Pier 1 2013 Annual Report Download - page 117

Table 5 below explains the NEOs’ fiscal 2013 incentive targets (expressed as a percentage of the officer’s base
salary) and the quarterly and annual component details. See further discussion of incentive targets below under the
caption “Grants of Plan-Based Awards for the Fiscal Year Ended March 2, 2013.”
Table 5
Named
Executive
Officer
Quarterly Incentive Component
(50% of incentive target)
Annual Incentive Component
(50% of incentive target)
Q1 Q2 Q3 Q4
+
Threshold
10%
Target
100%
Maximum
400%
=
Fiscal 2013 Short-Term Incentive
Target
CEO 12.5% 12.5% 12.5% 12.5% 5% 50% 200% 100%
CFO 10% 10% 10% 10% 4% 40% 160% 80%
Other
NEOs 9.375% 9.375% 9.375% 9.375% 3.75% 37.5% 150% 75%
The quarterly incentive component was based on
the achievement of each fiscal quarter’s targeted
Profit Goal. Each quarter was measured
independently on a pass or fail basis and was paid
out at either 100% following successful
achievement of the targeted quarterly Profit Goal,
or 0% if the goal was not met.
The annual incentive component was
based on the achievement of the
targeted annual Profit Goal, which is
the cumulative total for the quarterly
targeted Profit Goals for the fiscal
year. The threshold Profit Goal that
would result in a 10% payout of the
annual component of the short-term
incentive target was $190,000,000.
Achieving the target Profit Goal of
$218,000,000 would result in a 100%
payout. A maximum payout of 400%
would occur if the annual Profit Goal
met or exceeded $262,000,000.
The short-term incentive
opportunity for the NEOs
(expressed as a percentage of base
salary) was comprised of 2
components, the quarterly
incentive component 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 the cash award of a participant as a result of individual performance. Pier 1 Imports
believes that these target percentage levels were competitive when compared to Pier 1 Imports’ peer group as
identified at the beginning of the fiscal year.
Long-Term Incentive
Pier 1 Imports believes that restricted stock provides a long-term incentive opportunity that is both competitive
in the retail industry and serves as a retention tool. Table 6 below provides a breakdown of the restricted stock
awarded to the NEOs, other than Mr. Smith, in fiscal 2013. Mr. Smith’s long-term incentive awards, as governed by
his employment agreement, are detailed in Table 2 above.
Table 6
Named Executive Officer
(other than CEO)
Performance-
Based Shares (#)
– Profit Goal
Performance-
Based Shares (#)
– TSR
Time-Based
Shares (#)
Total Fiscal
2013 Shares
Granted (#)
Charles H. Turner 9,598 6,857 10,970 27,425
Michael R. Benkel 6,668 4,764 7,621 19,053
Catherine David 8,285 5,919 9,468 23,672
Sharon M. Leite 7,072 5,053 8,083 20,208
Approximately 60% of the shares granted in fiscal 2013 were performance-based. Of that 60%, approximately
58% were based on a Profit Goal target, while approximately 42% were based on relative TSR. The Profit Goal
shares vest 33% upon Pier 1 Imports satisfying the targeted Profit Goal established by the compensation committee
for fiscal 2013 and will vest 33% and 34% for each of the following two fiscal years, respectively, upon Pier 1
Imports satisfying the targeted Profit Goal established by the compensation committee for those respective fiscal
years. Vesting for each fiscal year is also conditioned upon the NEO being employed on the date of filing of Pier 1
Imports’ annual report on Form 10-K with the SEC for the applicable fiscal year. For discussion purposes, Pier 1
Imports refers to these grants as Profit Goal performance-based shares.
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