Pier 1 2013 Annual Report Download - page 114

performance as well as its performance in relation to a group of other retail companies for certain long-term
incentive awards. This aligns management’s interests with shareholders’ interests as the executive’s potential total
compensation should only increase when Pier 1 Imports’ performance improves.
Pier 1 Imports generally targets total compensation packages for executive officers to reflect the 50th percentile
of Pier 1 Imports’ peer group when it achieves planned financial and operational goals. Pier 1 Imports designs its
total compensation packages to provide pay above the 50th percentile of pay compared to its peer group when its
results exceed planned financial and operational goals.
At the beginning of fiscal 2013, Pier 1 Imports used a group of peer companies to benchmark base salary,
short-term incentive and long-term incentive elements of total executive compensation. The peer group included the
following companies, which at that time were publicly traded and were direct competitors, retail industry
competitors, and/or local area competitors for executive talent:
• Bed Bath & Beyond Inc. • RadioShack Corporation
• Charming Shoppes, Inc. • Ross Stores, Inc.
• Cost Plus, Inc. • Stein Mart, Inc.
• Dick’s Sporting Goods, Inc. • The Talbots Inc.
• Finish Line Inc. • Tuesday Morning Corporation
• Fossil, Inc. • Ulta Salon, Cosmetics & Fragrance, Inc.
• Hhgregg, Inc. • Williams-Sonoma, Inc.
• Kirkland’s, Inc. • Zale Corporation
• PetSmart, Inc.
Data for these companies was provided by Pay Governance LLC, the compensation committee’s independent
executive compensation consultant. Pay Governance LLC also provided data from the 2012 Towers Watson Retail/
Wholesale Survey in order to provide additional information relating to total compensation, cash compensation and
equity trends in the broader retail industry to ensure that Pier 1 Imports maintains competitive compensation
practices and packages across the broader retail group.
Advisory Vote on Executive Compensation
Pier 1 Imports conducted an advisory vote on executive compensation at its 2012 annual meeting of
shareholders. While this vote was not binding on Pier 1 Imports, its board of directors or its compensation
committee, Pier 1 Imports believes that it is important for its shareholders to have an opportunity to vote on this
proposal on an annual basis as a means to express their views regarding Pier 1 Imports’ executive compensation
philosophy, its compensation policies and programs, and its decisions regarding executive compensation, all as
disclosed in the proxy statement. Pier 1 Imports’ board of directors and its compensation committee value the
opinions of Pier 1 Imports’ shareholders and, to the extent there is any significant vote against the compensation of
its NEOs as disclosed in the proxy statement, Pier 1 Imports will consider its shareholders’ concerns and the
compensation committee will evaluate whether any actions are necessary to address those concerns.
At the 2012 annual meeting of shareholders, 96.3% of the votes represented at the meeting and entitled to vote
on the advisory vote on executive compensation (Proposal No. 2 in last year’s proxy statement) approved Pier 1
Imports’ NEO compensation as disclosed in the proxy statement. The board of directors and compensation
committee reviewed the final vote results and determined that, given the significant level of support, no significant
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 of shareholders.
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