Pier 1 2013 Annual Report Download - page 112

• Reported CEO pay, as shown in the summary compensation tables for each respective fiscal year,
grew by 290% from the beginning of fiscal 2011 through fiscal 2013.
• A $100 investment on February 26, 2010 in the stock of the component companies comprising the
Pier 1 Imports peer group (for executive compensation purposes as detailed later in this
Compensation Discussion & Analysis) grew to $215 by the end of fiscal year 2013, which represents
an approximate 29% 3-year annualized TSR growth rate.
• A $100 investment in the S&P 500 on February 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 explain his fiscal 2013 total compensation. On June 13,
2012, Mr. Smith and Pier 1 Imports entered into a second renewal and extension of Mr. Smith’s employment
agreement, effective March 3, 2013. Restricted stock awards to be made pursuant to that agreement are both
performance-based and time-based and are to be made over the three-year term of the employment agreement.
However, accounting guidelines require Pier 1 Imports to include the value of the future time-based restricted shares
in the fiscal 2013 Summary Compensation Table below, even though those shares were not actually received in
fiscal 2013 and will not be received if Mr. Smith is not employed on future dates pursuant to his employment
agreement. As a result, the value of Mr. Smith’s total fiscal 2013 stock awards compensation in the Summary
Compensation Table below appears substantially higher than the value of restricted stock awards he actually
received during fiscal 2013. When the time-based restricted stock awards are received during fiscal years 2014,
2015 and 2016 (provided Mr. Smith is employed on the first day of the respective fiscal years), the value of those
awards will not be included in the respective summary compensation table because the amounts will have already
been reported in fiscal 2013. For further discussion and more details on Mr. Smith’s employment agreement, see the
Chief Executive Officer Employment Agreement section under the caption “Executive Compensation Components”
below.
Table 2 below illustrates the total maximum number of shares received during Mr. Smith’s employment during
fiscal 2011, 2012 and 2013 (pursuant to the first renewal and extension), regardless of the required reporting of the
value of these shares in the fiscal 2010 summary compensation table. Table 2 also illustrates the total maximum
number of shares to be received under Mr. Smith’s employment agreement during fiscal 2014, 2015 and 2016
(pursuant to the second renewal and extension), regardless of the required reporting of the value of these shares in
the fiscal 2013 summary compensation table.
Table 2
Maximum Fiscal Year Share Opportunity
Fiscal Year
Performance-Based
(Profit Goal)*
Performance-Based
(TSR)** Time-Based Total Shares
FY 11 187,500 n/a 187,500 375,000
FY 12 187,500 n/a 187,500 375,000
FY 13 187,500 n/a 187,500 375,000
Fiscal Year
Performance-Based
(Profit Goal)*
Performance-Based
(TSR)** Time-Based Total Shares
FY 14 120,000 75,000 180,000 375,000
FY 15 120,000 75,000 180,000 375,000
FY 16 120,000 75,000 180,000 375,000
* As defined below.
** TSR performance-based shares granted for the first time beginning with fiscal 2014 grant.
Table 2 above illustrates that pursuant to Mr. Smith’s first renewal and extension of his employment
agreement, which expired at the end of fiscal 2013, Mr. Smith received the same number of shares in connection to
his participation in Pier 1 Imports’ long-term incentive plan in fiscal 2013 that he received in both fiscal 2012 and
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