Pier 1 2015 Annual Report Download - page 120

EXECUTIVE COMPENSATION
Executive Compensation Overview
Pier 1 Imports’ executive compensation philosophy is focused on pay-for-performance supported by appropriate compensation
practices aligned to meet the needs of the business. Below is a summary of compensation practices Pier 1 Imports has adopted
which it believes drive performance, thereby increasing shareholder value:
What Pier 1 Imports Does
Pay-for-Performance. In fiscal 2015, 86% of Pier 1 Imports’
CEO’s target pay and 64% of the NEOs’ target pay (on
average) was based on incentives tied to financial results and
stock performance.
Aggressive Short-Term Incentive Performance Metrics.
The fiscal 2015 short-term incentive target represented an
18% increase over fiscal 2014’s actual results for the profit
goal performance metric.
Relative Performance in Pier 1 Imports’ Equity Awards.
A portion of the CEO’s and NEOs’ target compensation is
earned based on Pier 1 Imports’ relative stock performance
against a selected retail peer group.
Management Continuity. Long-term incentive programs for
the NEOs, including newly granted “career shares” granted in
fiscal 2015, and the CEO’s employment agreement
encourage management retention and continuity.
Stock Ownership Guidelines. CEO’s stock ownership
guidelines are 6 times base salary, with EVPs at 2.5 times
base salary.
Mitigation of Undue Risk. Pier 1 Imports’ compensation
plans cap the maximum level of payouts and award grants,
and set multiple performance metrics for long-term incentives.
Pier 1 Imports conducts annual risk assessments to ensure its
compensation programs do not promote inappropriate risk
taking.
Executive Compensation Independence. An independent
executive compensation consultant reports directly to the
compensation committee.
Clawback Adoption. Pier 1 Imports maintains a “clawback”
policy for the recovery of cash and equity-based incentive
compensation received by an executive officer.
What Pier 1 Imports Does Not Do
No Tax Gross-Ups Upon Change in Control. Pier 1
Imports does not have any tax gross-ups associated with
payments contingent on a change in control.
No Dividends on Unvested Restricted Stock. Unvested
time-based and performance-based restricted shares do not
receive cash dividend payments.
No Above-Market Earnings were Paid on Deferred
Compensation Arrangements during Fiscal 2015.
No Across-the-Board Base Salary Increases for
Executives. Pier 1 Imports evaluates the total 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
are prohibited from the following activities related to Pier 1
Imports’ stock: hedging and other forms of monetizing
transactions; short sales; option trading; and holdings in a
margin account or pledging as collateral for a loan.
No Employment Agreements other than for the CEO.
Pier 1 Imports does not maintain employment agreements for
the NEOs, other than the CEO.
No re-pricing of underwater stock options. Pier 1 Imports
does not re-price stock options and its stock incentive plan
prohibits re-pricing of stock options without approval of
shareholders, except in certain limited circumstances such as
mergers and acquisitions and similar events.
Pier 1 Imports does not pay discretionary bonuses to
NEOs when the established performance targets are
not met. Pier 1 Imports believes that well-defined incentive
targets, and its performance against them, should determine
how much incentive compensation an NEO receives. In fiscal
2015, internal profit goal targets were not achieved, therefore
no NEO received a short-term incentive payment or bonus.
Pier 1 Imports Career Share Grants
One-Time Career Share Grants Made To Three NEOs And No Career Share Grant Made To The CEO
During fiscal 2015, Pier 1 Imports, working in conjunction with Towers Watson, the independent compensation consultant to the
compensation committee, performed a comprehensive review of all executive compensation elements as well as evaluated the
degree to which these programs were rewarding, retaining and motivating Pier 1 Imports’ executive leaders to create long-term
growth and value. Pier 1 Imports determined that Mr. Benkel and Mmes. David and Leite should be granted special one-time
restricted stock awards to reinforce top management continuity over the next 5-6 years and provide an opportunity for these
executives to be rewarded for growing the business over an extended period of time. Pier 1 Imports believes that each of these
executives plays a vital role in its future and the equity grants made to these individuals were designed with a longer vesting
38 PIER 1 IMPORTS, INC. 2015 Proxy Statement