Pier 1 2013 Annual Report Download - page 113

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fiscal 2011. The portion of those fiscal 2013 shares was also again equally split between performance-based and
time-based shares as it was in fiscal 2012 and fiscal 2011.
Base Salary
Despite its strong financial performance, Pier 1 Imports once again concluded in fiscal 2013 that “across-the-
board” salary increases were not appropriate, primarily because its short-term and long-term incentives were
delivering above-market pay for above-market performance. However, as in past years, a review of all executive
positions was conducted, and three NEO’s had their base salaries adjusted to reflect their increased roles and
responsibilities in the organization as well as the external labor market for similar positions. Accordingly,
Mr. Turner’s base salary was adjusted from $460,000 to $475,000, an increase of 3.3%, to reflect his promotion to
senior executive vice-president and chief financial officer on April 15, 2012. Mr. Benkel received a base salary
adjustment from $310,000 to $330,000, an increase of 6.45%, to reflect his promotion to executive vice-president of
planning and allocations on April 15, 2012. Ms. David received a base salary adjustment from $400,000 to
$410,000, an increase of 2.5%, in consideration of her on-going roles and responsibilities for fiscal 2013 given the
external labor market for similar positions. For further discussion and more details on base salary, see 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 its executives to achieve
outstanding financial and operating results. The performance metric targets for the plan focused on adjusted
EBITDA (as detailed below) achievement with the targeted performance metric being set approximately 16.9%
above actual fiscal 2012 results for the performance metric. Pier 1 Imports’ actual performance in fiscal 2013
resulted in achievement in excess of the target. For further discussion and more details on the short-term incentive
plan, see the Short-Term Incentive section under the caption “Executive Compensation Components” below.
Long-Term Incentive
In prior fiscal years, Pier 1 Imports’ long-term incentive program consisted of performance-based and time-
based restricted stock. During fiscal 2013, Pier 1 Imports incorporated a second performance feature that measures
relative TSR performance against a peer group. For fiscal 2013 the NEOs’ equity grants, other than Mr. Smith’s,
were 60% performance-based restricted shares and 40% time-based restricted shares. Mr. Smith’s long-term equity
awards are governed by his employment agreement. For further discussion and more details on the long-term
incentive plan, see the Long-Term Incentive section under the caption “Executive Compensation Components”
below.
Compensation Policies, Principles, Objectives and Practices
Pier 1 Imports’ proven success and continuation of that success depends, in large part, on its ability to
successfully attract, motivate and retain a qualified management team. Sourcing qualified candidates to fill
important positions within Pier 1 Imports is challenging given the highly competitive retail environment.
Accordingly, Pier 1 Imports’ overall compensation philosophy is that its executive compensation program should be
structured to attract and retain highly skilled and motivated individuals who will lead Pier 1 Imports to successful
performance that is consistent with shareholders’ expectations. Pier 1 Imports accomplishes this by creating total
compensation packages which are competitive in the retail industry, fair and equitable among the executives, and
which provide strong incentives for the long-term success and performance of Pier 1 Imports.
Pier 1 Imports provides both short-term and long-term incentives to its executives for the effective
management of major functions, teamwork, and effective expense control. Success on these fronts leads to its
overall success. Pier 1 Imports believes that as an executive’s level of responsibility increases, a greater portion of
that executive’s potential total compensation should come from performance-based plans. Pier 1 Imports also
believes that the majority of an executive’s compensation should be “at-risk” and tied to Pier 1 Imports’
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