Pier 1 2013 Annual Report Download - page 119

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In addition, for the same purposes, Pier 1 Imports offered a non-qualified deferred compensation plan known as
the Pier 1 Imports, Inc. Deferred Compensation Plan to its executives and key members of management. The plan
also assists Pier 1 Imports in attracting and retaining executives and key members of management. The plan is
described and discussed below under the caption “Non-Qualified Deferred Compensation Table for the Fiscal Year
Ended March 2, 2013.”
Chief Executive Officer Employment Agreement
As noted, Mr. Smith’s employment with Pier 1 Imports as its president and chief executive officer is governed
by an employment agreement. Pier 1 Imports utilizes an employment agreement to create continuity of Mr. Smith’s
services and to mitigate Mr. Smith’s risk of involuntary termination (other than for cause) or Mr. Smith’s voluntary
termination based on a good reason, both events as defined in the agreement.
Mr. Smith’s employment since February of 2007 has been governed by employment agreements. The initial
employment agreement was for a term of three years beginning February 19, 2007 and expiring February 27, 2010. On
December 15, 2009, Mr. Smith and Pier 1 Imports entered into the first renewal and extension of that employment
agreement. The first renewal and extension was effective February 28, 2010, the first day of fiscal 2011. The term of
the first renewal and extension was for three fiscal years ending on March 2, 2013, the last day of fiscal 2013. On
June 13, 2012, Mr. Smith and Pier 1 Imports entered into the second renewal and extension of that employment
agreement. The second renewal and extension was effective March 3, 2013, the first day of fiscal 2014. The term of the
second renewal and extension is for three fiscal years ending on February 27, 2016, the last day of fiscal 2016. The
second renewal and extension is renewable one fiscal year at a time beginning on February 28, 2016, unless Pier 1
Imports or Mr. Smith gives notice of non-renewal at least 60 days prior to that date.
During fiscal 2013, pursuant to the first renewal and extension, Mr. Smith’s base salary was $1,050,000 per
year and he was eligible to participate in Pier 1 Imports’ short-term and long-term incentive cash awards.
Also, pursuant to the first renewal and extension, Mr. Smith received:
375,000 shares of time-based restricted stock on December 18, 2009, under the Pier 1 Imports, Inc.
2006 Stock Incentive Plan. One-third of such shares vested on December 18, 2010, one-third of such
shares vested on December 18, 2011, and the remaining one-third of such shares vested on
December 18, 2012; and
the right to receive 375,000 shares of restricted stock on February 28, 2010, February 27, 2011 and
February 26, 2012. The restricted stock vest(ed) as follows: (i) one-half of the 375,000 shares of
restricted stock were time-based and vest(ed) 62,500 shares per year on the last day of the fiscal year
in which the restricted stock was issued and on the last day of the following two fiscal years,
provided Mr. Smith was employed on the last day of each such fiscal year; and (ii) the other one-half
of the 375,000 shares of restricted stock were performance-based and vest(ed) 62,500 shares upon
Pier 1 Imports satisfying the Profit Goal target established by the compensation committee for the
fiscal year in which the grant was made and 62,500 shares in each of the following two fiscal years
upon Pier 1 Imports satisfying the Profit Goal target established by the compensation committee for
the respective fiscal year (each Profit Goal achievement was determined upon the filing of Pier 1
Imports’ annual report on Form 10-K for the applicable fiscal year) and provided that for each fiscal
year Mr. Smith was employed on the last day of each such fiscal year.
The Profit Goal target for fiscal 2013 was achieved and 62,500 of the fiscal 2011 (February 28, 2010 grant
date), 62,500 of the fiscal 2012 (February 27, 2011 grant date) and 62,500 of the fiscal 2013 (February 26, 2012
grant date) performance-based shares vested.
Pursuant to the second renewal and extension, during fiscal 2014 Mr. Smith’s base salary will be $1,250,000
per year, which amount may be adjusted from time-to-time by the compensation committee. He also is eligible to
participate in Pier 1 Imports’ short-term and long-term incentive cash awards during the renewal term.
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