Pier 1 2014 Annual Report Download

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2014 Annual Report
Annual Meeting of Shareholders
June 20, 2014

Table of contents

  • Page 1
    2014 Annual Report Annual Meeting of Shareholders June 20, 2014

  • Page 2
    ...online business, in addition to their traditional retail role. Expanding Assortments The treasure hunt that our customer knows and loves now extends far beyond the locations of our Pier 1 Imports stores. We are significantly expanding product assortments online and through our special-order service...

  • Page 3
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  • Page 4

  • Page 5
    ...PIER 1 IMPORTS, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 75-1729843 (I.R.S. Employer Identification No.) 100 Pier 1 Place Fort Worth, Texas (Address of principal executive offices) 76102 (Zip Code) Company...

  • Page 6
    PIER 1 IMPORTS, INC. FORM 10-K ANNUAL REPORT Fiscal Year Ended March 1, 2014 Table of Contents PAGE PART I Item 1. Business. 3 3 6 12 13 14 14 15 Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Selected Financial Data. Management's...

  • Page 7
    ... centers in or near Baltimore, Maryland; Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma, Washington. The Company has an arrangement to supply Grupo Sanborns, S.A. de C.V. ("Grupo Sanborns") with Pier 1 Imports merchandise to be sold primarily in a "store...

  • Page 8
    ...furniture cushions to be used in living, dining, office, kitchen and bedroom areas, sunrooms and on patios. Also included in this group are wall decorations and mirrors. This group has remained constant at approximately 40% of Pier 1 Imports' total U.S. and Canadian retail sales in fiscal years 2014...

  • Page 9
    ... of Home Goods, Marshalls, TJ Maxx, plus a number of corporate functions. He was instrumental in the development of the TK Maxx stores in Great Britain and also ran its international operations. CHARLES H. TURNER, age 57, was named Senior Executive Vice President of the Company in April 2012 and...

  • Page 10
    ... in customer preferences, and pricing shifts, and may misjudge the timing and selection of merchandise purchases. The Company's failure to anticipate, predict and respond in a timely manner to changing decorative home furnishing and gift trends could lead to lower sales and additional discounts and...

  • Page 11
    ...tracking and authorization, credit card authorization and processing, store scheduling and time and attendance, store maintenance services, maintenance and support of the Company's website and e-Commerce platform, certain marketing services, insurance claims processing, customs filings and reporting...

  • Page 12
    ...'s business and results of operations. The success and growth of the Company is partially dependent on generating customer traffic in order to produce sales in its stores and through the Company's e-Commerce website. Successful marketing efforts require the ability to obtain customer information and...

  • Page 13
    ..., sell merchandise, accomplish payment functions, report financial data or manage labor and staffing. Although the Company maintains off-site data backups, a concentration of technology-related risk exists in the Company's headquarters located in Fort Worth, Texas. PIER 1 IMPORTS, INC.  2014...

  • Page 14
    ... business and its financial results. As part of the Company's growth plan, the Company is investing in new information technology systems and implementing modifications and upgrades to existing systems. These investments include replacing legacy systems, making changes to existing systems, building...

  • Page 15
    ... barriers in international trade to be beneficial to its business. Any type of sanction on imports is likely to increase the Company's import costs or limit the availability of merchandise purchased from sanctioned countries. In that case, the Company may be required to seek similar merchandise from...

  • Page 16
    ...'s secured revolving credit facility. The Company expects to close a new $200 million senior secured term loan facility on or about April 30, 2014. Proceeds from the transaction will be used for general corporate purposes, including working capital needs, capital expenditures, share repurchases and...

  • Page 17
    ... 1, 2014, the Company owned or leased under operating leases the following distribution center properties, which include fulfillment centers in or near the following cities: Location Baltimore, Maryland Columbus, Ohio Fort Worth, Texas Ontario, California Savannah, Georgia Tacoma, Washington Approx...

  • Page 18
    ... ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse effect on its consolidated financial position, results of operations or liquidity. Item 4. Mine Safety Disclosures. Not applicable. 14 PIER 1 IMPORTS, INC.  2014 Form 10-K

  • Page 19
    ... The following table shows the high and low closing sale prices of the Company's common stock on the New York Stock Exchange (the "NYSE"), as reported in the consolidated transaction reporting system for each quarter of fiscal 2014 and 2013. Market Price High Low $25.20 24.70 23.60 23.47 High $18...

  • Page 20
    ... of the Company made during the three months ended March 1, 2014, by Pier 1 Imports, Inc. or any "affiliated purchaser" of Pier 1 Imports, Inc., as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934. Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs...

  • Page 21
    ...information used in the graph below was obtained from Bloomberg L.P. PIER 1 IMPORTS, INC. STOCK PERFORMANCE GRAPH $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 2/28/2009 2/27/2010 2/26/2011 2/25/2012 3/2/2013 3/1/2014 Pier 1 Imports, Inc. S&P 500 Stock Index S&P Retail Stores Composite Index PIER...

  • Page 22
    ... fiscal 2014, 2013 and 2012 was primarily the result of the Company's Board-approved common stock share repurchase programs. Under these programs, the Company repurchased 9,788,257, 5,822,142 and 9,498,650 shares in fiscal 2014, 2013 and 2012, respectively. 18 PIER 1 IMPORTS, INC.  2014 Form...

  • Page 23
    ...is the Company's plan to evolve from a store-only business model to one with full omnichannel capabilities. Through the '1 Pier 1' strategy the Company expects to maximize selling opportunities, extend brand reach and capture greater market share. The Company's focus is to ensure that customers have...

  • Page 24
    ... and lighting in numerous existing locations. The remaining capital expenditures were primarily utilized for technology and infrastructure initiatives, including e-Commerce and the new point-of-sale system. Capital expenditures in fiscal 2015 are expected to be at similar levels to fiscal 2014...

  • Page 25
    ... for fiscal 2013. E-Commerce sales are comprised of both customer orders placed online which were shipped directly to the customer from a fulfillment center ("direct-to-customer") and those picked up by the customer at a store location ("store pick-up"). The Company's proprietary credit card program...

  • Page 26
    ... investment in marketing of 5% of sales. This increase was due in part to the opening of a net ten new stores during fiscal 2014. In addition, relatively fixed expenses increased as a result of additional headcount and software-related expenses in support of the Company's '1 Pier 1' strategy. These...

  • Page 27
    ... 2012. Sales on the Pier 1 credit card comprised 25.7% of U.S. store sales compared to 21.2% in fiscal 2012. A summary reconciliation of the Company's stores open at the beginning of fiscal 2013, 2012 and 2011 to the number open at the end of each period is as follows (openings and closings include...

  • Page 28
    ... store payroll and marketing. The increases in store payroll and marketing were due in part to the opening of a net ten new stores during fiscal 2013. As a percentage of sales, selling, general and administrative expenses were 30.1% of sales in fiscal 2013, compared to 31.0% of sales in fiscal 2012...

  • Page 29
    ... invested in the build-out of e-Commerce fulfillment space located in one of the Company's distribution centers. The remaining capital expenditures were for technology and infrastructure initiatives, including e-Commerce and the new point-of-sale system. PIER 1 IMPORTS, INC.  2014 Form 10-K 25

  • Page 30
    ... $0.05 per share for the fourth quarter of fiscal 2013, totaling $18.0 million. The cash outflows were partially offset by the receipt of $20.1 million in proceeds related primarily to employee stock option exercises and the Company's employee stock purchase plan. Revolving Credit Facility and Term...

  • Page 31
    ... repurchase 5,071,812 shares of the Company's common stock at a weighted average price per share of $18.95 and as of April 10, 2014, the October 2013 program was completed. Subsequent to year end, on April 10, 2014, the Company announced a new $200 million common stock share repurchase program, and...

  • Page 32
    ... for liquidity, which include available cash balances and available lines of credit. The Company's current plans for fiscal 2015 include the Term Loan Facility discussed above, a capital expenditure budget similar to that of fiscal 2014, cash dividends and share repurchases as discussed above. The...

  • Page 33
    ... 2014, 2013 and 2012, respectively. Inventories - The Company's inventory is comprised of finished merchandise and is stated at the lower of weighted average cost or market value. Cost is calculated based upon the actual landed cost of an item at the time it is received in the Company's distribution...

  • Page 34
    ... the projected benefit obligation. Additionally, changes made to the provisions of the Plans may impact current and future benefit costs. Stock-based compensation - For restricted stock awards, compensation expense is measured and recorded using the closing price of the Company's stock on the...

  • Page 35
    ... affected by changes in market interest rates. As of March 1, 2014, the Company had $9.5 million in long-term debt outstanding related to its industrial revenue bonds and no cash borrowings outstanding on its Revolving Credit Facility. Subsequent to year end, the Company expects to close a new $200...

  • Page 36
    ... and Supplementary Data. Report of Independent Registered Public Accounting Firm To the Board of Directors of Pier 1 Imports, Inc. We have audited the accompanying consolidated balance sheets of Pier 1 Imports, Inc. as of March 1, 2014 and March 2, 2013, and the related consolidated statements...

  • Page 37
    ...Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) 52 Weeks Ended March 1, 2014 Net sales Cost of sales Gross profit Selling...provision (benefit) Net income Earnings per share: Basic Diluted Dividends declared per share: Average shares outstanding during...

  • Page 38
    ... (2,391) 1,105 (1,286) $106,245 (918) 563 (355) $129,089 (2,050) (1,639) (3,689) $165,249 $107,531 53 Weeks Ended March 2, 2013 $129,444 52 Weeks Ended February 25, 2012 $168,938 The accompanying notes are an integral part of these financial statements. 34 PIER 1 IMPORTS, INC.  2014 Form 10-K

  • Page 39
    ... BALANCE SHEETS Pier 1 Imports, Inc. CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) March 1, 2014 ASSETS Current assets: Cash and cash equivalents, including temporary investments of $121,446 and $191,568, respectively Accounts receivable, net of allowance for doubtful accounts...

  • Page 40
    ... expense Deferred compensation Deferred income taxes Excess tax benefit from stock-based awards Amortization of deferred gains Change in reserve for uncertain tax positions Other Change in cash from: Inventories Proprietary credit card receivables Prepaid expenses and other assets Accounts payable...

  • Page 41
    ...' EQUITY Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands) Common Stock Outstanding Shares Balance February 26, 2011 Net income Other comprehensive loss Purchases of treasury stock Stock-based compensation expense Exercise of stock options, stock purchase plan...

  • Page 42
    ... BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - Pier 1 Imports, Inc. (together with its consolidated subsidiaries, the "Company") is an original global importer of home décor and furniture, with retail stores located in the United States and Canada. Additionally, the Company...

  • Page 43
    ... value as of March 1, 2014 or March 2, 2013. Risk management instruments: The Company may utilize various financial instruments to manage interest rate and market risk associated with its on- and off-balance sheet commitments. From time to time, the Company hedges certain commitments denominated in...

  • Page 44
    ...costs related to the Company's distribution network (including depreciation) and store occupancy expenses. The costs incurred by the Company for shipping and handling are recorded in cost of sales. Gift cards - Revenue associated with gift cards is recognized when merchandise is sold and a gift card...

  • Page 45
    ... of fiscal 2014, 2013 and 2012 earnings per share, respectively, as the effect would be antidilutive. Stock-based compensation - The Company's stock-based compensation relates to stock options, restricted stock awards and director deferred stock units. Accounting guidance requires all companies to...

  • Page 46
    ... the bond interest rates, which are market driven, reset weekly and are similar to other tax-exempt municipal debt issues. The Company's weighted average effective interest rate, including standby letter of credit fees, was 1.9%, 2.4% and 2.7% for fiscal 2014, 2013 and 2012, respectively. Revolving...

  • Page 47
    ...on or about April 30, 2014, in order to allow additional borrowings under a new senior secured term loan facility that is expected to close on the same day. Substantially all of the other material terms and conditions applicable under the Revolving Credit Facility are anticipated to remain unchanged...

  • Page 48
    ...2014, 2013, and 2012, respectively. In addition, the Company offers non-qualified deferred compensation plans for the purpose of providing deferred compensation for certain employees whose benefits under the qualified plan may be limited under Section 401(k) of the Internal Revenue Code. The Company...

  • Page 49
    ...'s rate of compensation is set forth in his employment agreement. Net periodic benefit cost included the following actuarially determined components during fiscal 2014, 2013, and 2012 as shown in the table below (in thousands). The amortization of amounts related to unrecognized prior service costs...

  • Page 50
    ...subject to such awards. As of March 1, 2014, there were a total of 3,954,611 shares available for issuance under the 2006 Plan. Restricted stock awarded to the Chief Executive Officer - On June 13, 2012, upon the recommendation of the Compensation Committee, the Board of Directors approved a renewal...

  • Page 51
    ... 2014 and March 2, 2013, outstanding options covering 405,400 and 607,775 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...

  • Page 52
    ...Compensation expense for the director deferred stock awards was $821,000, $700,000 and $642,000 in fiscal 2014, 2013 and 2012, respectively. Stock purchase plan - Substantially all Company employees and all non-employee directors are eligible to participate in the Pier 1 Imports, Inc. Stock Purchase...

  • Page 53
    ...amount includes stock options outstanding, director deferred stock units and shares available for future grant. Share repurchase plan - The following table summarizes the Company's total share repurchases during fiscal 2014, 2013 and 2012: Shares Purchased Date Program Announced Apr. 7, 2011 Oct. 14...

  • Page 54
    ... over the term of the new program agreement based on revolving credit card sales, and certain other credit and account related matters. The Company received total payments of $160,000 and $1,574,000 related to these program agreements during fiscal 2013 and 2012, respectively, and recognized them as...

  • Page 55
    .... Interest associated with unrecognized tax benefits is recorded in nonoperating (income) and expenses. Penalties associated with unrecognized tax benefits are recorded in selling, general and administrative expenses. During the second quarter of fiscal 2013, PIER 1 IMPORTS, INC.  2014 Form 10...

  • Page 56
    ... in fiscal 2014, 2013 and 2012, respectively. During fiscal 2009, the Company sold its corporate headquarters building and accompanying land and entered into a lease agreement to rent office space in the building. The lease will expire on June 30, 2022. The related gain on the sale of the property...

  • Page 57
    ... quarterly financial data for the years ended March 1, 2014 and March 2, 2013 are set forth below (in thousands except per share amounts): Fiscal 2014 Net sales Gross profit Operating income Net income Average shares outstanding - basic Average shares outstanding - diluted Basic earnings per share...

  • Page 58
    ... registered public accounting firm, has audited the Company's internal control over financial reporting as of March 1, 2014, as stated in their report which is included in this Annual Report on Form 10-K. /s/ Alexander W. Smith Alexander W. Smith President and Chief Executive Officer /s/ Charles...

  • Page 59
    ... no changes in the Company's internal control over financial reporting during the fourth quarter of fiscal 2014 that would have materially affected, or would have been reasonably likely to materially affect, the Company's internal control over financial reporting. PIER 1 IMPORTS, INC.  2014 Form...

  • Page 60
    ... over financial reporting as of March 1, 2014, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Pier 1 Imports, Inc. as of March 1, 2014 and March 2, 2013 and the...

  • Page 61
    ... 2014 Proxy Statement. Information regarding the Company's audit committee financial experts and code of ethics and business conduct required by this Item is incorporated by reference to the section entitled "Matters Relating to Corporate Governance, Board Structure, Director Compensation and Stock...

  • Page 62
    ..." and the section entitled "Matters Relating to Corporate Governance, Board Structure, Director Compensation and Stock Ownership - Director Independence" set forth in the 2014 Proxy Statement. Item 14. Principal Accounting Fees and Services. Information required by this Item is incorporated by...

  • Page 63
    ...' Equity for the Years Ended March 1, 2014, March 2, 2013 and February 25, 2012 Notes to Consolidated Financial Statements 32 33 34 35 36 37 38 2. Financial Statement Schedules Schedules have been omitted because they are not required or are not applicable or because the information required to...

  • Page 64
    ... authorized. PIER 1 IMPORTS, INC. Date: April 29, 2014 By: /s/ Alexander W. Smith Alexander W. Smith, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and...

  • Page 65
    .... Stock Purchase Plan, restated as amended December 1, 2013, incorporated herein by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended November 30, 2013 (File No. 001-07832). Amended and Restated Credit Agreement, dated April 4, 2011, among Pier 1 Imports (U.S.), Inc., Bank...

  • Page 66
    ... Form of Restricted Stock Award Agreement - April 11, 2014 Performance-Based Award ("e-Comm Sales"), incorporated herein by reference to Exhibit 10.5 to the Company's Form 8-K filed on April 17, 2014 (File No. 001-07832). Pier 1 Imports Non-Employee Director Compensation Plan, incorporated herein by...

  • Page 67
    ...Restoration Plan II, as amended and restated effective January 1, 2009, incorporated herein by reference to Exhibit 10.3 to the Company's Form 10-Q for the quarter ended November 27, 2010 (File No. 001-07832). Form of Non-Qualified Stock Option Agreement between Alexander W. Smith and Pier 1 Imports...

  • Page 68
    ... reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended November 24, 2012 (File No. 001-07832). Private Label Credit Card Plan Agreement by and between World Financial Network Bank and Pier 1 Imports (U.S.), Inc., dated October 5, 2011, incorporated herein by reference to Exhibit...

  • Page 69
    ... Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a). Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pier 1 Imports, Inc. Stock Purchase Plan Audit Report. XBRL Instance...

  • Page 70

  • Page 71
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  • Page 72

  • Page 73
    ... Pier 1 Place Fort Worth, Texas 76102 May 9, 2014 Dear Shareholder: The board of directors and management cordially invite you to attend Pier 1 Imports' annual meeting of shareholders to be held at 10:00 a.m., local time, on Friday, June 20, 2014, at Pier 1 Imports' corporate headquarters, Mezzanine...

  • Page 74

  • Page 75
    ... the annual meeting of shareholders of Pier 1 Imports, Inc., a Delaware corporation ("Pier 1 Imports"), will be held on Friday, June 20, 2014, at 10:00 a.m., local time, at Pier 1 Imports' corporate headquarters, Mezzanine Level, Conference Center Room C, 100 Pier 1 Place, Fort Worth, Texas 76102...

  • Page 76

  • Page 77
    .... 100 Pier 1 Place Fort Worth, Texas 76102 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS To Be Held June 20, 2014 Table of Contents QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING MATTERS RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK...

  • Page 78
    ... and Role of Executive Officers Pier 1 Imports' Policy on Share Ownership Pier 1 Imports' Policy on Section 162(m) Clawback Policy Compensation Risk Summary Compensation Table for the Fiscal Years Ended March 1, 2014, March 2, 2013 and February 25, 2012 Grants of Plan-Based Awards for the Fiscal...

  • Page 79
    ... requested to vote on the proposals described in this proxy statement. The annual meeting will be held on the Mezzanine Level, in Conference Center Room C, of Pier 1 Imports' corporate headquarters located at the address shown above. How can I access the proxy materials electronically? The Notice...

  • Page 80
    ... to the board of directors (PROPOSAL NO. 1); • "For" approval of an amendment of the Pier 1 Imports, Inc. Stock Purchase Plan to extend the term of the plan for ten years (PROPOSAL NO. 2); • "For" the resolution approving the compensation of Pier 1 Imports' named executive officers as disclosed...

  • Page 81
    ... to Pier 1 Imports' corporate secretary at 100 Pier 1 Place, Fort Worth, Texas 76102; • timely delivering of a valid, later-dated proxy; or • voting in person at the annual meeting. If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or...

  • Page 82
    ... at the annual meeting and for ten days prior to the meeting for any purpose germane to the meeting, between the hours of 8:30 a.m. and 5:00 p.m., local time, at Pier 1 Imports' corporate headquarters at 100 Pier 1 Place, Fort Worth, Texas 76102, by contacting Pier 1 Imports' corporate secretary at...

  • Page 83
    ... your broker, bank or other holder of record is not entitled to vote on the election of directors, the approval of the amendment of the Pier 1 Imports, Inc. Stock Purchase Plan, or on the non-binding, advisory resolution to approve the compensation of Pier 1 Imports' named executive officers, absent...

  • Page 84
    .... To request either of these accommodations, please contact Pier 1 Imports' Investor Relations Department on or before June 6, 2014. You may make your request by mail to Pier 1 Imports, Inc., Attn.: Investor Relations Department, 100 Pier 1 Place, Fort Worth, Texas 76102 or by telephone at (817...

  • Page 85
    ..., Code of Business Conduct and Ethics and charters for the audit, compensation, and nominating and corporate governance committees are available on Pier 1 Imports' web site at www.pier1.com at the Investor Relations link. Board Leadership Structure Pier 1 Imports' bylaws require that the directors...

  • Page 86
    ... other interested parties can send written communications to one or more members of Pier 1 Imports' board of directors, addressed to: [Name of Board Member], Board of Directors Pier 1 Imports, Inc. c/o Corporate Secretary 100 Pier 1 Place Fort Worth, Texas 76102 In addition, shareholders and other...

  • Page 87
    MATTERS RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP • information technology experience; • international business experience; and • chief executive officer, chief financial officer or other senior management experience. Although the Board ...

  • Page 88
    ... by the board of directors or compensation committee) the board of directors' responsibilities relating to compensation of Pier 1 Imports' non-employee directors, chief executive officer, executive officers, and other senior officers who report directly to Pier 1 Imports' chief executive officer...

  • Page 89
    ... by Pier 1 Imports' chief executive officer, human resources compensation group, or both, on those elements of compensation, plus recommended plan design changes, if any, and a summary of all proposed awards to all eligible levels of management. The presentations may also include survey data from...

  • Page 90
    ... time attended the 2013 Pier 1 Imports annual meeting of shareholders. Committee memberships, the number of meetings of the full board and each standing committee, and each director's dates of service for fiscal 2014 are shown in the table below. Board of Directors Member Member Member Chair Member...

  • Page 91
    ...extent applicable plan limitations at such time preclude issuing Pier 1 Imports' common stock. Mmes. Babrowski, Sardini and Smith participated in the Pier 1 Imports, Inc. Stock Purchase Plan during fiscal 2014. The stock purchase plan is a broad based plan available to all non-employee directors and...

  • Page 92
    ... in fiscal 2014 in accordance with the Financial Accounting Standards Board's Accounting Standards Codification Topic 718, Compensation-Stock Compensation ("FASB ASC Topic 718"). The number of DSUs is calculated using the closing price of Pier 1 Imports' common stock on the last trading day of each...

  • Page 93
    ... TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP The following table shows the Pier 1 Imports' common stock closing price by month used to calculate the number of DSUs to be received for deferred director fees plus any Pier 1 Imports' match, including the closing...

  • Page 94
    ... and Ms. Smith (203,272 DSUs). The DSUs will be exchanged one-for-one for shares of Pier 1 Imports' common stock when the director ceases to be a member of the board of directors, as described above under the caption "Non-Employee Director Compensation for the Fiscal Year Ended March 1, 2014 - Fees...

  • Page 95
    ... TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP Security Ownership of Certain Beneficial Owners The following table indicates the ownership by each person who is known by Pier 1 Imports as of April 23, 2014, to beneficially own more than 5% of Pier 1 Imports...

  • Page 96
    ..., and based solely on a review of the furnished Section 16(a) reports, all Section 16(a) filing requirements applicable to Pier 1 Imports' executive officers, directors and greater than 10% beneficial owners during the last fiscal year were observed. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER...

  • Page 97
    ... During fiscal 2014, there were no transactions exceeding $120,000 in which Pier 1 Imports was a participant, or is to be a participant, and in which any related person had or will have a direct or indirect material interest. Pier 1 Imports indemnifies its directors and executive officers to the...

  • Page 98
    ...fiscal 2014, Ms. Bachelder served as a member and chair of the compensation committee. Ms. Bachelder is a restaurant industry executive who brings to the board over 30 years of brand building, operations and public-company management experience. Ms. Bachelder has served as chief executive officer of...

  • Page 99
    ...'s 2014 annual shareholders meeting. Ms. McCague brings extensive experience in human resources and executive compensation to the board of directors. Her deep and broad global experience in consumer products gives the board a perspective on developing, marketing, merchandising and selling products...

  • Page 100
    ... Fund for the City of New York. ALEXANDER W. SMITH Mr. Smith, age 61, is being nominated for his ninth consecutive term on the board of directors, and has served on the board of directors since joining Pier 1 Imports as president and chief executive officer in February 2007. Mr. Smith has over 30...

  • Page 101
    ... NYSE closing price on the last trading day of each calendar month. Shares purchased are allocated to the accounts of participants in proportion to the funds received from each respective account. The plan provides that Pier 1 Imports pay any broker's commissions or markups on open market purchases...

  • Page 102
    ... by Pier 1 Imports and the number of shares purchased under the plan for their respective accounts during the fiscal year ended March 1, 2014. Pier 1 Imports, Inc. Stock Purchase Plan Name and Position Alexander W. Smith President and Chief Executive Officer Charles H. Turner Senior Executive Vice...

  • Page 103
    ... INFORMATION EQUITY COMPENSATION PLAN INFORMATION The following table sets forth certain information regarding Pier 1 Imports' equity compensation plans as of March 1, 2014. Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price...

  • Page 104
    ... PLAN INFORMATION practices of Pier 1 Imports are focused on pay-for-performance and are strongly aligned with the long-term interests of its shareholders. Compensation of Pier 1 Imports' named executive officers is designed to enable it to attract and retain talented and experienced senior...

  • Page 105
    ... for services related to the annual audit of the consolidated financial statements, required statutory audits, if any, reviews of Pier 1 Imports' quarterly reports on Form 10-Q, the registered public accounting firm's report on Pier 1 Imports' internal control over financial reporting, as required...

  • Page 106
    ... public accounting firm, the committee recommended to the board of directors that Pier 1 Imports' audited consolidated financial statements be included in Pier 1 Imports' Annual Report on Form 10-K for the fiscal year ended March 1, 2014, for filing with the SEC. AUDIT COMMITTEE Cece Smith, Chair...

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    ... and some highlights of Pier 1 Imports' chief executive officer ("CEO") compensation in fiscal 2014. Fiscal 2014 Business Results Highlights: • Net sales for the 52-week fiscal 2014 year expanded 3.9% to $1.772 billion, compared to net sales for the 53-week fiscal 2013 year of $1.705 billion...

  • Page 108
    ...fiscal 2012 restricted stock grants, unvested timebased and performance-based restricted shares do not receive cash dividend payments. No Above-Market Earnings were Paid on Deferred Compensation Arrangements during Fiscal 2014. No Across-the-Board Base Salary Increases for Executives. Pier 1 Imports...

  • Page 109
    ... $200 $150 $100 $4,000,000 $50 $2,000,000 $0 2010 2011 2012 2013 2014 $- Pier 1 Imports Fiscal Year Summary CompensaÆŸon Table Pier 1 Imports TSR S&P TSR 2014 Peer TSR Summary Compensation Table = total compensation as reported in the Pier 1 Imports' proxy statement in each of the last four...

  • Page 110
    ... 2014, Pier 1 Imports used a group of peer companies to benchmark base salary, short-term incentive and long-term incentive elements of total executive compensation. The peer group included the following companies, which at that time were publicly traded and were direct competitors, retail industry...

  • Page 111
    ... 2013 say-on-pay results, the board of directors and management engaged in a series of substantial discussions and deliberations about Pier 1 Imports' compensation philosophy and executive compensation practices, exploring further changes to the program. The board of directors encouraged management...

  • Page 112
    ... results were below Pier 1 Imports' internal expectations; • Strengthened the executive stock ownership guidelines, including increasing the CEO guideline from 5 times to 6 times base salary (effective in fiscal 2015); • Implemented a clawback policy that is applicable to performance-based...

  • Page 113
    ...Stock) Base Salary NO ACROSS-THE-BOARD INCREASES In fiscal 2014, Pier 1 Imports' chief executive officer and human resources compensation group once again recommended to the compensation committee only targeted increases to certain executives and no "across-the-board" base salary increases for Pier...

  • Page 114
    ... awarded to the NEOs, other than Mr. Smith, in fiscal 2014. Mr. Smith did not participate in the fiscal 2014 long-term incentive equity award given his awards of restricted stock pursuant to his employment agreement as described below at "Chief Executive Officer Compensation." 36 PIER 1 IMPORTS...

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    ... the average closing stock price during the twenty trading days at the end of fiscal 2016. The peer group is comprised of the companies in the Russell 1000 Specialty Retail Index, with the addition of any other specialty retailers in Pier 1 Imports' fiscal 2014 peer group for executive compensation...

  • Page 116
    ... is employed on the applicable vesting date. Retirement and Other Plans Pier 1 Imports offers a supplemental retirement plan which is designed to provide certain executives with post-employment financial security and to mitigate the effects of deferral limitations on highly compensated individuals...

  • Page 117
    .... Smith is employed on the last day of each such fiscal year. Mr. Smith's employment agreement does not provide for gross-up payments designed to offset the impact of the excise tax imposed by Section 4999 of the Internal Revenue Code on payments contingent upon a change in control of Pier 1 Imports...

  • Page 118
    ... at the end of fiscal 2013 and during the first fiscal month of 2014. The presentations included recommendations of Pier 1 Imports' chief executive officer and human resources compensation group on those elements of compensation, plus recommended plan design changes and a summary of all short...

  • Page 119
    ...compensation, commonly referred to as a "clawback policy," applicable to Pier 1 Imports' executive officers (as defined under Rule 3b-7 of the Securities Exchange Act of 1934, as amended). The policy appears in Pier 1 Imports' Code of Business Conduct and Ethics, available on Pier 1 Imports' website...

  • Page 120
    ...compensation earnings. There were no above-market earnings paid in fiscal 2012, 2013 and 2014 on the non-qualified deferred compensation plan. Mr. Benkel and Mmes. David and Leite do not participate in a Pier 1 Imports defined benefit plan. The change in pension values were: Name Alexander W. Smith...

  • Page 121
    ... (1) Plan Awards (2) of Stock Underlying Threshold Target Maximum Threshold Target Maximum or Units Options Grant Date Fair Exercise Value of or Base Stock Price of and Option Option Awards Awards (3) ($/Share) ($) Name Grant Date Meeting Date Alexander W. Smith 05/13/2013 02/27/2011 02/26/2012...

  • Page 122
    ... was determined using the closing price of Pier 1 Imports' common stock of $18.92 (the NYSE closing price on February 28, 2014, which was the last trading day of fiscal 2014). Option Awards Stock Awards Equity Incentive Plan Awards: Number of Market Unearned Value of Shares, Shares or Units or Units...

  • Page 123
    ... of Pier 1 Imports' Annual Report on Form 10-K for the applicable fiscal year for Profit Goal performance-based shares and is within thirty days of the end of the measurement period for TSR performance-based shares. (4) (5) Grant Date 04/08/2011 04/06/2012 04/12/2013 04/06/2012 04/12/2013 Shares...

  • Page 124
    ...the option times the number of shares acquired on exercise of the options. The value realized on the vesting of restricted stock awards is equal to the closing market price of Pier 1 Imports' common stock on the date of vesting (or the last trading day before vesting, if applicable) times the number...

  • Page 125
    ... Benefit (2) ($) $15,589,697 $ 6,428,034 Payments During Last Fiscal Year ($) $0 $0 Name Alexander W. Smith Charles H. Turner (1) For Mr. Turner, the number of years of credited service for plan purposes equals the years of credited vesting service as determined by Pier 1 Imports' 401(k) plan...

  • Page 126
    EXECUTIVE COMPENSATION During fiscal 2011, BRP II was closed to further deferral elections by participants. The final participant contributions and Pier 1 Imports matching contributions to BRP II were credited to the plan in fiscal 2012. Account balances in BRP II will continue to earn interest at ...

  • Page 127
    ..., plans or arrangements to which they are a party for various scenarios including a change in control or termination of employment, assuming the event occurred on March 1, 2014 and, where applicable, using the closing price of Pier 1 Imports' common stock of $18.92 (the NYSE closing price on...

  • Page 128
    ...-sum amount of the actuarial equivalent of the benefits for Messrs. Smith and Turner assuming the executive officer is involuntarily terminated other than for cause, or left the employment of Pier 1 Imports for good reason (as defined in the plan), on March 1, 2014, and that such date is within 24...

  • Page 129
    EXECUTIVE COMPENSATION (2) Generally, under grant agreements pursuant to the 2006 plan, termination of employment for any reason results in a forfeiture to Pier 1 Imports of all unvested restricted stock awards. However, as discussed in footnote 7 below, all shares of Mr. Smith's restricted stock ...

  • Page 130
    ...before the annual meeting. Pier 1 Imports' bylaws require that it receive written notice of the matter in proper form with the requisite materials and information no earlier than February 20, 2015, and no later than March 22, 2015. You may contact Pier 1 Imports' corporate secretary to find out what...

  • Page 131
    ... PLAN WHEREAS, the Pier 1 Imports, Inc. Stock Purchase Plan (the "Plan") was established in 1980 and was most recently amended and restated on December 1, 2013; NOW THEREFORE: A. The first sentence of Article VII of the Plan is replaced with the following: "Unless previously terminated by the Board...

  • Page 132
    ... in order to attend the Pier 1 Imports, Inc. Annual Meeting of Shareholders. Doors will open at 9:00 a.m., local time. Below are directions to Pier 1 Imports' corporate headquarters located at 100 Pier 1 Place / 100 Energy Way, Fort Worth, Texas from various locations in the surrounding area. From...

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    .... DIRECTORS AND EXECUTIVE OFFICERS Corporate Headquarters 100 Pier 1 Place Fort Worth, Texas 76102 817-252-8000 www.pier1.com Board of Directors Chairman of the Board Terry E. London President London Broadcasting Company, Inc. Alexander W. Smith President and Chief Executive Officer Pier 1 Imports...

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