Pier 1 2013 Annual Report Download - page 110

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What Pier 1 Imports Does Not Do
No Tax Gross-Ups Upon Change in Control. Beginning with the CEO’s renewed and extended employment
agreement described below, which was signed during fiscal 2013 and which is effective beginning March 3,
2013, Pier 1 Imports has eliminated any tax gross-ups payable to the CEO associated with payments contingent
on a change in control.
No Dividends on Unvested Restricted Stock. Beginning with the fiscal 2012 restricted stock grants, unvested
time-based and performance-based restricted shares do not receive cash dividend payments.
During Fiscal 2013, no Above-Market Earnings were Paid on Deferred Compensation Arrangements.
No Across the Board Base Salary Increases for Executives. Pier 1 Imports evaluates the total compensation
for all executives and only makes adjustments to base salary when necessary to reflect significant changes in
the executive’s responsibilities or in current market conditions.
No Hedging, Short Sales, Option Trading or Pledging of Pier 1 Imports’ Common 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.
F
ISCAL
2013 E
XECUTIVE
C
OMPENSATION
H
IGHLIGHTS
The following is a brief summary of the most significant developments relating to Pier 1 Imports’ chief
executive officer compensation, to NEO base salaries and to short-term and long-term incentive programs during
fiscal 2013.
Chief Executive Officer Compensation
One of the most significant accomplishments regarding executive pay in fiscal 2013 was the negotiation of a
new employment agreement for Mr. Smith, which extends his service and role as Pier 1 Imports president and chief
executive officer through February 27, 2016.The employment agreement, which is a second renewal and extension
of his employment agreement, was negotiated by the compensation committee of the board of directors, which
considered the retention of Mr. Smith to be of paramount importance to the ongoing success of Pier 1 Imports as it
executes its growth plan and strategy. When Mr. Smith assumed the role of president and chief executive officer in
February 2007, Pier 1 Imports was a struggling specialty retailer with lackluster sales and operating losses – Pier 1
Imports’ share price had declined from over $26.00 per share in November of 2003 to less than $6.00 per share in
December of 2006.
The value of Mr. Smith’s impact on the organization has been significant. Since joining the organization in
February 2007, the market capitalization of Pier 1 Imports has increased by approximately $1.8 billion, or 325%, the
organization has spent $200,000,000 to buy back stock through its share repurchase programs and has returned
approximately $18,000,000 to shareholders in the form of cash dividends. Over the past five years, Pier 1 Imports’
total cumulative shareholder return has been greater than 400%, and during this time, Mr. Smith’s compensation has
predominately been in the form of equity and performance-based incentives. During this period, Mr. Smith’s total
compensation has increased as Pier 1 Imports’ stock price has risen.
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