Pier 1 2014 Annual Report Download - page 101

ITEMS OF BUSINESS TO BE ACTED UPON AT THE MEETING
The plan has been in effect since 1980. The plan is administered by the compensation committee. The current term of the plan
is five years and the number of shares remaining available for issuance under the plan is 3,752,490 shares as of April 3, 2014.
Pier 1 Imports’ board of directors on April 3, 2014 approved an amendment of the plan, subject to shareholder approval,
extending the term of the plan for ten years (through June 20, 2024). The number of shares available under the plan is not being
increased. The plan is described below and a copy of the amendment is attached to this proxy statement as Appendix A. A
complete copy of the current plan is set forth in Exhibit 10.1 to Pier 1 Imports’ Quarterly Report on Form 10-Q for the fiscal
quarter ended November 30, 2013, as filed with the SEC.
Eligibility
All of Pier 1 Imports’ employees who have attained the age of majority of their state or province of residence and have completed
60 days of employment with Pier 1 Imports, or one of its designated subsidiaries that has adopted the plan, are eligible to
participate in the plan. Directors who are not employees are also eligible to participate in the plan. At March 1, 2014,
approximately 21,543 employees and 10 non-employee directors were eligible to participate in the plan, and 1,161 employees
and 3 non-employee directors were participants in the plan.
Participant Accounts
Pier 1 Imports maintains an account in the name of each participant, deducts funds from each participant’s pay as elected and
authorized by the participant and pays monthly to the plan for each participant’s account the deducted funds plus Pier 1 Imports’
contribution, as described below, on the participant’s behalf. The plan allows Pier 1 Imports as the plan administrator to use the
contributed funds to purchase shares of Pier 1 Imports’ common stock either on the open market or directly from Pier 1 Imports.
No open market purchases may be made at a price that is greater than the fair market value for Pier 1 Imports’ common stock on
the date of purchase. Purchases of shares from Pier 1 Imports’ treasury are made at the 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 made by a broker.
Each participant acquires full and immediate beneficial ownership of all shares and fractional shares allocated to his or her
account. All shares are registered in the name of the plan and remain registered in the plan’s name until delivery of the shares as
described below or until “released” shares are sold or transferred by the participant. All such shares in a participant’s account will
initially be classified under the plan as “unreleased” and may not be sold, assigned, pledged or otherwise disposed until
released. Upon termination of employment, the employee’s participation in the plan will end and his or her shares will be
distributed to the participant. All shares in the account of each participant will be automatically classified as “released” at least
once each calendar year.
A participant’s account is credited with all dividends, if any, paid on full and fractional shares held in his or her account. All cash
dividends are reinvested under the plan in common stock.
Compensation Deductions and Pier 1 Imports’ Contributions
A participant must specify the amount to be withheld from his or her compensation, with a minimum of $2.50 per week and a
maximum of 20% of his or her compensation. The plan provides that non-employee directors may contribute to the plan all or a
portion of their cash director fees. Subject to the plan’s limitations, compensation deductions may be increased or decreased at
any time by the participant. Pier 1 Imports will contribute to the plan an amount equal to 25% of each participant’s compensation
deduction.
Amendment or Termination of the Plan
The board of directors may amend, suspend or terminate the plan at any time. An amendment, suspension or termination will not
result in the forfeiture of any funds contributed by a participant or Pier 1 Imports, or of any shares or fractional shares purchased
for a participant, or of any dividends or other distributions with respect to such shares, that were effective before the effective
date of the amendment, suspension or termination. Certain material amendments to the plan must be submitted to Pier 1
Imports’ shareholders for their approval.
U.S. Federal Income Tax Effects
The amount of Pier 1 Imports’ contribution to the plan is treated as “earned income” to the participant, which is subject to federal
income tax at ordinary rates. Assuming federal income tax withholding requirements are satisfied, Pier 1 Imports receives a
deduction for participants’ and Pier 1 Imports’ contributions to participants’ accounts.
PIER 1 IMPORTS, INC. 2014 Proxy Statement 23