Pier 1 2013 Annual Report Download - page 53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of March 2, 2013 and February 25, 2012, accumulated other comprehensive loss included amounts
that had not been recognized as components of net periodic benefit cost related to prior service cost of
$1,146,000 and $1,555,000, and net actuarial loss of $5,568,000 and $5,634,000, respectively. During fiscal
2013, $854,000 was recognized in other comprehensive income related to net actuarial loss for the period. The
estimated prior service cost and net actuarial loss that will be amortized from accumulated other comprehensive
loss into net periodic cost in fiscal 2014 are $410,000 and $1,392,000, respectively.
NOTE 6 – MATTERS CONCERNING SHAREHOLDERS’ EQUITY
On March 23, 2006, the Board of Directors approved the adoption of the Pier 1 Imports, Inc. 2006 Stock
Incentive Plan (the “2006 Plan”). The 2006 Plan was approved by the shareholders on June 22, 2006. The
aggregate number of shares available for issuance under the 2006 Plan included a new authorization of
1,500,000 shares, plus shares (not to exceed 560,794 shares) that remained available for grant under the Pier 1
Imports, Inc. 1999 Stock Plan (the “1999 Stock Plan”) and the Pier 1 Imports, Inc. Management Restricted Stock
Plan, increased by the number of shares (not to exceed 11,186,150 shares) subject to outstanding awards on
March 23, 2006, under these prior plans that cease to be subject to such awards. As of March 2, 2013, there were
a total of 4,399,094 shares available for issuance under the 2006 Plan.
Restricted stock awards – On December 15, 2009, upon the recommendation of the Compensation
Committee, the Board of Directors approved the first renewal and extension of the Company’s President and
Chief Executive Officer’s (the “CEO”) initial employment agreement dated February 19, 2007. The first renewal
and extension provided that a total of 1,500,000 shares of restricted stock would be awarded over a period of
more than three years, provided the CEO is employed by the Company at designated times during the period
covered by the employment agreement. 937,500 of the shares were time-based and the remaining 562,500 share
were performance-based. On December 18, 2009 the CEO received 375,000 time-based awards that vest equally
over a three-year period on the anniversary date of the grant, and on the first day of the 2011, 2012 and 2013
fiscal years the CEO received 187,500 time-based awards that vest equally over a three-year period on the last
day of each respective fiscal year. In accordance with the accounting guidance on equity compensation, all
937,500 shares of the time-based restricted stock included in the first renewed and extended employment
agreement had a grant date as of the date of the employment agreement, which was December 15, 2009. On the
date the employment agreement was signed, December 15, 2009, both the Company and the CEO had a mutual
understanding of all key terms and conditions related to the time-based restricted stock awards and the Company
became obligated to issue the restricted stock awards to the CEO, subject only to his continued employment. In
addition, all necessary approvals from both the Company’s Compensation Committee and Board of Directors
were obtained on December 15, 2009 for the restricted stock awards. Therefore, the Company began expensing
the time-based shares on December 15, 2009.
On the first day of the 2011, 2012 and 2013 fiscal years the Company’s CEO received 187,500
performance-based shares of restricted stock that vest equally over a period of three fiscal years if the Company
achieves certain fiscal year targeted levels of a performance measure for each year as defined by the renewed and
extended agreement. Shares that do not vest because the performance target is not met during one fiscal year may
vest in future fiscal years if certain aggregate levels of the performance measure are achieved. The vesting of
performance-based shares will occur on the date the Company’s Form 10-K is filed with the Securities and
Exchange Commission for each respective fiscal year. In accordance with accounting guidelines, one-third of the
fiscal 2013 performance-based shares had a grant date in fiscal 2013 and the Company began expensing these
shares during fiscal 2013. The remaining two-thirds of the fiscal 2013 performance shares did not have a grant
date in fiscal 2013 because the performance targets for future fiscal years, which are a key term of the award,
have not been established and, therefore, both parties did not have a mutual understanding of all key terms of the
award. The CEO must be employed by the Company on the last day of each respective fiscal year in order for the
performance-based shares to vest. These shares could also vest under certain termination events. During fiscal
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