Pier 1 2014 Annual Report Download - page 110

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EXECUTIVE COMPENSATION
As illustrated in the graph:
•A $100 investment in Pier 1 Imports’ common stock on February 26, 2010 (the last trading day of fiscal 2010) grew to $316
by the end of fiscal 2014, which represents an approximate 33.3% annualized growth of TSR for each year in the four-year
period.
•Over the same period of time, the CEO’s pay, as reported in the summary compensation tables for each respective fiscal
year, increased by the annual equivalent of approximately 6.6% each year.
•A $100 investment on February 26, 2010 in the stock of the constituent companies comprising the fiscal 2014 Pier 1 Imports
peer group (for executive compensation purposes as detailed later in this Compensation Discussion and Analysis) grew to
$267 over the same period of time, which represents an annualized growth of TSR for each year in the four-year period of
approximately 27.8%.
•A $100 investment in the S&P 500 on February 26, 2010 grew to $183 over the same period of time, which represents an
annualized growth of TSR for each year in the four-year period of approximately 16.4%.
In conclusion, Pier 1 Imports continues to maintain policies that pay for performance as demonstrated by both the results of fiscal
2014 and the direct compensation actions taken. In light of this strong philosophy to deliver results to shareholders, Pier 1
Imports encourages a “Yes” vote on its say-on-pay proposal.
Compensation Policies, Principles, Objectives and Practices
Pier 1 Imports’ proven success has resulted, in large part, from its ability to successfully attract, motivate and retain a qualified
executive management team and its future success will depend on its ability to continue to do so. Sourcing qualified candidates
to fill important positions within Pier 1 Imports is challenging given the highly competitive retail environment. Pier 1 Imports’ overall
compensation philosophy is that its executive compensation program should be structured to attract and retain highly skilled and
motivated individuals who will lead Pier 1 Imports to successful performance that is consistent with shareholders’ expectations.
Pier 1 Imports accomplishes this by creating total compensation packages which are competitive in the retail industry, fair and
equitable among the executives, and which provide strong incentives for the long-term success and performance of Pier 1
Imports.
Pier 1 Imports provides both short-term and long-term incentives to its executives for the effective management of major
functions, teamwork, and effective expense control. Success on these fronts leads to its overall success. Pier 1 Imports believes
that as an executive’s level of responsibility increases, a greater portion of that executive’s potential total compensation should
come from performance-based plans. Pier 1 Imports also believes that the majority of an executive’s compensation should be
“at-risk” and tied to Pier 1 Imports’ performance as well as its performance in relation to a group of other retail companies for
certain long-term incentive awards. This aligns management’s interests with shareholders’ interests as the executive’s total
compensation should only increase when Pier 1 Imports’ performance improves.
Pier 1 Imports generally targets total compensation packages for executive officers to reflect the 50th percentile of Pier 1 Imports’
peer group when it achieves planned financial and operational goals. Pier 1 Imports designs its total compensation packages to
provide pay above the 50th percentile compared to its peer group when its results exceed planned financial and operational
goals.
Peer Group
At the beginning of fiscal 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 competitors, and/or local area competitors for executive
talent:
Bed Bath & Beyond Inc. Ross Stores, Inc.
Chico’s FAS Inc. Select Comfort Corporation
Dick’s Sporting Goods, Inc. Stage Stores Inc.
Finish Line Inc. Stein Mart, Inc.
Fossil Group, Inc. Tuesday Morning Corporation
hhgregg, Inc. Ulta Salon, Cosmetics & Fragrance, Inc.
Kirkland’s, Inc. Williams-Sonoma, Inc.
PetSmart, Inc. Zale Corporation
RadioShack Corporation
32 PIER 1 IMPORTS, INC. 2014 Proxy Statement