Pier 1 2013 Annual Report Download - page 89

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Board Leadership Structure
Pier 1 Imports’ bylaws require that the directors elect annually from among themselves a chairman of the
board. The bylaws, however, grant the board of directors discretion as to whether the chairman of the board is an
employee or an officer of Pier 1 Imports. A non-officer, non-employee elected as chairman of the board is
designated as the “non-executive” chairman of the board. Pier 1 Imports’ corporate governance guidelines and
policies contain general guidance that the positions of chairman of the board and chief executive officer should be
held by separate individuals and that the chairman of the board should be a “non-executive.” Provisions are made in
the guidelines and policies for an independent lead director if the roles of chairman of the board and chief executive
officer are combined.
During the last fiscal year, the chairman of the board and chief executive officer roles were held by separate
individuals, and the chairman of the board was a “non-executive” since he was neither an employee nor an officer of
Pier 1 Imports. Currently, the chairman of the board is a non-executive. This structure of separate individuals
holding these positions focuses board leadership and company leadership in separate and distinct individuals. Each
leader can direct her or his respective group on the objectives at hand while at the same time developing and
implementing strategic issues, financial issues and operational policies which affect the short-term and long-term
welfare of Pier 1 Imports.
Director Independence
It is Pier 1 Imports’ policy that the board of directors will at all times consist of a majority of independent
directors. In addition, all members of the audit committee, compensation committee, and nominating and corporate
governance committee must be independent directors. To be considered independent, a director must satisfy both
the subjective and objective independence requirements established by the New York Stock Exchange (“NYSE”). In
assessing independence under the subjective test, the board of directors takes into account the standards in the
objective tests, and reviews and discusses additional information provided by the directors and Pier 1 Imports with
regard to each director’s business and personal activities as they may relate to Pier 1 Imports and Pier 1 Imports’
management. Based on the foregoing, as required by NYSE rules, the board of directors makes a subjective
determination as to each independent director that no material relationship exists with Pier 1 Imports. The board of
directors will broadly consider all relevant facts and circumstances relating to a director in determining whether that
director is independent.
On October 11, 2012, the board of directors increased the size of the board of directors from eight directors to
nine and elected to the board of directors Cheryl A. Bachelder. On January 22, 2013, Michael R. Ferrari resigned
from the board of directors. On January 25, 2013, the board of directors reduced the number of directors comprising
the board to be elected by shareholders of Pier 1 Imports at the annual meeting from nine to eight, subject to further
change by the board of directors pursuant to the authority delegated to the board of directors by Pier 1 Imports’
bylaws.
Based on the NYSE independence requirements, the board of directors has determined that seven of the eight
current members of the board of directors are independent. They are directors Claire H. Babrowski, Ms. Bachelder,
John H. Burgoyne, Hamish A. Dodds, Brendan L. Hoffman, Terry E. London and Cece Smith. Pier 1 Imports’
president and chief executive officer, Alexander W. Smith, is the eighth member of the board of directors. The
board of directors’ determinations regarding independence also included Mr. Ferrari as independent during the time
of his service as a director. Independence for the non-employee directors was considered under both the subjective
and objective standards of the NYSE. In other words, none of the non-employee directors was disqualified from
independent status under the objective standards, and under the subjective standard each non-employee director was
determined not to have a material relationship with Pier 1 Imports.
Meetings of Independent Directors without Management Present
The independent directors of Pier 1 Imports met without management present four times during the last fiscal
year. The non-executive chairman of the board of directors presided over these meetings.
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