Pier 1 2015 Annual Report Download

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2015 ANNUAL REPORT
Annual Meeting of Shareholders
June 25, 2015

Table of contents

  • Page 1
    2015 ANNUAL REPORT Annual Meeting of Shareholders June 25, 2015

  • Page 2

  • Page 3
    ... where she shops. Our merchandising, marketing and pricing strategies are designed to drive improvement across all three of these metrics. 2. Stores as sales and customer experience centers - approximately 60% of our e-Commerce sales touched a store in fiscal 2015. Our nationwide footprint remains...

  • Page 4
    ... home furnishings and gift store for our customers, associates, investors and vendors. We thank you for your role in helping to make Pier 1 Imports such a unique and successful organization. Sincerely, Alexander W. Smith President and Chief Executive Officer Terry E. London Chairman of the Board

  • Page 5
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  • Page 6

  • Page 7
    ...Worth, Texas (Address of principal executive offices) 76102 (Zip Code) Company's telephone number, including area code: (817) 252-8000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $0.001 par value New York...

  • Page 8
    PIER 1 IMPORTS, INC. FORM 10-K ANNUAL REPORT Fiscal Year Ended February 28, 2015 TABLE OF CONTENTS PAGE PART I Item 1. Business. 4 4 6 13 14 15 15 16 Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Selected Financial Data. ...

  • Page 9
    ... Company's e-Commerce website; the ability of the Company to source, ship, and deliver items of acceptable quality to its U.S. distribution centers, stores and customers at reasonable prices and rates in a timely fashion; failure to successfully manage and execute the Company's marketing initiatives...

  • Page 10
    ... distribution center facilities and fulfillment 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...

  • Page 11
    ... This merchandise group consists of furniture and furniture cushions to be used in living, dining, office, kitchen and bedroom areas, sunrooms and patios. This group has remained constant at approximately 35% of Pier 1 Imports' sales in fiscal years 2015, 2014 and 2013. These goods are imported from...

  • Page 12
    ..., including Vice President of Inventory Management, Director - Inventory Management, and as a home furnishings and furniture buyer. LAURA A. COFFEY, age 48, was named Executive Vice President of the Company and began serving as Interim Chief Financial Officer in February 2015. Ms. Coffey has served...

  • Page 13
    ... plans and the stock purchase plan, and third party vendor auditing. In addition, the Company also has business relationships with third parties to provide essential services such as the extension of credit to its customers and maintenance of the Pier 1 rewards credit card program. The Company makes...

  • Page 14
    ...'s supply chain, or the e-Commerce website, could impact the Company's ability to deliver merchandise to its stores and customers, which could impact its sales and results of operations. The Company maintains regional distribution centers in Maryland, Ohio, Texas, California, Georgia and Washington...

  • Page 15
    ... manage the Company's omni-channel operations could negatively affect the Company's business. The Company successfully executed the launch of its e-Commerce website in the United States during fiscal 2013, and in fiscal 2015 the Company continued to implement its omni-channel strategy, '1 Pier...

  • Page 16
    ... manage the merchandise supply chain, 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...

  • Page 17
    ... transport to designated U.S. destinations. Global political unrest, war, threats of war, terrorist acts or threats, especially threats to foreign and U.S. ports and piracy, disruption in the operation of the international portion of the Company's supply PIER 1 IMPORTS, INC.  2015 Form 10-K 11

  • Page 18
    .... The Company imports merchandise from countries around the world and as a result may be affected from time to time by antidumping petitions alleging that foreign manufacturers are selling their own products at prices that are less than the prices that they charge in their home country market or in...

  • Page 19
    ... the Company's contractual agreements. The inability of the Company to obtain financing as needed on acceptable terms to fund its operations may have a negative impact on the Company's business and financial results. Item 1B. Unresolved Staff Comments. None. PIER 1 IMPORTS, INC.  2015 Form 10...

  • Page 20
    ... 28, 2015, the Company owned or leased under operating leases the following properties, which include distribution and/or fulfillment centers in or near the following cities: Location Baltimore, Maryland Columbus, Ohio Fort Worth, Texas Fort Worth, Texas Ontario, California Savannah, Georgia Tacoma...

  • Page 21
    ... the ultimate resolution of such matters will not have a material adverse effect, either individually or in aggregate, on the Company's consolidated financial position, results of operations or liquidity. Item 4. Mine Safety Disclosures. Not applicable. PIER 1 IMPORTS, INC.  2015 Form 10-K 15

  • Page 22
    ... Purchases of Equity Securities. Market Prices of Common Stock The following table shows the high and low closing sale prices of the Company's common stock on the New York Stock Exchange ("NYSE"), as reported in the consolidated transaction reporting system for each quarter of fiscal 2015 and 2014...

  • Page 23
    ... stock of the Company made during the three months ended February 28, 2015, 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...

  • Page 24
    ... 2015. The information used in the graph below was obtained from Bloomberg L.P. PIER 1 IMPORTS, INC. STOCK PERFORMANCE GRAPH 400 350 300 250 200 150 100 50 0 2/27/2010 2/26/2011 2/25/2012 3/2/2013 3/1/2014 2/28/2015 Pier 1 Imports, Inc. S&P 500 Stock Index S&P Retail Stores Composite Index 18 PIER...

  • Page 25
    ..., 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 10,280,312; 9,788,257; 5,822,142 and 9,498,650 shares in fiscal 2015, 2014, 2013 and 2012, respectively. PIER 1 IMPORTS, INC.  2015...

  • Page 26
    ... decorative accessories, furniture, candles, housewares, gifts and seasonal products in its stores and through the Company's website, pier1.com. As of February 28, 2015, the Company operated 1,065 stores in the United States and Canada. Fiscal 2015 and 2014 consisted of 52-week years and fiscal 2013...

  • Page 27
    ... 2014 over fiscal 2013 comparison, the sales included in the company comparable sales calculation were determined in the same manner as above, except that direct-to-customer sales were excluded because those sales did not meet the criteria for inclusion at that time. PIER 1 IMPORTS, INC.  2015...

  • Page 28
    ...and average ticket compared to the prior year. The Company's e-Commerce sales accounted for 11.0% of net sales for fiscal 2015 compared to 4.0% for fiscal 2014. E-Commerce sales are comprised of both customer orders placed online which were shipped directly to the customer ("direct-to-customer") and...

  • Page 29
    ... chief financial officer was $77.2 million, or $0.84 per diluted share. Fiscal year 2015 EBITDA (earnings before interest, taxes, depreciation, and amortization) was $176.3 million compared to $215.4 million in fiscal 2014. See "Reconciliation of Non-GAAP Financial Measures" below. PIER 1 IMPORTS...

  • Page 30
    ... sales accounted for 4.0% of net sales for fiscal 2014 compared to approximately 1.0% 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 and those picked up by the customer at a store location...

  • Page 31
    ... per share. Net income for fiscal 2013, which consisted of 53 weeks, was $129.4 million, or $1.20 per share, which included the impact of the Company reversing a portion of its reserve for uncertain income tax positions during the second quarter of fiscal 2013. PIER 1 IMPORTS, INC.  2015 Form 10...

  • Page 32
    ... earnings per share. The Company believes that the non-GAAP financial measures included in this Annual Report on Form 10-K allow management and investors to understand and compare results in a more consistent manner for the fiscal years ended February 28, 2015, March 1, 2014 and March 2, 2013...

  • Page 33
    ... stores, new merchandise fixtures for existing stores, other leasehold improvements, and technology and infrastructure initiatives, including enhancements to the omni-channel platform. The Company also invested in its distribution network and completed its second fulfillment center in Columbus, Ohio...

  • Page 34
    ... 2014 $200 million program, the Company utilized a total of $5.1 million to repurchase 383,000 shares of the Company's common stock at a weighted average price per share of $13.26 and $117.1 million remained available for further repurchases under that program. 28 PIER 1 IMPORTS, INC.  2015 Form...

  • Page 35
    ... assets. The remaining three sub-trusts are restricted to meet the funding requirements of the Company's non-qualified deferred compensation plans. The trusts' assets are included in other noncurrent assets and are comprised of investments and life PIER 1 IMPORTS, INC.  2015 Form 10-K 29

  • Page 36
    ... be required. The Company's revenues are reported net of discounts and returns, net of sales tax and third-party credit card fees, and include wholesale sales and royalties. Amounts billed to customers for shipping and handling are included in net sales. 30 PIER 1 IMPORTS, INC.  2015 Form 10-K

  • Page 37
    ...of the plans may impact current and future benefit costs. 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 measure and recognize compensation expense at...

  • Page 38
    ... CHANGING PRICES Inflation has not had a significant impact on the operations of the Company during the preceding three years. However, the Company's management cannot be certain of the effect inflation may have on the Company's operations in the future. 32 PIER 1 IMPORTS, INC.  2015 Form 10-K

  • Page 39
    ... to hedge exposure associated with the Company's merchandise purchases denominated in foreign currencies or the repatriation of Canadian funds. Interest Rate Risk The Company manages its exposure to changes in interest rates by optimizing the use of variable and fixed rate debt. The expected...

  • Page 40
    ... with the standards of the Public Company Accounting Oversight Board (United States), Pier 1 Imports, Inc.'s internal control over financial reporting as of February 28, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations...

  • Page 41
    ...Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) 52 Weeks Ended February 28, 2015 Net sales Cost of sales Gross profit Selling... Net income Earnings per share: Basic Diluted Dividends declared per share: Average shares outstanding during period...

  • Page 42
    ... income (3,729) (142) (3,871) $71,291 (2,391) 1,105 (1,286) $106,245 (918) 563 (355) $129,089 $75,162 52 Weeks Ended March 1, 2014 $107,531 53 Weeks Ended March 2, 2013 $129,444 The accompanying notes are an integral part of these financial statements. 36 PIER 1 IMPORTS, INC.  2015 Form 10-K

  • Page 43
    ... BALANCE SHEETS Pier 1 Imports, Inc. CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) February 28, 2015 ASSETS Current assets: Cash and cash equivalents, including temporary investments of $69,572 and $121,446, respectively Accounts receivable, net of allowance for doubtful accounts...

  • Page 44
    ... of treasury stock Proceeds from stock options exercised, stock purchase plan and other, net Excess tax benefit from stock-based awards Issuance of long-term debt, net of discount Repayments of long-term debt Debt issuance costs Borrowing of notes payable Repayments of notes payable Net cash used in...

  • Page 45
    ...' EQUITY Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands) Common Stock Outstanding Shares Balance February 25, 2012 Net income Other comprehensive loss Purchases of treasury stock Stock-based compensation expense Exercise of stock options, stock purchase plan...

  • Page 46
    ... ACCOUNTING POLICIES Organization - Pier 1 Imports, Inc. (together with its consolidated subsidiaries, the "Company") is the original global importer of home décor and furniture. The Company directly imports merchandise from many countries, and sells a wide variety of decorative accessories...

  • Page 47
    ... 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 center using vendor invoices, the cost of warehousing and transporting merchandise to the stores and other direct costs associated with purchasing...

  • Page 48
    ... Company maintains supplemental retirement plans for certain of its current and former executive officers. These plans provide that upon death, disability, reaching retirement age or certain termination events, a participant will receive benefits based on highest compensation, years of service and...

  • Page 49
    ...fiscal 2013 were excluded from the computation of earnings per share, 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...

  • Page 50
    ... 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 1.7%, 1.9% and 2.4% for fiscal 2015, 2014 and 2013, respectively. Revolving...

  • Page 51
    ... and bankers' acceptances for merchandise purchases, $20,250,000 related to a standby letter of credit for the Company's workers' compensation and general liability insurance policies, $9,715,000 related to a standby letter of credit related to the Company's industrial revenue bonds and $6,460,000...

  • Page 52
    ...2015. The Company maintains supplemental retirement plans for certain of its current and former executive officers. These plans provide that upon death, disability, reaching retirement age or certain termination events, a participant will receive benefits based 46 PIER 1 IMPORTS, INC.  2015 Form...

  • Page 53
    ...00% 3.00% 5.00% 3.00% The rate of compensation increase shown above assumes an increase of 0% for fiscal year 2016 and 3% for fiscal years thereafter, except for the Company's CEO. The CEO's rate of compensation is set forth in his employment agreement. PIER 1 IMPORTS, INC.  2015 Form 10-K 47

  • Page 54
    ... 28, 2015, there were a total of 3,447,563 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 and extension of the employment...

  • Page 55
    ... all key terms of the award. The CEO must be employed by the Company on the last day of each respective fiscal year in order for the performance-based shares to vest. These shares could also vest under certain termination events. During fiscal 2015, the Company also began expensing performance-based...

  • Page 56
    ... recognized over a weighted average period of 2.0 years. The total fair value of restricted stock awards vested was $7,098,000, $17,810,000 and $15,339,000 in fiscal 2015, 2014 and 2013, respectively. The Company realized a total tax benefit related to stock-based compensation of $5,856,000, $3,993...

  • Page 57
    ... 2015, 2014 and 2013, respectively. Stock purchase plan - Substantially all Company associates and all non-employee directors are eligible to participate in the Pier 1 Imports, Inc. Stock Purchase Plan under which the Company's common stock is purchased on behalf of participants at market prices...

  • Page 58
    ... and other tax credits Other, net Provision for income taxes Effective tax rate $42,141 4,402 (224) 2,420 (3,436) (63) $45,240 37.6% 2014 $61,127 3,138 (1,298) 4,652 (5,444) 4,943 $67,118 38.4% 2013 $70,350 6,838 (1,034) 1,093 (1,785) (3,906) $71,556 35.6% 52 PIER 1 IMPORTS, INC.  2015 Form 10-K

  • Page 59
    ...965) (4,689) $ 2,194 As of February 28, 2015, the Company had total unrecognized tax benefits of $765,000, the majority of which would, if recognized, affect the Company's effective tax rate. As March 1, 2014, the Company had unrecognized tax benefits of PIER 1 IMPORTS, INC.  2015 Form 10-K 53

  • Page 60
    ... of management, after consultation with counsel, that the ultimate resolution of such matters will not have a material adverse effect, either individually or in aggregate, on the Company's consolidated financial position, results of operations or liquidity. 54 PIER 1 IMPORTS, INC.  2015 Form 10...

  • Page 61
    ... quarterly financial data for the years ended February 28, 2015 and March 1, 2014 are set forth below (in thousands except per share amounts): Fiscal 2015 Net sales Gross profit Operating income Net income Average shares outstanding - basic Average shares outstanding - diluted Basic earnings...

  • Page 62
    ... registered public accounting firm, has audited the Company's internal control over financial reporting as of February 28, 2015, 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/ Laura...

  • Page 63
    ... in the Company's internal control over financial reporting during the fourth quarter of fiscal 2015 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.  2015 Form 10-K 57

  • Page 64
    ... reporting as of February 28, 2015, 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 February 28, 2015 and March 1, 2014 and the related...

  • Page 65
    ... 2015 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 66
    ..." and the section entitled "Matters Relating to Corporate Governance, Board Structure, Director Compensation and Stock Ownership - Director Independence" set forth in the 2015 Proxy Statement. Item 14. Principal Accounting Fees and Services. Information required by this Item is incorporated by...

  • Page 67
    ... Schedules have been omitted because they are not required or are not applicable or because the information required to be set forth therein either is not material or is included in the financial statements or notes thereto. 3. Exhibits See Exhibit Index. PIER 1 IMPORTS, INC.  2015 Form 10-K 61

  • Page 68
    ... of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PIER 1 IMPORTS, INC. Date: April 28, 2015 By: /s/ Alexander W. Smith Alexander W. Smith, President and Chief Executive Officer Pursuant to the...

  • Page 69
    ...-07832). Forms of Director and Employee Stock Option Agreements, incorporated herein by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter ended August 28, 1999 (File No. 001-07832). Pier 1 Imports, Inc. Stock Purchase Plan, Restated as Amended December 1, 2013, incorporated herein...

  • Page 70
    ...-07832). Pier 1 Imports, Inc. 2006 Stock Incentive Plan (Omnibus Plan), Restated as Amended through March 25, 2011, incorporated herein by reference to Exhibit 10.10 to the Company's Form 10-K for the year ended February 26, 2011 (File No. 001-07832). Form of Non-Qualified Stock Option Agreement for...

  • Page 71
    ...File No. 001-07832). Pier 1 Imports, Inc. Non-Employee Director Compensation Plan, as amended June 20, 2014, incorporated herein by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter ended May 31, 2014 (File No. 001-07832). Pier 1 Benefit Restoration Plan I, as amended and restated...

  • Page 72
    ... Amendment to Office Lease between Hines VAV III Energy Way LLC and Pier 1 Services Company, dated July 14, 2014, incorporated herein by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended August 30, 2014 (File No. 001-07832). Summary Plan Description of Pier 1 Imports Limited...

  • Page 73
    ...-07832). Pier 1 Imports, Inc. Deferred Compensation Plan Amendment No. 1, effective January 1, 2013, incorporated herein by 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...

  • Page 74

  • Page 75
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  • Page 77
    ... 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 Thursday, June 25, 2015, at Pier 1 Imports' corporate headquarters, Mezzanine Level, Conference Center Room C, 100 Pier 1 Place, Fort Worth, Texas...

  • Page 78

  • Page 79
    ... the annual meeting of shareholders of Pier 1 Imports, Inc., a Delaware corporation ("Pier 1 Imports"), will be held on Thursday, June 25, 2015, 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 80

  • Page 81
    PIER 1 IMPORTS, INC. 100 Pier 1 Place Fort Worth, Texas 76102 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS To Be Held June 25, 2015 Table of Contents QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING MATTERS RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR ...

  • Page 82
    ... Executive Officers Pier 1 Imports' Policy on Share Ownership Prohibition on Hedging and Pledging Clawback Policy Pier 1 Imports' Policy on Section 162(m) Compensation Risk Summary Compensation Table for the Fiscal Years Ended February 28, 2015, March 1, 2014, and March 2, 2013 Grants of Plan-Based...

  • Page 83
    ... 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 84
    ... LLP as Pier 1 Imports' independent registered public accounting firm for fiscal 2016 (PROPOSAL NO. 4). Who is entitled to vote at the annual meeting? Holders of Pier 1 Imports common stock at the close of business on April 27, 2015, are entitled to vote their shares at the annual meeting. As of...

  • Page 85
    ... to Pier 1 Imports' corporate secretary at 100 Pier 1 Place, Fort Worth, Texas 76102 which must be received prior to June 24, 2015; • 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...

  • Page 86
    ... 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 87
    ... is not entitled to vote on the election of directors, the approval of the Pier 1 Imports, Inc. 2015 Stock Incentive Plan, or on the non-binding, advisory resolution to approve the compensation of Pier 1 Imports' named executive officers, absent voting instructions from you. Without your voting...

  • Page 88
    ... are a beneficial owner of shares and you plan to attend the annual meeting, you must present proof of your ownership of Pier 1 Imports common stock, such as a bank or brokerage account statement, to be admitted to the annual meeting. Pier 1 Imports' corporate headquarters is accessible to disabled...

  • Page 89
    ... In addition, Pier 1 Imports has adopted a Code of Business Conduct and Ethics applicable to all of its directors, officers and employees, including Pier 1 Imports' chief executive officer, chief financial officer and principal accounting officer. The nominating and corporate governance committee is...

  • Page 90
    ... 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 interested parties may communicate with the chair committee, or...

  • Page 91
    ... RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP product concerns or inquiries, new product suggestions, résumés and other forms of job inquiries, surveys and business solicitations or advertisements. In addition, Pier 1 Imports will not distribute...

  • Page 92
    MATTERS RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP qualifications to the chair of the nominating and corporate governance committee, in care of the corporate secretary, Pier 1 Imports, Inc., 100 Pier 1 Place, Fort Worth, Texas 76102. To be properly ...

  • Page 93
    ... employment contract or other arrangement approved 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...

  • Page 94
    ...CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP and the modification of existing compensation programs and retirement plans. For fiscal 2015, Pier 1 Imports' management did not retain an outside consultant to recommend the amount or form of executive or non-employee...

  • Page 95
    MATTERS RELATING TO CORPORATE GOVERNANCE, BOARD STRUCTURE, DIRECTOR COMPENSATION AND STOCK OWNERSHIP Non-Employee Director Compensation for the Fiscal Year Ended February 28, 2015 Fees Paid to Directors Directors who are Pier 1 Imports employees do not receive any compensation for their board ...

  • Page 96
    ...not accrue DSUs in June, 2014. The total balance of both Mr. Burgoyne's and Ms. Smith's DSUs were exchanged for an equal number of shares of Pier 1 Imports common stock and were subsequently delivered to them. The closing price of Pier 1 Imports common stock was $15.18 on June 20, 2014 and $15.74 on...

  • Page 97
    MATTERS RELATING 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, ...

  • Page 98
    ... days of April 27, 2015, upon the exercise of stock options granted pursuant to Pier 1 Imports' stock option plans: Mr. Benkel (10,000 shares), Ms. Coffey (10,000 shares), Mr. London (12,000 shares), Mr. Smith (944,000 shares), Mr. Turner (60,000 shares), and to all directors and executive officers...

  • Page 99
    ... RELATING 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 27, 2015, to beneficially own more than 5% of Pier...

  • Page 100
    ...at Board and Committee Meetings and at the Annual Meeting of Shareholders." During fiscal 2015, there were no compensation committee interlocks or insider participation. Related Person Transaction Policies and Procedures Pier 1 Imports' board of directors has adopted as part of its Code of Business...

  • Page 101
    ..., or is to be a participant, and in which any related person had or will have a direct or indirect material interest that required approval by the nominating and governance committee. Pier 1 Imports indemnifies its directors and executive officers to the fullest extent permitted by law and has also...

  • Page 102
    ... Brussels. CHERYL A. BACHELDER Ms. Bachelder, age 59, is being nominated for her third consecutive term on the board of directors. During fiscal 2015, Ms. Bachelder served as chair of the compensation committee. Ms. Bachelder is a restaurant industry executive who brings to 20 PIER 1 IMPORTS, INC...

  • Page 103
    ITEMS OF BUSINESS TO BE ACTED UPON AT THE MEETING the board over 30 years of brand building, operations and public-company management experience. Ms. Bachelder has served as chief executive officer of Popeyes Louisiana Kitchen, Inc. since November 1, 2007 and served as president from November 2007 ...

  • Page 104
    ... the City of New York. ALEXANDER W. SMITH Mr. Smith, age 62, is being nominated for his tenth 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 years of...

  • Page 105
    ... the Internal Revenue Code of 1986 failing to so qualify. Shares Subject to the Plan The aggregate number of shares of common stock that may be issued under the plan will not exceed 2,500,000 shares plus the number of shares of common stock which remain available for grant under the Pier 1 Imports...

  • Page 106
    ... closing price reported by the NYSE on the date such option is granted. The plan expressly prohibits the re-pricing of options without approval of the shareholders of Pier 1 Imports except in the event of adjustments for stock splits and other corporate events. No option may be exercised ten years...

  • Page 107
    ... to the departing director within five business days. Under the plan, deferred stock units are credited with dividends paid on Pier 1 Imports common stock. Amendment and Termination of the Plan The board of directors may terminate the plan at any time with respect to any shares of common stock for...

  • Page 108
    ... in the plan. New Plan Benefits The selection of officers, employees, and non-employee directors who will receive future awards under the Pier 1 Imports, Inc. 2015 Stock Incentive Plan and the amount and types of awards will be determined by the board of directors or the compensation committee, as...

  • Page 109
    ... holding period of the shares of common stock. Upon the optionee's exercise of a non-qualified option, and subject to the application of Section 162(m) of the Internal Revenue Code of 1986 as discussed below, Pier 1 Imports may claim a tax deduction for the compensation at the same time and in the...

  • Page 110
    ... 162(m) of the Internal Revenue Code of 1986 as discussed below, Pier 1 Imports will be entitled to a deduction at the same time and in the same amount as the income recognized by the plan participant. Director Deferred Stock Units Provided that a non-employee director's cash fee deferral election...

  • Page 111
    ... of the Internal Revenue Code of 1986 are exempt from the cap and do not count toward the $1,000,000 limit. Generally, options granted with an exercise price at least equal to the fair market value of the stock on the date of the grant will qualify as performance-based compensation. Other awards may...

  • Page 112
    ... option awards granted to Mr. Smith on February 19, 2007. The affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote on this proposal is required to approve the Pier 1 Imports, Inc. 2015 Stock Incentive Plan...

  • Page 113
    ...the resolution. The board of directors unanimously recommends a vote "For" the non-binding, advisory resolution to approve the compensation of Pier 1 Imports' named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the...

  • Page 114
    ...Includes fees 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 independent registered public accounting firm's report on Pier 1 Imports' internal control over financial...

  • Page 115
    ... it. The audit committee has delegated to the chair of the audit committee, or any of its other members, authority to approve permitted services up to $50,000 per engagement provided that any pre-approval decisions are reported to the committee at its next scheduled meeting. PIER 1 IMPORTS, INC...

  • Page 116
    ... and the independent registered 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 February 28, 2015, for filing with the...

  • Page 117
    ... during fiscal 2015, highlights of Pier 1 Imports' chief executive officer ("CEO") compensation, an overview of Pier 1 Imports' executive compensation philosophy and "career share grants" to specific NEOs in fiscal 2015. Fiscal 2015 Business Results Highlights: • Net sales for fiscal 2015 grew...

  • Page 118
    ... Pier 1 Imports' second e-Commerce fulfillment center which opened in Columbus, Ohio; and • Upgraded information technology and systems in support of '1 Pier 1,' including optimization of www.pier1.com for mobile devices and additional personal computers and tablets to support omni-channel sales...

  • Page 119
    ... time, the CEO's pay, as reported in the summary compensation tables for each respective fiscal year, increased by approximately 6.3% on an annualized basis each year. • A $100 investment in the stock of the constituent companies comprising the fiscal 2015 Pier 1 Imports peer group (for executive...

  • Page 120
    ...compensation for all executives and only makes adjustments to base salary when necessary to reflect significant changes in the executive's responsibilities or in current market conditions. No Hedging, Short Sales, Option Trading or Pledging of Pier 1 Imports common stock. All employees and directors...

  • Page 121
    ... six years from the date of grant (October 16, 2020). Career share grant information is detailed in Table 6 below. In conclusion, Pier 1 Imports continues to maintain policies that support pay for performance, as demonstrated by both the results of fiscal 2015 and the direct compensation actions...

  • Page 122
    ... internal performance and subsequent stock performance relative to Pier 1 Imports' peers PERFORMANCE REWARDED Based on individual skills, experience, responsibilities and performance over time Fixed Long-Term Time-based Restricted Stock Directly tied to company stock price Annual Performance...

  • Page 123
    ... provided data from the Towers Watson 2013 Compensation Data Bank (CDB) Retail/Wholesale Services Executive Database in order to provide additional information relating to total compensation, cash compensation and equity trends in the broader retail industry to ensure that Pier 1 Imports maintains...

  • Page 124
    ...- and long-term, including both informal and formal views by shareholders, the board of directors and compensation committee have taken the following actions with respect to Pier 1 Imports' executive compensation program over previous fiscal years and for fiscal 2015: • Eliminated the "catch-up...

  • Page 125
    ...BOARD INCREASES In fiscal 2015, 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 1 Imports' NEOs. The compensation...

  • Page 126
    ... Executive Officer Alex Smith Charles H. Turner Laura A. Coffey Michael R. Benkel Catherine David Sharon M. Leite 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...

  • Page 127
    ...these equity share grants were awarded). Mr. Smith did not participate in the fiscal 2015 long-term incentive equity award given his awards of restricted stock pursuant to his employment agreement as described below in "Chief Executive Officer Compensation." Table 6 PerformanceBased Shares - Profit...

  • Page 128
    ...fiscal 2015 in order to tie the performance of e-Commerce sales to executive pay. The e-Commerce performance-based shares granted in fiscal 2015 cliff vest at the end of fiscal 2017 as shown in Table 7 below, provided the NEO is employed on the date of filing of Pier 1 Imports' Annual Report on Form...

  • Page 129
    ... credited at 3% per year and the deferred amounts plus interest paid upon the expiration of the six-month period following termination of employment. Pursuant to Mr. Smith's employment agreement, he received 375,000 shares of restricted stock on March 3, 2013, March 2, 2014, and March 1, 2015...

  • Page 130
    ... compensation committee at their meetings at the end of fiscal 2014 and during the first fiscal month of 2015. 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...

  • Page 131
    ...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 132
    ... Ended February 28, 2015, March 1, 2014, and March 2, 2013 The following table sets forth a summary of the compensation in the past three fiscal years for services rendered in all capacities to Pier 1 Imports and its subsidiaries by the chief executive officer, chief financial officer and the three...

  • Page 133
    ...Other Benefits (d) - $1,083,293 - - - - Total All Other Compensation $ 83,919 $1,131,032 $ $ $ $ 23,603 26,869 33,511 15,864 This column reports Pier 1 Imports' aggregate matching contributions to the NEO's 401(k) savings account, Deferred Compensation Plan account and Stock Purchase Plan account...

  • Page 134
    ...2015 fiscal year pursuant to the Pier 1 Imports, Inc. 2006 Stock Incentive Plan as described under "Long-Term Incentive" in the Compensation Discussion and Analysis - Executive Compensation Components. Mr. Smith's grants for fiscal 2015 are described above under "Chief Executive Officer Compensation...

  • Page 135
    ... day of fiscal 2015). Option Awards Stock Awards Name Alexander W. Smith Grant Date (1) 02/19/2007 02/26/2012 03/03/2013 03/02/2014 03/03/2013 03/02/2014 06/13/2012 07/01/2005 04/11/2008 Equity Equity Incentive Incentive Plan Plan Awards: Equity Awards: Market or Incentive Number of Payout Plan...

  • Page 136
    EXECUTIVE COMPENSATION Option Awards Stock Awards Name Laura A. Coffey Grant Date (1) 07/01/2005 09/30/2005 04/06/2012 04/12/2013 04/11/2014 04/06/2012 04/12/2013 04/11/2014 04/06/2012 04/12/2013 04/11/2014 04/11/2014 Equity Equity Incentive Incentive Plan Plan Awards: Equity Awards: Market or ...

  • Page 137
    .... The time-based restricted stock awards received by Mr. Smith on March 3, 2013, March 2, 2014 and March 1, 2015 vest 60,000 shares per year on the last day of the fiscal year in which they were issued and on the last day of each of the following two fiscal years, provided Mr. Smith is employed on...

  • Page 138
    ... enrollment in the plan and 6.67 years of credited service as of his employment date with Pier 1 Imports. The additional 6.67 years of credited service accounts for $8,128,098 of his total present value of accumulated benefit of $19,095,547. As of the end of fiscal 2015, Mr. Smith has achieved nine...

  • Page 139
    ...in Pier 1 Imports' matching contributions plus earnings at six years of service with Pier 1 Imports. Each participant's deferral amount plus the Pier 1 Imports match is credited at least quarterly with an amount of interest at an annual rate equal to a daily average Moody's Corporate Bond Index plus...

  • Page 140
    ... or termination of employment, assuming the event occurred on February 28, 2015 and, where applicable, using the closing price of Pier 1 Imports common stock of $12.06 (the NYSE closing price on February 27, 2015). The table below does not include normal (versus early) retirement payout information...

  • Page 141
    ... Termination in Control ($) ($) ($) Name Alexander W. Smith Employment Agreement Compensation/ Benefits Supplemental Retirement Plan(1) Benefit Payment Insurance Premiums Restricted Stock Awards Time-based Performance-based Profit Goal Shares TSR Shares Laura A. Coffey Restricted Stock Awards Time...

  • Page 142
    ... the time from the separation date to the date Mr. Smith would attain the age of 65 included in years of credited service. 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...

  • Page 143
    ... matters 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 26, 2016, and no later than March 27, 2016. You may contact Pier 1 Imports' corporate secretary to find...

  • Page 144
    ...OF THE PLAN The purpose of the PIER 1 IMPORTS, INC. 2015 STOCK INCENTIVE PLAN (the "Plan") is to provide a means through which PIER 1 IMPORTS, INC., a Delaware corporation (the "Company"), and its Affiliates may attract able persons to serve as Directors or to enter the employ of the Company and its...

  • Page 145
    ... a Director) in an employment relationship with the Company or any Affiliate. (o) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (p) "Fair Market Value" of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average...

  • Page 146
    ... business), or department thereof. (x) "Phantom Stock Award" means an Award granted under Paragraph X of the Plan. (y) "Phantom Stock Award Agreement" means a written agreement between the Company and a Participant with respect to a Phantom Stock Award. (z) "Plan" means the Pier 1 Imports, Inc. 2015...

  • Page 147
    ... of the Plan, the Committee shall have authority, in its discretion, to determine which employees or Directors shall receive an Award, the time or times when such Award shall be made, the type of Award that shall be made, the number of shares to be subject to each Option, Restricted Stock Award or...

  • Page 148
    ...or otherwise), as applicable, on the exercisability of the Option. An Option Agreement may provide for the payment of the option price, in whole or in part, by the delivery of a number of shares of Common Stock (plus cash if necessary) having a Fair Market Value equal to such 66 PIER 1 IMPORTS, INC...

  • Page 149
    ... in Substitution for Options Granted by Other Employers. Options and Stock Appreciation Rights may be granted under the Plan from time to time in substitution for options and such rights held by individuals providing services to corporations or other entities who become employees or Directors as...

  • Page 150
    ...into between the registered owner and Pier 1 Imports, Inc. A copy of such plan and agreement is on file in the office of Pier 1 Imports, Inc., 100 Pier 1 Place, Fort Worth, Texas 76102." Any Common Stock certificates or book-entry uncertificated shares evidencing such shares shall be held in custody...

  • Page 151
    ...in the Performance Award Agreement. (e) Termination of Award. A Performance Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to serve as a Director for the Company at all times during the applicable performance...

  • Page 152
    ... be awarded additional deferred stock units in an amount equal to .25 times the dollar amount of the deferred portion of the Director Annual Retainer Payment divided by the Fair Market Value of a share of Common Stock determined as of the date that such deferred Director Compensation Payment amount...

  • Page 153
    ... any Affiliate, any issue of debt or equity securities ahead of or affecting Common Stock or the rights thereof, the dissolution or liquidation of the Company or any Affiliate or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or...

  • Page 154
    ... the number of shares of Common Stock subject to Awards theretofore granted or the purchase price per share, if applicable. XIII. AMENDMENT AND TERMINATION OF THE PLAN The Board in its discretion may terminate the Plan at any time with respect to any shares of Common Stock for which Awards have not...

  • Page 155
    ... services that are reasonably anticipated to be provided by a Participant to the Company or its Affiliate at the time a Participant's employment terminates), any benefits payable under the Plan or an Award agreement that constitute non-qualified deferred compensation under section 409A of the Code...

  • Page 156
    ...Company's Code of Business Conduct and Ethics (as amended from time to time) including any amendments of such claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder. PIER 1 IMPORTS...

  • Page 157
    ... 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 DFW Airport...

  • Page 158
    ... on 5th Street. • Turn RIGHT into Pier 1 Imports. Follow directions for parking. Parking will be available on a first-come, first-served basis. If you have any further questions about attending the meeting, please call Pier 1 Imports' Investor Relations Department at (817) 252-7835 or toll-free...

  • Page 159
    ... INFORMATION Pier 1 Imports, Inc. 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 Chairman London Broadcasting Company, Inc. Alexander W. Smith President and Chief...

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