K. /s/ Alexander W. Smith Alexander W. Smith President and Chief Executive Officer /s/ Charles...

  • Page 64
    ... Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Pier 1 Imports, Inc. as of March 2, 2013 and February 25, 2012 and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years...

  • Page 65
    ... 2013 Proxy Statement. Information regarding the Company's audit committee financial experts and code of ethics and business conduct required by this Item is incorporated by reference to the section entitled "Matters Relating to Corporate Governance, Board Structure, Director Compensation and Stock...

  • Page 66
    ... Registered Public Accounting Firm Consolidated Statements of Operations for the Years Ended March 2, 2013, February 25, 2012 and February 26, 2011 Consolidated Statements of Comprehensive Income for the Years Ended March 2, 2013, February 25, 2012 and February 26, 2011 Consolidated Balance Sheets...

  • Page 67
    ... authorized. PIER 1 IMPORTS, INC. Date: April 30, 2013 By: /s/ Alexander W. Smith Alexander W. Smith, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in...

  • Page 68
    ... 10.1 to the Company's Form 10-K for the year ended February 26, 2011 (File No. 001-07832). Pier 1 Imports, Inc. Supplemental Executive Retirement Plan, Restated as of January 1, 2009, incorporated herein by reference to Exhibit 10.5 to the Company's Form 10-Q for the quarter ended November 29, 2008...

  • Page 69
    ... the Company's Form 10-Q for the quarter ended May 29, 2010 (File No. 001-07832). Amended and Restated Credit Agreement, dated April 4, 2011, among Pier 1 Imports (U.S.), Inc., Bank of America, N.A., as administrative and collateral agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells...

  • Page 70
    ...Restoration Plan II, as amended and restated effective January 1, 2009, incorporated herein by reference to Exhibit 10.3 to the Company's Form 10-Q for the quarter ended November 27, 2010 (File No. 001-07832). Form of Non-Qualified Stock Option Agreement between Alexander W. Smith and Pier 1 Imports...

  • Page 71
    ... herein by reference to Exhibit 10.14.12 to the Company's Form 10-K for the year ended February 26, 2011 (File No. 001-07832). Restricted Stock Award Agreement dated February 26, 2012 by and between Alexander W. Smith and Pier 1 Imports, Inc., incorporated herein by reference to Exhibit 10.1 to the...

  • Page 72
    ... to the Company's Form 10-Q for the quarter ended May 28, 2011 (File No. 001-07832). Third Amendment to Office Lease between Chesapeake Plaza, L.L.C. and Pier 1 Services Company, dated January 28, 2013. Summary Plan Description of Pier 1 Imports Limited Severance Plan, Restated as of January 1, 2009...

  • Page 73
    ... Document. 101.DEF**+ XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB**+ XBRL Taxonomy Extension Label Linkbase Document. 101.PRE**+ XBRL Taxonomy Extension Presentation Linkbase Document. *Management Contracts and Compensatory Plans

  • Page 74

  • Page 75
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  • Page 76

  • Page 77
    ... board of directors and management cordially invite you to attend Pier 1 Imports' annual meeting of shareholders to be held at 10:00 a.m., local time, on Tuesday, July 2, 2013, at Pier 1 Imports' corporate headquarters, Mezzanine Level, Conference Center Room C, 100 Pier 1 Place, Fort Worth, Texas...

  • Page 78

  • Page 79
    ... the annual meeting of shareholders of Pier 1 Imports, Inc., a Delaware corporation ("Pier 1 Imports"), will be held on Tuesday, July 2, 2013, at 10:00 a.m., local time, at Pier 1 Imports' corporate headquarters, Mezzanine Level, Conference Center Room C, 100 Pier 1 Place, Fort Worth, Texas 76102...

  • Page 80

  • Page 81
    ... 100 Pier 1 Place Fort Worth, Texas 76102 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS To Be Held July 2, 2013 Table of Contents QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING ...MATTERS RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK...

  • Page 82
    ... Table for the Fiscal Year Ended March 2, 2013 ...Potential Payments upon Termination or Change in Control ...EQUITY COMPENSATION PLAN INFORMATION ...OTHER BUSINESS ...SHAREHOLDER PROPOSALS FOR 2014 ANNUAL MEETING OF SHAREHOLDERS ...YOUR VOTE IS IMPORTANT ...DRIVING DIRECTIONS FOR THE PIER 1 IMPORTS...

  • Page 83
    ...by Pier 1 Imports' transfer agent, Computershare Trust Company, N.A. Log into, or activate, your Investor Centre account by going to http://www.computershare.com/investor and following the step-by-step instructions through the enrollment process. Beneficial Owners: If you hold your shares in a stock...

  • Page 84
    ... public accounting firm for fiscal 2014 (PROPOSAL NO. 3). • Who is entitled to vote at the annual meeting? Holders of Pier 1 Imports' common stock at the close of business on May 3, 2013, are entitled to receive the Notice and the Notice of Annual Meeting of Shareholders and to vote their shares...

  • Page 85
    ...proxy card or voting instruction form. If you are located outside the U.S. and Canada, please use the Internet or mail voting methods. Your vote is important. Your timely response can save us the expense of attempting to contact you again. What can I do if I change my mind after I vote my shares? If...

  • Page 86
    ... be available at the annual meeting and for ten days prior to the meeting for any purpose germane to the meeting, between the hours of 8:30 a.m. and 5:00 p.m., local time, at our corporate headquarters at 100 Pier 1 Place, Fort Worth, Texas 76102, by contacting our corporate secretary at (817) 252...

  • Page 87
    ... from you. If you are a beneficial owner, your broker, bank or other holder of record is not entitled to vote on the election of directors or on the non-binding, advisory resolution to approve the compensation of Pier 1 Imports' named executive officers, absent voting instructions from you. Without...

  • Page 88
    ..., a code of business conduct and ethics applicable to all of Pier 1 Imports' directors, officers and employees, including our chief executive officer, chief financial officer and principal accounting officer, and charters for each of the board of directors' committees. The nominating and corporate...

  • Page 89
    ... the chairman of the board is an employee or an officer of Pier 1 Imports. A non-officer, non-employee elected as chairman of the board is designated as the "non-executive" chairman of the board. Pier 1 Imports' corporate governance guidelines and policies contain general guidance that the positions...

  • Page 90
    ...' board of directors, addressed to: [Name of Board Member], Board of Directors Pier 1 Imports, Inc. c/o Corporate Secretary 100 Pier 1 Place Fort Worth, Texas 76102 In addition, shareholders and other interested parties may communicate with the chair or chairman of the audit committee, compensation...

  • Page 91
    ...'s name, business or residence address, principal occupation or employment and a description of the candidate's qualifications to the Chairman of the Nominating and Corporate Governance Committee, in care of the corporate secretary, Pier 1 Imports, Inc., 100 Pier 1 Place, Fort Worth, Texas 76102. To...

  • Page 92
    ... board of directors or compensation committee) the board of directors' responsibilities relating to compensation of Pier 1 Imports' non-employee directors, chief executive officer, executive officers, and other senior officers who report directly to Pier 1 Imports' chief executive officer; establish...

  • Page 93
    ... existing compensation programs and retirement plans. For fiscal 2013 Pier 1 Imports' management did not retain an outside consultant to recommend the amount or form of executive or non-employee director compensation. Each member of the compensation committee is independent. Nominating and Corporate...

  • Page 94
    ... at the time attended Pier 1 Imports' annual meeting of shareholders in person, except Mr. Ferrari who attended by telephone. Committee memberships, the number of meetings of the full board and each standing committee, and each director's dates of service for fiscal 2013 are shown in the table below...

  • Page 95
    ... year limit of 375,000 units per individual. Deferred fees plus matching contributions are converted to DSU's based on the closing price of Pier 1 Imports' common stock on the day the fees are payable. The DSU's are credited to an account maintained by Pier 1 Imports for each non-employee director...

  • Page 96
    ... for board and committee service. As described in footnote 2 below, certain percentages of this cash compensation were deferred by each director into the Pier 1 Imports' Director Deferred Stock Unit Program. (2) This column represents the dollar value of Pier 1 Imports' 25% match on director annual...

  • Page 97
    ...Smith elected to defer 0% of her cash fees and participate in the Pier 1 Imports, Inc. Stock Purchase Plan. The following table shows the Pier 1 Imports' common stock closing price by month used to calculate the number of DSU's to be received for deferred director fees plus any Pier 1 Imports' match...

  • Page 98
    ... of Pier 1 Imports' common stock by each director and nominee, each named executive officer shown below in the table included under the caption "Summary Compensation Table for the Fiscal Years Ended March 2, 2013, February 25, 2012 and February 26, 2011," and all directors and executive officers as...

  • Page 99
    ... and Ms. Smith (201,266 DSU's). The DSU's will be exchanged one-for-one for shares of Pier 1 Imports' common stock when the director ceases to be a member of the board of directors, as described above under the caption "NonEmployee Director Compensation for the Fiscal Year Ended March 2, 2013 - Fees...

  • Page 100
    ... include shares held by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., who is the beneficial owner of 137,891 shares or 0.13% of the Common Stock outstanding of Pier 1 Imports as a result of its serving as investment manager of collective trust accounts. The...

  • Page 101
    ...at the Annual Meeting of Shareholders." During fiscal 2013, there were no compensation committee interlocks or insider participation. Related Person Transaction Policies and Procedures Pier 1 Imports' board of directors has adopted as part of its Code of Business Conduct and Ethics a written Related...

  • Page 102
    ... in the section above captioned "Matters Relating to Corporate Governance, Board Structure, Director Compensation and Stock Ownership," the primary qualities and characteristics nominees to the board of directors should possess are management and leadership experience; relevant knowledge; diversity...

  • Page 103
    ... directors. During fiscal 2013, Mr. Hoffman served as a member of the compensation committee. Mr. Hoffman serves as president and chief executive officer of The Bon-Ton Stores, Inc. He brings to the board a broad retail background including experience in direct marketing, fulfillment and e-commerce...

  • Page 104
    ... the executive committee. Mr. Smith has over 30 years of retail and international branding experience. Prior to joining Pier 1 Imports, Mr. Smith served as Group President of the TJX Companies, Inc., where he oversaw the operations and development of Home Goods, Marshalls, and TJ Maxx plus a number...

  • Page 105
    ... officers is designed to enable us to attract and retain talented and experienced senior executives to lead Pier 1 Imports successfully in a competitive environment. Your vote on this resolution is advisory, and therefore not binding on Pier 1 Imports, the compensation committee, or the board...

  • Page 106
    ... for services related to the annual audit of the consolidated financial statements, required statutory audits, if any, reviews of Pier 1 Imports' quarterly reports on Form 10-Q, the registered public accounting firm's report on Pier 1 Imports' internal control over financial reporting, as required...

  • Page 107
    ... public accounting firm, the committee recommended to the board of directors that Pier 1 Imports' audited consolidated financial statements be included in Pier 1 Imports' Annual Report on Form 10-K for the fiscal year ended March 2, 2013, for filing with the SEC. AUDIT COMMITTEE Cece Smith, Chair...

  • Page 108
    ... key business achievements during fiscal 2013, an overview of Pier 1 Imports' executive compensation philosophy and some highlights of Pier 1 Imports' executive compensation program in fiscal 2013. FISCAL 2013 BUSINESS RESULTS HIGHLIGHTS: • delivered a 7.5% annual comparable store sales increase...

  • Page 109
    ... plan, plus multiple performance metrics for the long-term incentives. An independent executive compensation consultant reports directly to the compensation committee of the board of directors. In addition, Pier 1 Imports conducts an annual risk assessment to verify that its compensation programs...

  • Page 110
    ...Stock. All employees and directors are prohibited from the following activities related to Pier 1 Imports' stock: hedging and other forms of monetizing transactions, short sales, option trading, and holdings in a margin account or pledging as collateral for a loan. FISCAL 2013 EXECUTIVE COMPENSATION...

  • Page 111
    ... the 3-year period, February 26, 2010 to March 1, 2013. As illustrated in the graph: • A $100 investment in Pier 1 Imports' common stock on February 26, 2010 (the last trading day of fiscal 2010) grew to $373 by the end of fiscal year 2013, which represents an approximate 55% 3year annualized TSR...

  • Page 112
    ... 26, 2010 grew to $147 by the end of fiscal year 2013, which represents an approximate 13.5% 3-year annualized TSR growth rate. • • Given the structure of Mr. Smith's equity compensation pursuant to his second renewed and extended employment agreement, Pier 1 Imports believes it helpful to...

  • Page 113
    ... the Base Salary section under the caption "Executive Compensation Components" below. Short-Term Incentive No major changes were made to the fiscal 2013 short-term incentive plan, as Pier 1 Imports believes the incentive plan as structured in fiscal 2012 had the desired objective of helping motivate...

  • Page 114
    ... changes to its executive compensation policies and decisions were necessary based on the vote results. Pier 1 Imports has determined that its shareholders should vote on a say-on-pay proposal each year, consistent with the preference expressed by its shareholders at the 2011 annual meeting...

  • Page 115
    ... combined with the Pier 1 Imports stock ownership guidelines helps to align the interests of its executive team with its shareholders. Targeted Direct Compensation - Sum total of all the elements of the cash and equity compensation programs provided to executive officers. Base Salary The aspects of...

  • Page 116
    ... base salary may be made based on individual and company performance, pay in relation to peers for executive compensation purposes, "at market" within the context of the national retail market, and increased responsibility. In fiscal 2013, Pier 1 Imports' chief executive officer and human resources...

  • Page 117
    ... and the annual incentive component. The plan required participants to be employed with Pier 1 Imports at the end of each respective quarter and year-end to receive an incentive cash award, if any, for that performance period. The plan allowed Pier 1 Imports' chief executive officer to reduce...

  • Page 118
    ...the annual equivalent return of the TSR of Pier 1 Imports and a peer group using the average closing stock price of Pier 1 Imports and the peer group companies during the twenty trading days at the beginning of fiscal 2013 and the average closing stock price during the twenty trading days at the end...

  • Page 119
    ... management. The plan also assists Pier 1 Imports in attracting and retaining executives and key members of management. The plan is described and discussed below under the caption "Non-Qualified Deferred Compensation Table for the Fiscal Year Ended March 2, 2013." Chief Executive Officer Employment...

  • Page 120
    ... 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...

  • Page 121
    ...five years of becoming a member of the board of directors, acquire ownership of shares of Pier 1 Imports' common stock equal in value to five times one-half of the non-employee director annual retainer (i.e., 5 X $75,000). Shares counted toward ownership include shares beneficially owned directly or...

  • Page 122
    ... Pier 1 Imports considers the effect of limitations on deductibility of compensation for federal income tax purposes. Section 162(m) of the Internal Revenue Code generally denies public companies like Pier 1 Imports a federal income tax deduction for compensation paid to the chief executive officer...

  • Page 123
    ... fiscal years for services rendered in all capacities to Pier 1 Imports and its subsidiaries by the chief executive officer, chief financial officer and the three other most highly compensated executive officers. Change in Pension Value and Non-Equity Non-Qualified Incentive Deferred Option Plan...

  • Page 124
    ... at the time the rate for the plan was selected and the annual interest credited in calendar years 2013, 2012, 2011 and 2010 of 4.72%, 5.81%, 5.99% and 7.47%, respectively, by Pier 1 Imports on salary deferred by the NEOs plus Pier 1 Imports match amounts under the Pier 1 Benefit Restoration Plan II...

  • Page 125
    ...,531 $ 16,001 (a) This column reports Pier 1 Imports' aggregate matching contributions to the NEO's 401(k) savings account, Deferred Compensation Plan account and Stock Purchase Plan account. Those contributions were as follows: Name Alexander W. Smith Charles H. Turner Michael R. Benkel Catherine...

  • Page 126
    ... for the Fiscal Year Ended March 2, 2013 As set forth in the Compensation Discussion and Analysis above, during fiscal 2013 Pier 1 Imports granted shortterm incentive cash awards pursuant to the Pier 1 Imports, Inc. 2006 Stock Incentive Plan to the NEOs. Quarterly and annual incentive cash awards...

  • Page 127
    ...the annual equivalent return of the TSR of Pier 1 Imports and a peer group using the average closing stock price of Pier 1 Imports and the peer group companies during the twenty trading days at the beginning of fiscal 2013 and the average closing stock price during the twenty trading days at the end...

  • Page 128
    ... "Summary Compensation Table for the Fiscal Years Ended March 2, 2013, February 25, 2012 and February 26, 2011." All other Stock Awards: Estimated Future Payouts Estimated Future Payouts Number of Under Non-Equity Under Equity Incentive Shares Incentive Plan Awards(1) Plan Awards(2) of Stock Meeting...

  • Page 129
    ... related to service-based vesting conditions. For time-based and Profit Goal performance-based restricted stock awards, fair value is calculated using the closing price of Pier 1 Imports' common stock on the date of grant. If the date of grant occurs on a day when Pier 1 Imports' common stock...

  • Page 130
    ... the closing price of Pier 1 Imports' common stock of $22.55 (the NYSE closing price on March 1, 2013, which was the last trading day of fiscal 2013). Option Awards Stock Awards Equity Incentive Plan Awards: Number of Market Unearned Value of Shares, Shares or Units or Units of Other Stock Rights...

  • Page 131
    ... compensation committee for fiscal 2013, 2014 and 2015, respectively, provided that the participant is employed on the date of filing of Pier 1 Imports' annual report on Form 10-K for the applicable fiscal year. Cliff vest within thirty days of the end of fiscal 2015 within the ranges shown on Table...

  • Page 132
    .... The number of shares and value realized on vesting includes shares that were withheld at the time of vesting to satisfy tax withholding requirements. Pension Benefits Table for the Fiscal Year Ended March 2, 2013 Messrs. Smith and Turner participate in a plan which was adopted by Pier 1 Imports in...

  • Page 133
    ... enrollment in the plan and 6.67 years of credited service as of his employment date with Pier 1 Imports. The additional 6.67 years of credited service accounts for $6,709,445 of his total present value of accumulated benefit of $13,750,842. As of the end of fiscal 2013, Mr. Smith has achieved seven...

  • Page 134
    ... 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 credited to the plan in fiscal 2012. Account balances...

  • Page 135
    ... included in each NEO's salary amount in the table included under the caption "Summary Compensation Table for the Fiscal Years Ended March 2, 2013, February 25, 2012 and February 26, 2011" above. (2) Reflects Pier 1 Imports' matching contribution credited to the DCP account of each NEO during fiscal...

  • Page 136
    ...regarding the Supplemental Retirement Plan, see the information above under the caption "Pension Benefits Table for the Fiscal Year Ended March 2, 2013." Potential payments to the NEOs upon termination of employment under Pier 1 Imports' non-qualified deferred compensation arrangements are discussed...

  • Page 137
    ... present value of the lump-sum amount of the actuarial equivalent of the benefits for Messrs. Smith and Turner assuming the executive officer is involuntarily terminated other than for cause, or leaves the employment of Pier 1 Imports for good reason (as defined in the plan), on March 2, 2013, and...

  • Page 138
    ... is the NYSE closing price on March 1, 2013, of $22.55 per share times the number of shares. (7) If Mr. Smith's employment ended as of the end of fiscal 2013, which is the last day of the term of his first renewed and extended employment agreement, due to a voluntary good reason termination or an...

  • Page 139
    ... 2013, the plan had 3,862,660 shares available for issuance. (2) Equity compensation plans not approved by shareholders represent the employment inducement stock option awards granted to Mr. Smith on February 19, 2007. OTHER BUSINESS Pier 1 Imports does not plan to act on any matters at the meeting...

  • Page 140
    ... the annual meeting?" at the admissions table in order to attend the Pier 1 Imports, Inc. Annual Meeting of Shareholders. Doors will open at 9:00 a.m., local time. Below are directions to Pier 1 Imports' corporate headquarters located at 100 Pier 1 Place / 100 Energy Way, Fort Worth, Texas from...

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    .... DIRECTORS AND EXECUTIVE OFFICERS Corporate Headquarters 100 Pier 1 Place Fort Worth, Texas 76102 817-252-8000 www.pier1.com Board of Directors Chairman of the Board Terry E. London President London Broadcasting Company, Inc. Alexander W. Smith President and Chief Executive Officer Pier 1 Imports...

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