Pier 1 2013 Annual Report Download - page 129

(3) This column represents the aggregate grant date fair value of performance-based and time-based restricted stock
awarded during the fiscal year, computed in accordance with FASB ASC Topic 718. Pursuant to the second
renewal and extension of Mr. Smith’s employment agreement on June 13, 2012, 180,000 time-based restricted
shares, 120,000 Profit Goal performance-based restricted shares, and 75,000 TSR performance-based restricted
shares are to be issued to Mr. Smith on each of the first day of fiscal 2014, 2015 and 2016, provided Mr. Smith
is employed on such dates. In accordance with FASB ASC Topic 718, all 540,000 shares of the time-based
restricted stock to be issued pursuant to the second renewed and extended employment agreement have a grant
date for accounting purposes as of the date of the agreement of June 13, 2012, which is also the service inception
date, and as both Pier 1 Imports and Mr. Smith had a mutual understanding of the key terms and conditions of
the award on that date. Therefore, the aggregate grant date fair value of these awards has been included in the
table above.
As of March 2, 2013, the last day of fiscal 2013, none of the shares subject to time-based vesting had been
received by Mr. Smith; however, Pier 1 Imports is obligated to issue 540,000 shares subject to time-based
vesting (in addition to the 585,000 shares subject to performance-based vesting) in the future in accordance with
his employment agreement. The time-based awards will vest over a period of five years. No fair value for Mr.
Smith’s performance-based shares has been included in the table above because the performance measures for
each of these respective awards had not been established as of March 2, 2013, and therefore, an accounting grant
date had not yet occurred. The accounting grant date for these performance-based awards will be the date on
which the respective measures are established.
The table above also includes 187,500 shares of Profit Goal performance-based restricted stock that Mr. Smith
received pursuant to the first renewal and extension of his employment agreement dated December 15, 2009.
The accounting grant date for these performance-based awards occurred during fiscal 2013 when Pier 1 Imports
established the respective performance measures.
The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For
time-based and Profit Goal performance-based restricted stock awards, fair value is calculated using the closing
price of Pier 1 Imports’ common stock on the date of grant. If the date of grant occurs on a day when Pier 1
Imports’ common stock is not traded, then the closing price on the last trading day before the date of grant is
used. For TSR performance-based shares, fair value is determined by a valuation model. These amounts reflect
Pier 1 Imports’ accounting expense for these awards, and do not necessarily correspond to the actual value that
will be recognized by the NEO. For Profit Goal performance-based awards, the grant date fair value is based on
the probable outcome of Pier 1 Imports achieving the Profit Goal target for fiscal 2013. The amounts in the table
assume that the applicable target will be met and that the maximum number of shares awarded will vest. For
TSR performance-based awards, the grant date fair value is based on the probability Pier 1 Imports’ percentile
ranking within the rankings of the annual equivalent return of the TSR of Pier 1 Imports and a peer group over a
three year period will meet or exceed the established threshold.
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