Pier 1 2015 Annual Report Download - page 54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company’s former Chief Financial Officer retired on February 10, 2015. As of his retirement date, he had earned under one
of the plans an early retirement benefit payment of $7,573,981, which is not included in the projected benefit obligation at fiscal
2015 year end. The benefit payment will be paid during fiscal 2016 and is included in other accrued liabilities.
Net periodic benefit cost included the following actuarially determined components during fiscal 2015, 2014 and 2013 as shown
in the table below (in thousands). The amortization of amounts related to unrecognized prior service costs and net actuarial loss
were reclassified out of other comprehensive income as a component of net periodic benefit cost.
2015 2014 2013
Service cost $1,402 $1,456 $1,353
Interest cost 823 765 740
Amortization of unrecognized prior service cost 410 410 410
Amortization of net actuarial loss 1,329 1,392 1,408
Settlement 1,248 — (488)
Curtailment 781 — —
Net periodic benefit cost $5,993 $4,023 $3,423
As of February 28, 2015 and March 1, 2014, cumulative other comprehensive loss included amounts that had not been
recognized as components of net periodic benefit cost related to prior service cost of $178,000 and $736,000, and net actuarial
loss of $4,183,000 and $3,988,000, respectively. During fiscal 2015, 2014 and 2013, $(2,772,000), $188,000 and
$(854,000), respectively, were recognized in other comprehensive income related to net actuarial gain (loss) for the period. The
estimated prior service cost and net actuarial loss that will be amortized from cumulative other comprehensive loss into net
periodic benefit cost in fiscal 2016 are $59,000 and $1,394,000, respectively.
NOTE 6 — MATTERS CONCERNING SHAREHOLDERS’ EQUITY
The Pier 1 Imports, Inc. 2006 Stock Incentive Plan (“2006 Plan”) was approved by the shareholders on June 22, 2006. The
aggregate number of shares available for issuance under the 2006 Plan included a new authorization of 1,500,000 shares, plus
shares (not to exceed 560,794 shares) that remained available for grant under the Pier 1 Imports, Inc. 1999 Stock Plan (“1999
Stock Plan”) and the Pier 1 Imports, Inc. Management Restricted Stock Plan, increased by the number of shares (not to exceed
11,186,150 shares) subject to outstanding awards on March 23, 2006, under these prior plans that cease to be subject to such
awards. As of February 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 agreement for the Chief
Executive Officer (“CEO”). This renewal and extension provides that a total of 1,125,000 shares of restricted stock will be
awarded over a three-year period that began during fiscal 2014. 540,000 of the shares are time-based and the remaining
585,000 shares are performance-based. In accordance with the accounting guidance on equity compensation, all 540,000
shares of the time-based restricted stock included in the renewed and extended employment agreement had a grant date as of
the date of the employment agreement, which was June 13, 2012. On the date the employment agreement was signed,
June 13, 2012, both the Company and the CEO had a mutual understanding of all key terms and conditions related to the time-
based restricted stock awards, and the Company became obligated to issue the restricted stock awards to the CEO, subject
only to his continued employment. In addition, all necessary approvals from both the Company’s Compensation Committee and
Board of Directors were obtained on June 13, 2012, for the restricted stock awards. Therefore, on June 13, 2012, the Company
began expensing these time-based shares, which had a grant date fair value of $15.58 per share. The Company did not begin
expensing any of the performance-based awards during fiscal 2013 because the performance-based metrics, which are a key
term of the awards, had not been established and, therefore, both parties did not have a mutual understanding of all key terms of
the performance-based awards.
During fiscal 2015, pursuant to the renewed and extended agreement described above, the CEO received performance-based
shares of restricted stock that vest equally over a period of three fiscal years if the Company achieves certain fiscal year targeted
levels of a performance measure for each year as defined in the agreement and associated award agreements. Shares that do
not vest because the performance target is not met during one fiscal year may vest in future fiscal years if certain aggregate levels
of the performance measure are achieved. The vesting of performance-based shares will occur on the date the Company’s
Annual Report on Form 10-K is filed with the Securities and Exchange Commission (“SEC”) for each respective fiscal year. In
accordance with accounting guidelines, one-third of the performance-based shares had a grant date in fiscal 2015 and the
48 PIER 1 IMPORTS, INC. 2015 Form 10-K