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EXECUTIVE COMPENSATION
short-term incentive was based on achievement of annual targets. The Realized Profit (defined below) for fiscal 2014 was below
the threshold Profit Goal (defined below) set for fiscal 2014 and, as a result, no NEO earned a fiscal 2014 short-term incentive
award.
Pier 1 Imports’ short-term incentive program for its executives in fiscal 2014 provided a cash award based upon achievement of
a performance measure consisting of consolidated earnings before interest, taxes, depreciation, and amortization, adjusted for
certain recurring non-cash items and unusual or non-recurring items, as determined by the compensation committee. This
performance objective is referred to as the “Profit Goal” and the actual amount realized for the fiscal year is referred to as the
“Realized Profit.” This performance measure was selected because it focuses on factors that an individual participant’s actions
can affect and because it more closely reflects cash being generated by Pier 1 Imports’ ongoing core operations. It eliminates the
effects of financing and tax decisions as well as unusual charges. Use of the short-term incentive Profit Goal as a measure of Pier
1 Imports’ financial and operational performance is designed to lead to increased profitability over time. These factors were
evaluated by the compensation committee and resulted in their approval of the short-term incentive program and the Profit Goal
for fiscal 2014. (The short-term incentive awards are made pursuant to the Pier 1 Imports, Inc. 2006 Stock Incentive Plan.)
The fiscal 2014 Profit Goal of $274,000,000 represented an approximate 15% increase over the Realized Profit for fiscal 2013 of
$238,000,000 (on a 52-week basis). No award payout was possible unless the Realized Profit for 2014 met or exceeded the
previous year’s actual results. The fiscal 2014 short-term incentive program capped the Realized Profit for which an incentive
would be paid at $300,000,000. Fiscal 2014 short-term incentive opportunity as a percentage of base salary for each NEO is
shown on Table 4 below. Mr. Smith’s award is described below at “Chief Executive Officer Compensation.”
Table 4
Fiscal 2014 Annual Short-Term Incentive Opportunity
as a Percentage of Base Salary
Named Executive Officer
(other than CEO)
At Threshold
Performance
Levels
At Target
Performance
Levels
At Maximum
Performance
Levels Actual
Payout
Charles H. Turner 8.0% 80% 200% 0%
Michael R. Benkel 7.5% 75% 188% 0%
Catherine David 7.5% 75% 188% 0%
Sharon M. Leite 7.5% 75% 188% 0%
The short-term incentive plan required participants to be employed with Pier 1 Imports at fiscal year-end to receive a cash award.
The plan also allowed Pier 1 Imports’ chief executive officer to reduce the cash award of a participant as a result of individual or
group performance. Pier 1 Imports believes that these target percentage levels were competitive when compared to Pier 1
Imports’ peer group as identified at the beginning of the fiscal year.
Long-Term Incentive
O
NLY
P
ARTIAL
V
ESTING
F
OR
F
ISCAL
2014 G
RANT
The Realized Profit for fiscal 2014 was $230,600,000 and, as a result, only 60.4% of the performance-based Profit Goal shares
for fiscal 2014 vested, as described below, upon the date of filing of Pier 1 Imports’ Annual Report on Form 10-K.
Pier 1 Imports believes that a blend of performance- and time-based restricted stock provides a long-term incentive opportunity
that is both competitive in the retail industry and serves as a retention tool. During fiscal 2014, equity grants, which aid Pier 1
Imports in executive retention, were a mix of performance-based restricted stock that utilized achievement of two different
performance measures plus time-based restricted shares, which vest ratably over a three-year period. Table 5 below provides a
breakdown of the restricted stock 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, INC. 2014 Proxy Statement