Pier 1 2013 Annual Report Download - page 55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
fiscal 2012, 671,600 shares of restricted stock were awarded, 609,581 shares of restricted stock vested, and
38,725 shares of restricted stock were forfeited. The weighted average fair market value at the date of grant of
the restricted stock shares awarded during fiscal 2013 was $16.44 and is being expensed over the requisite
service period. This amount excludes the value of shares awarded to the Company’s CEO which is disclosed
above. This amount also does not include performance-based restricted shares that the Company will begin
expensing in future fiscal years when the targeted performance measures are set, but does include performance-
based restricted shares awarded in the previous fiscal year that were based on a fiscal 2013 targeted performance
measure which the Company began expensing in fiscal 2013.
Compensation expense for restricted stock was $12,167,000, $5,737,000 and $3,802,000 in fiscal 2013,
2012 and 2011, respectively. As of March 2, 2013, there was $13,645,000 of total unrecognized compensation
expense related to restricted stock that will be recognized over a weighted average period of 1.98 years. The total
fair value of restricted stock awards vested was $15,339,000, $8,016,000 and $2,454,000 in fiscal 2013, 2012 and
2011, respectively.
The Company recognized a tax benefit related to stock-based compensation of $4,814,000 and
$1,679,000 during fiscal years 2013 and 2012, respectively, and no net tax benefit during fiscal 2011 as a result
of the Company’s valuation allowance on all deferred tax assets. See Note 8 of the Notes to Consolidated
Financial Statements for additional discussion of income taxes.
Stock option grants – On January 27, 2007, the Board of Directors approved an employment agreement
effective February 19, 2007 for the CEO. Under the employment agreement, the CEO received stock option
grants. These options have a term of ten years from the grant date. As of March 2, 2013, outstanding options
covering 1,500,000 shares were exercisable. The options were granted as an employment inducement award, and
not under any stock option or other equity incentive plan adopted by the Company.
During fiscal 2013, the Board of Directors approved stock options grants under the 2006 Plan of
11,900 shares. As of March 2, 2013 and February 25, 2012, outstanding options covering 607,775 and 932,275
shares were exercisable under the 2006 Plan, respectively. Options were granted at exercise prices equal to the
fair market value of the Company’s common stock at the date of grant. Employee options issued under the 2006
Plan vest over a period of four years and have a term of ten years from the grant date. The employee options are
fully vested upon death, disability or retirement of the employee. The 2006 Plan’s administrative committee also
has the discretion to take certain actions with respect to stock options, such as accelerating the vesting, upon
certain corporate changes (as defined in the 2006 Plan).
The 1999 Stock Plan provided for the granting of options to directors and employees with an exercise
price not less than the fair market value of the common stock on the date of the grant. The 1999 Stock Plan
provided that a maximum of 14,500,000 shares of common stock could be issued under the 1999 Stock Plan, of
which not more than 250,000 shares could be issued under the Director Deferred Stock Program. The options
issued to employees vest equally over a period of four years, while non-employee directors’ options were fully
vested on the date of grant. The options all have a term of ten years from the grant date. The employee options
are fully vested upon death, disability, or retirement of an employee, or under certain conditions, such as a
change in control of the Company, unless the Board of Directors determines otherwise prior to a change of
control event. As of March 2, 2013, there were no shares available for grant under the 1999 Stock Plan. All
future stock option grants will be made from shares available under the 2006 Plan. Additionally, outstanding
options covering 1,147,500 and 2,430,250 shares were exercisable under the 1999 Stock Plan at fiscal years
ended 2013 and 2012, respectively.
Under the Pier 1 Imports, Inc. 1989 Employee Stock Option Plan, options vest over a period of four to
five years and have a term of ten years from the grant date. As of March 2, 2013 and February 25, 2012,
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