Pier 1 2016 Annual Report Download

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2016 ANNUAL REPORT
Annual Meeting of Shareholders
June 23, 2016

Table of contents

  • Page 1
    2016 ANNUAL REPORT Annual Meeting of Shareholders June 23, 2016

  • Page 2

  • Page 3
    ... pick up her online purchases. 3. Merchandise margin. Product is always front and center at Pier 1 Imports, and its relevance with the customer is of core importance to everything we do. To that end, we're presently evolving our go-to-market strategies to emphasize newness, as well as key categories...

  • Page 4
    ... omni-channel transformation - technology, stores, supply chain and fulfillment capacity. Fiscal 2016 saw us lower our capital expenditures meaningfully, by over one-third. As always, we will balance our spending in order to invest for future growth, with plans to return excess capital to Pier...

  • Page 5
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  • Page 6

  • Page 7
    ... in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 75-1729843 (I.R.S. Employer Identification No.) 100 Pier 1 Place Fort Worth, Texas (Address of principal executive offices) 76102 (Zip Code) Company's telephone number, including area code: (817) 252-8000...

  • Page 8
    ... 1 IMPORTS, INC. FORM 10-K ANNUAL REPORT Fiscal Year Ended February 27, 2016 TABLE OF CONTENTS PAGE PART I Item 1. Business. 4 4 7 13 14 15 15 16 Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Selected Financial Data. Management...

  • 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
    ...Maryland; Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma, Washington; and its executive offices are located in Fort Worth, Texas. The Company has an arrangement to supply Grupo Sanborns, S.A. de C.V. ("Grupo Sanborns") with Pier 1 Imports merchandise to be sold...

  • Page 11
    ..., gifts and seasonal items. FURNITURE - 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 2016, 2015...

  • Page 12
    ... with Target Corporation for 13 years in various positions including Vice President and General Manager of target.direct and various positions in the buying, planning and stores divisions. GREGORY S. HUMENESKY, age 64, was named Executive Vice President of Human Resources of the Company in February...

  • Page 13
    ..., credit card authorization and processing, store schedule visibility and time/attendance tracking, store maintenance services, maintenance and support of the Company's website and e-Commerce platform, certain marketing services, insurance claims processing, customs filings and reporting...

  • Page 14
    ... regional distribution centers in Maryland, Ohio, Texas, California, Georgia and Washington. At these distribution centers, merchandise is received, allocated, and shipped to the Company's stores and customers, and at the Company's fulfillment centers in Ohio and Texas, e-Commerce orders are...

  • Page 15
    ... manage and support the Company's stores, distribution and fulfillment centers and e-Commerce website could negatively affect the Company's business. The Company's success depends, in a large part, on being able to successfully attract, motivate and retain a qualified management team and associates...

  • 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
    ... in the course of operating its business because of its numerous locations, large number of associates, contact with consumers and importation and exportation of product. In addition, the Company is subject to regulations regarding consumer product quality and safety standards. Complying with...

  • Page 18
    ... business interruptions. Risks Associated with International Trade As an importer and retailer of imported merchandise, the Company is subject to certain risks that typically do not affect retailers of domestically produced merchandise. The Company must order merchandise well in advance of delivery...

  • Page 19
    ... letters of credit as well as to fund working capital requirements. Borrowings under the secured revolving credit facility are subject to a borrowing base calculation consisting of a percentage of certain eligible assets of the Company and are subject to advance rates and commercially reasonable...

  • Page 20
    ... 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, Washington Approx. Sq. Ft. 1,278,000 1,182...

  • Page 21
    ...second related case, captioned Town of Davie Police Pension Plan, Plaintiff, v. Pier 1 Imports, Inc., Alexander W. Smith and Charles H. Turner, Defendants (the "Davie Case"), was filed in the United States District Court for the Northern District of Texas - Dallas Division on October 21, 2015 making...

  • Page 22
    ..., Related Stockholder Matters and Issuer 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...

  • Page 23
    ...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 or Programs 157,737 - - 157,737 Period Nov. 29, 2015 through Jan. 2, 2016 Jan. 3, 2016 through Jan. 30, 2016 Jan. 31, 2016 through...

  • Page 24
    ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Performance Graph The following graph compares the five-year cumulative total shareholder return for the Company's common stock against the Standard & Poor's 500 Stock Index and...

  • Page 25
    ... these programs, the Company repurchased 7,460,935; 10,280,312; 9,788,257; 5,822,142 and 9,498,650 shares of its common stock in fiscal 2016, 2015, 2014, 2013 and 2012, respectively. Certain items have been reclassified to conform to the current year presentation. PIER 1 IMPORTS, INC.  2016 Form...

  • Page 26
    ... merchandise from many countries, and sells a wide variety of decorative accessories, furniture, candles, housewares, gifts and seasonal products in its stores and through the Company's website, Pier1.com. As of February 27, 2016, the Company operated 1,032 stores in the United States and Canada...

  • Page 27
    ... and average ticket; 2. Stores as sales and customer experience centers; 3. Merchandise margin and gross profit; 4. Fulfillment and home delivery; 5. Selling, general and administrative expenses; and 6. Capital allocation. The Company closed 33 stores, on a net basis, during fiscal 2016. These...

  • Page 28
    ... and average ticket compared to the prior year. The Company's e-Commerce sales accounted for 16.1% of net sales for fiscal 2016 compared to 11.1% for fiscal 2015. E-Commerce sales are comprised of both customer orders placed online which were shipped directly to the customer ("direct-to-customer...

  • Page 29
    ... sales, for fiscal 2015. The year-over-year decline in merchandise margin as a percentage of sales was primarily attributable to promotional and clearance activity and inventoryrelated inefficiencies within the Company's distribution center network. Delivery and fulfillment net costs for fiscal 2016...

  • Page 30
    ... Company's e-Commerce sales accounted for 11.1% 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 and those picked up by the customer at a store location. The Company's sales...

  • Page 31
    ... stores): United States Open at March 2, 2013 Openings Closings Open at March 1, 2014 Openings Closings Open at February 28, 2015 (1) (1) Canada 80 1 - 81 1 (1) 81 Total 1,062 27 (17) 1,072 30 (37) 1,065 982 26 (17) 991 29 (36) 984 The Company supplies merchandise and licenses the Pier 1 Imports...

  • Page 32
    ... from operations. The Company believes the non-GAAP financial measures referenced 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 27, 2016, February 28, 2015 and March 1, 2014...

  • Page 33
    ... activities provided $65.7 million of cash in fiscal 2015, primarily as a result of $75.2 million of net income and a $26.3 million increase in accounts payable and other liabilities, primarily due to increased purchases of merchandise, offset by a $101.2 PIER 1 IMPORTS, INC.  2016 Form 10-K 27

  • Page 34
    ... and technology development, supply chain upgrades, existing store improvements and new store openings. The Company expects total capital expenditures to be approximately $55 million in fiscal 2017 to support ongoing investments in technology, stores and distribution centers. During fiscal 2015, the...

  • Page 35
    ... $75.0 million related to shares of common stock repurchased in fiscal 2016. Subsequent to year end, through April 20, 2016, under the April 2014 program, the Company utilized a total of $0.8 million to repurchase 120,000 shares of the Company's common stock at a weighted average price per share of...

  • Page 36
    ... and related fees on the Revolving Credit Facility. Represents estimated commitment fees for trade and standby letters of credit, and unused balance fees on the Company's Revolving Credit Facility. Fees are calculated based upon balances at fiscal 2016 year end and the applicable rates in effect...

  • Page 37
    .... The Company's revenues are reported net of discounts and returns, net of sales tax, and include wholesale sales and royalties. Amounts billed to customers for shipping and handling are included in net sales. Gift cards - Revenue associated with gift cards is recognized when merchandise is sold and...

  • Page 38
    ... pricing model. For time-based and certain performance-based restricted stock awards, compensation expense is measured and recorded using the closing price of the Company's stock on the date of grant. If the date of grant for stock options or restricted stock awards occurs on a day when the Company...

  • Page 39
    ... in market interest rates. As of February 27, 2016, the Company had $202.3 million (net of unamortized discounts and debt issuance costs) in long-term debt outstanding related to its Term Loan Facility and industrial revenue bonds and no cash borrowings outstanding on its Revolving Credit Facility...

  • Page 40
    ... and ASU 2015-03 "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Pier 1 Imports, Inc.'s internal control over financial...

  • Page 41
    ...,980 578,828 50,944 75,208 Year Ended February 28, 2015 $1,884,557 1,116,076 768,481 594,906 46,304 127,271 March 1, 2014 $1,791,443 1,026,180 765,263 550,890 38,873 175,500 The accompanying notes are an integral part of these financial statements. PIER 1 IMPORTS, INC.  2016 Form 10-K 35

  • Page 42
    ... Comprehensive income (2,299) 1,647 (652) $38,982 (3,729) (142) (3,871) $71,291 (2,391) 1,105 (1,286) $106,245 $39,634 Year Ended February 28, 2015 $75,162 March 1, 2014 $107,531 The accompanying notes are an integral part of these financial statements. 36 PIER 1 IMPORTS, INC.  2016 Form 10-K

  • Page 43
    ... liabilities: Accounts payable Gift cards and other deferred revenue Accrued income taxes payable Current portion of long-term debt Other accrued liabilities Total current liabilities Long-term debt Other noncurrent liabilities Commitments and contingencies Shareholders' equity: Common stock, $0.001...

  • Page 44
    ... 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 Borrowings under revolving line of credit Repayments of borrowings under revolving line of credit Net cash used in...

  • Page 45
    ...' EQUITY Pier 1 Imports, Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands) Common Stock Outstanding Shares Balance March 2, 2013 Net income Other comprehensive loss Purchases of treasury stock Stock-based compensation expense Exercise of stock options, stock purchase plan...

  • Page 46
    ...directly imports merchandise from many countries, and sells a wide variety of decorative accessories, furniture, candles, housewares, gifts and seasonal products in its stores and through the Company's website, Pier1.com. Additionally, the Company sells merchandise primarily in "store within a store...

  • 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
    ...costs related to the Company's distribution network (including depreciation) and store occupancy expenses. The costs incurred by the Company for shipping and handling are recorded in cost of sales. Gift cards - Revenue associated with gift cards is recognized when merchandise is sold and a gift card...

  • Page 49
    ... pricing model. For time-based and certain performance-based restricted stock awards, compensation expense is measured and recorded using the closing price of the Company's stock on the date of grant. If the date of grant for stock options or restricted stock awards occurs on a day when the Company...

  • Page 50
    .... In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which outlines new provisions intended to simplify various aspects related to accounting for...

  • Page 51
    ...at February 27, 2016 and February 28, 2015. The Company's industrial revenue bonds have been outstanding since fiscal 1987. Proceeds were used to construct warehouse/distribution facilities. The loan agreements and related tax-exempt bonds mature in the year 2026. The Company's interest rates on the...

  • Page 52
    ... unused amounts. As of February 27, 2016 and February 28, 2015, the fee for standby letters of credit was 125 basis points per year and 62.5 basis points per year for trade letters of credit. In addition, the Company will pay, when applicable, letter of credit fronting fees on the amount of letters...

  • Page 53
    ... 27, 2016 and February 28, 2015, respectively. The trusts' assets are restricted and may only be used to satisfy obligations to the Non-Qualified Plans' participants. The Company also owns and is the beneficiary of a number of life insurance policies on the lives of former key executives that are...

  • Page 54
    ... years thereafter, except for the Company's CEO. The CEO's rate of compensation is governed by his employment agreement. 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...

  • Page 55
    ... 27, 2016, there were a total of 5,283,699 shares available for issuance under the 2015 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 56
    ... stock option grants with a term of ten years from the grant date. As of February 27, 2016, outstanding options covering 944,000 shares were exercisable. The options were granted as an employment inducement award and not under any equity incentive plan adopted by the Company. 50 PIER 1 IMPORTS...

  • Page 57
    ... to nonemployee directors. During fiscal 2016, directors could elect to defer all or a portion of their director's cash fees into a deferred stock unit account. The annual retainer fees deferred (other than committee chairman and chairman of the board annual PIER 1 IMPORTS, INC.  2016 Form 10...

  • Page 58
    ... 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 through regular payroll deductions. Each associate may contribute up to 20% of the eligible portions of compensation, and non-employee directors may...

  • Page 59
    ..., 2015 and 2014, and income tax reported in the consolidated statements of operations were as follows (in thousands): 2016 Tax provision at statutory federal income tax rate State income taxes, net of federal provision Change in valuation allowance Foreign income taxes Foreign and other tax credits...

  • Page 60
    .... Legal matters - On August 28, 2015, a putative class action complaint was filed in the United States District Court for the Northern District of Texas - Dallas Division, captioned Kathleen Kenney, Plaintiff, v. Pier 1 Imports, Inc., Alexander W. Smith and Charles H. Turner, Defendants (the...

  • Page 61
    ...second related case, captioned Town of Davie Police Pension Plan, Plaintiff, v. Pier 1 Imports, Inc., Alexander W. Smith and Charles H. Turner, Defendants (the "Davie Case"), was filed in the United States District Court for the Northern District of Texas - Dallas Division on October 21, 2015 making...

  • Page 62
    ... to both net sales and SG&A expenses. There is no impact to operating income, net income, the balance sheet or statement of cash flows. The three months ended November 29, 2014 included a reduction of Credit Card Fees based upon a settlement agreement. 56 PIER 1 IMPORTS, INC.  2016 Form 10-K

  • Page 63
    ... public accounting firm, has audited the Company's internal control over financial reporting as of February 27, 2016, as stated in their report which is included in this Annual Report on Form 10-K. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes in the Company's internal...

  • Page 64
    ... the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Pier 1 Imports, Inc. as of February 27, 2016 and February 28, 2015, and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for...

  • Page 65
    ...this report under the caption "Executive Officers of the Company." Information regarding directors of the Company required by this Item is incorporated by reference to the section entitled "Proposal No. 1 - Election of Directors" set forth in the Company's Proxy Statement for its 2016 Annual Meeting...

  • Page 66
    ... Services. Information required by this Item is incorporated by reference to the section entitled "Independent Registered Public Accounting Firm Fees" and the section entitled "Pre-approval of Nonaudit Fees" set forth in Proposal No. 3 of the 2016 Proxy Statement. 60 PIER 1 IMPORTS, INC.  2016...

  • Page 67
    ...' Equity for the Years Ended February 27, 2016, February 28, 2015 and March 1, 2014 Notes to Consolidated Financial Statements 34 35 36 37 38 39 40 2. Financial Statement Schedules Schedules have been omitted because they are not required or are not applicable or because the information required to...

  • Page 68
    ...the undersigned, thereunto duly authorized. PIER 1 IMPORTS, INC. Date: April 26, 2016 By: /s/ Alexander W. Smith Alexander W. Smith, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons...

  • Page 69
    ...File No. 00107832). First Amendment to Pier 1 Imports, Inc. Stock Purchase Plan, dated June 20, 2014, incorporated herein by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended May 31, 2014 (File No. 001-07832). Amended and Restated Credit Agreement, dated April 4, 2011, among...

  • Page 70
    ...to the Company's Form 10-Q for the quarter ended November 27, 2010 (File No. 001-07832). 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...

  • Page 71
    ... Exhibit 10.2 to the Company's Form 10-Q for the quarter ended August 26, 2006 (File No. 001-07832). Pier 1 Imports Non-Employee Director Compensation Plan, as amended March 4, 2007, incorporated herein by reference to Exhibit 10.22.2 to the Company's Form 10-K for the year ended March 3, 2007 (File...

  • Page 72
    ... incorporated herein by reference to Exhibit 10.3 to the Company's Form 8-K filed on March 6, 2014 (File No. 001-07832). Restricted Stock Award Agreement dated March 1, 2015, by and between Alexander W. Smith and Pier 1 Imports, Inc. (time-based award agreement), incorporated herein by reference to...

  • Page 73
    ....16.1* 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 76

  • 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 23, 2016, 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 23, 2016, 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
    100 Pier 1 Place Fort Worth, Texas 76102 TABLE OF CONTENTS VOTING INFORMATION Who is entitled to vote at the annual meeting? How do I vote? Roadmap of Voting Matters Additional Information 1 1 1 2 2 GOVERNANCE PROPOSAL NO. 1 - Election of Directors Board Member Qualification Criteria Nominees for...

  • Page 82
    ... Fiscal Year Ended February 27, 2016 Potential Payments upon Termination or Change in Control 18 18 19 19 21 22 23 23 24 26 33 33 33 34 34 35 36 38 40 40 41 43 EQUITY COMPENSATION PLAN INFORMATION AUDIT MATTERS Audit Committee Report Relationship with Independent Registered Public Accounting Firm...

  • Page 83
    ..., you do not have to return a proxy card or voting instruction form. If you are located outside the U.S. and Canada, please use the Internet or mail voting methods. Your vote is important. Your timely response can save Pier 1 Imports the expense of attempting to contact you regarding your vote...

  • Page 84
    ... under the caption "Compensation." Proposal No. 3 - Ratification of Engagement of Ernst & Young LLP (page 48) The board of directors and audit committee are seeking ratification of the engagement of Ernst & Young LLP as Pier 1 Imports' independent registered public accounting firm for fiscal 2017...

  • Page 85
    ... 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 responsible for overseeing and reviewing the...

  • Page 86
    ... experience in operations, finance, and international and general management, as well as global exposure. Director Since: 2011 Age: 58 Committees: Audit, Nominating and Corporate Governance (Chair) Other Company Boards: Delhaize Group â- Retail Executive Experience: Ms. Babrowski most recently...

  • Page 87
    ... over 30 years of brand building, operations and public company management experience. Director Since: 2012 Age: 60 Committees: Compensation (Chair) Other Company Boards: Popeyes Louisiana Kitchen, Inc. â- Retail Executive Experience: Ms. Bachelder has served as chief executive officer of Popeyes...

  • Page 88
    ... the board over 35 years of human resources and public company leadership experience. Her deep and broad global experience in consumer products gives the board perspective on developing, marketing, merchandising and selling products in a fast moving consumer goods environment, as well as on strategy...

  • Page 89
    ... Fund for the City of New York. â- â- ALEXANDER W. SMITH Mr. Smith has served on the board since joining Pier 1 Imports as president and chief executive officer in February 2007 and brings over 40 years of retail and international branding experience. Director Since: 2007 Age: 63 Committees...

  • Page 90
    ...'s name, business or residence address, principal occupation or employment and a description of the candidate's 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...

  • Page 91
    ...is to: ‰ develop, review, approve and modify Pier 1 Imports' compensation philosophy as necessary to achieve Pier 1 Imports' overall business strategies and goals, attract and retain key executives, link compensation to organizational performance and provide competitive compensation opportunities...

  • Page 92
    ... of new compensation programs and retirement plans and the modification of existing compensation programs and retirement plans. For fiscal 2016, Pier 1 Imports' management did not retain an outside consultant to recommend the amount or form of executive or non-employee director compensation. Each...

  • Page 93
    ...Ann M. Sardini 03/01/2015 to 02/27/2016 Alexander W. Smith 03/01/2015 to 02/27/2016 Number of Meetings in Fiscal 2016 Director Independence and Related Person Transactions Independence Considerations It is Pier 1 Imports' policy that the board of directors will at all times consist of a majority of...

  • Page 94
    ... 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 of the audit committee, compensation...

  • Page 95
    ... Board's Accounting Standards Codification Topic 718, CompensationStock Compensation ("FASB ASC Topic 718"). The number of DSUs is calculated using the closing price of Pier 1 Imports common stock on the last trading day of each fiscal month in which the fees were earned, which price was used...

  • Page 96
    ... 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, including the closing prices for the dividend payment dates. This closing price also represents the grant...

  • Page 97
    ... applicable to Pier 1 Imports' executive officers (as defined under Rule 3b-7 of the Exchange Act). The policy appears in Pier 1 Imports' Code of Business Conduct and Ethics, available on Pier 1 Imports' website at www.pier1.com by selecting "About" on the home page and linking through the "Investor...

  • Page 98
    ... of Pier 1 Imports common stock by each director and nominee, each named executive officer shown below in the table included under the caption "Summary Compensation Table for the Fiscal Years Ended February 27, 2016, February 28, 2015, and March 1, 2014," and all directors and executive officers as...

  • Page 99
    ... Pier 1 Imports' knowledge, and based solely on a review of the furnished Section 16(a) reports, all Section 16(a) filing requirements applicable to Pier 1 Imports' executive officers, directors and greater than 10% beneficial owners during the last fiscal year were met. PIER 1 IMPORTS, INC. | 2016...

  • Page 100
    ... are designed to enable it to attract and retain talented and experienced senior executives to lead Pier 1 Imports successfully in a competitive environment. Your vote on this resolution is advisory, and therefore not binding on Pier 1 Imports, the compensation committee, or the board of directors...

  • Page 101
    ... the Company, he spent 11 years at Williams-Sonoma Inc. in continuously advancing positions in the Pottery Barn Retail Stores division, including Vice President of Inventory Management, Director - Inventory Management, and as a home furnishings and furniture buyer. PIER 1 IMPORTS, INC. | 2016 Proxy...

  • Page 102
    ... served Target Corporation for 13 years in various positions including Vice President and General Manager of target.direct and various positions in the buying, planning and stores divisions. Eric W. Hunter Executive Vice President, Marketing Mr. Hunter, age 42, was named Executive Vice President...

  • Page 103
    ... a moot point. The board believes Mr. Smith's decision to voluntarily reduce his compensation demonstrates accountable leadership and is a productive step towards alignment of his compensation with that of our executive team. ‰ CEO's continued participation in the NEOs' annual incentive plan. As...

  • Page 104
    ... CEO did not accept an equity award. In the year ahead we will continue to focus on further conforming the CEO's pay to the pay for performance program in place for his executive team. Fiscal 2016 Business Highlights Some of Pier 1 Imports' fiscal 2016 accomplishments are highlighted below: ‰ Net...

  • Page 105
    ... as well as investor advisory service firms when making changes to executive compensation practices and programs. Advisory Vote on Executive Compensation; Shareholder Engagement Efforts Pier 1 Imports believes that it is important for its shareholders to vote on the say-on-pay proposal on an annual...

  • Page 106
    ... related to stock price appreciation for the past several years. Pier 1 Imports expects to continue to set rigorous metrics based on profitability and sales as well as other financial return metrics in the near term while considering Pier 1 Imports opportunities within the broader retail market...

  • Page 107
    ... Have employment agreements other than for the CEO Allow hedging, short sales, option trading or pledging of Pier 1 Imports common stock Apply across-the-board base salary increases Pay dividends on unvested restricted stock or abovemarket earnings on deferred compensation arrangements Re-price...

  • Page 108
    ... Pier 1 Imports' executive compensation program for fiscal 2016 among base salary, short-term cash incentives and long-term equity incentives for the CEO and for the other NEOs as a group (Ms. Coffey is excluded solely for the purposes of this table): Table 1 CEO OTHER NEOs Base Salary 37% 81% Pay...

  • Page 109
    ... 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 committee supported management...

  • Page 110
    ...would have been pro-rated based on his date of appointment (July 27, 2015). The fiscal 2016 short-term incentive program required participants to be employed with Pier 1 Imports at fiscal year-end to receive a cash award. The program allows Pier 1 Imports' chief executive officer to reduce the cash...

  • Page 111
    ... of the annual equivalent return of the TSR of Pier 1 Imports and a peer group using the average closing stock price of Pier 1 Imports and the peer group companies during the twenty trading days at the beginning of fiscal 2016 and the average closing stock price during the twenty trading days at the...

  • Page 112
    ...was determined by multiplying the number of shares that vested during fiscal 2016 by the closing price of Pier 1 Imports' common stock on the last trading day of the fiscal year, which is different than the grant date fair value methodology required in the summary compensation table. As shown in the...

  • Page 113
    ... and retaining executives and key members of management. The plan is described and discussed below under the caption "NonQualified Deferred Compensation Table for the Fiscal Year Ended February 27, 2016." Peer Group For fiscal 2016, Pier 1 Imports used a group of peer companies to benchmark...

  • Page 114
    ... fiscal years upon Pier 1 Imports satisfying the Profit Goals established by the compensation committee for the respective fiscal year, provided that Mr. Smith is employed on the last day of each such fiscal year. If the Profit Goal for a particular fiscal year is partially met, then the number of...

  • Page 115
    ... well as data available from public sources such as proxy filings, in order to provide additional information relating to total compensation, cash compensation and equity trends in the broader retail industry. These resources were used to ensure that Pier 1 Imports maintains competitive compensation...

  • Page 116
    ... the caption "Director Attendance at Board and Committee Meetings and at the Annual Meeting of Shareholders." During fiscal 2016, there were no compensation committee interlocks or insider participation. Compensation Risk Annually, Pier 1 Imports' internal audit department assists Pier 1 Imports in...

  • Page 117
    ...-market earnings paid in fiscal 2014, 2015 and 2016 on any non-qualified deferred compensation plans. None of the NEOs except for Mr. Smith participate in a Pier 1 Imports defined benefit plan. See "Pension Benefits Table for the Fiscal Year Ended February 27, 2016" below for additional information...

  • Page 118
    ...$ 24,622 $ 19,054 $3,415 $1,099 - $ 23,568 (a) This column reports Pier 1 Imports' aggregate matching and employer discretionary contributions to the NEOs 401(k) savings account, Deferred Compensation Plan account and Stock Purchase Plan account. Those contributions are set forth in the Fiscal...

  • Page 119
    ... fair value of performance-based and time-based restricted stock awarded during the fiscal year, computed in accordance with FASB ASC Topic 718. Refer to footnote 2 of the Summary Compensation Table for additional information. During fiscal 2016, Pier 1 Imports also began expensing performance-based...

  • Page 120
    ... Equity Awards Table for the Fiscal Year Ended February 27, 2016 The following table provides information on the current outstanding stock option and unvested restricted stock awards held by each NEO as of the end of fiscal 2016. Market value was determined using the closing price of Pier 1 Imports...

  • Page 121
    ... stock awards awarded to Mr. Smith vest according to the schedule below, provided that he is employed on the last day of the applicable fiscal year. Achievement for Profit Goal performance-based shares is determined upon filing of Pier 1 Imports' Annual Report on Form 10-K for the applicable...

  • Page 122
    ... realized on the vesting of restricted stock awards, if any, is equal to the closing market price of Pier 1 Imports common stock on the date of vesting (or the last trading day before vesting, if applicable) times the number of shares acquired upon vesting. The number of shares and value realized on...

  • Page 123
    ... to earn interest at an annual rate equal to a daily average Moody's Corporate Bond Index plus 1% until the account balance is distributed to the participant. ‰ Pier 1 Imports, Inc. Deferred Compensation Plan - Effective January 1, 2011, the Pier 1 Imports, Inc. Deferred Compensation Plan ("DCP...

  • Page 124
    ... to be used to settle obligations under the non-qualified deferred compensation plans described above. Refer to note 5 to the Pier 1 Imports, Inc. consolidated financial statements in the 2016 Form 10-K for additional information about the trust assets. EXECUTIVE CONTRIBUTIONS IN LAST FISCAL YEAR...

  • Page 125
    ... or termination of employment, assuming the event occurred on February 27, 2016 and, where applicable, using the closing price of Pier 1 Imports common stock of $4.77 (the NYSE closing price on February 26, 2016). The table below does not include normal (versus early) retirement payout information...

  • Page 126
    ... date to the date Mr. Smith would attain the age of 65 included in years of credited service. (2) Generally, under grant agreements pursuant to the 2006 Plan and the Pier 1 Imports, Inc. 2015 Stock Incentive Plan (the "2015 Plan"), termination of employment for any reason results in a forfeiture...

  • Page 127
    ... award was designed to meet the exception for performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986. The chief financial officer, Mr. Boyer, is not included as a "covered employee" under the applicable Treasury Regulations. Mr. Smith's restricted stock awards are...

  • Page 128
    EQUITY COMPENSATION PLAN INFORMATION The following table sets forth certain information regarding Pier 1 Imports' equity compensation plans as of February 27, 2016. NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS WEIGHTED-AVERAGE EXERCISE PRICE OF ...

  • Page 129
    ... on the above-described review and discussions with management 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...

  • Page 130
    ...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 131
    ... Center Room C, of Pier 1 Imports' corporate headquarters located at 100 Pier 1 Place, Fort Worth, Texas 76102. Choosing to receive future proxy materials by email will save Pier 1 Imports the cost of printing and mailing documents to you thereby lowering the costs associated with the annual meeting...

  • Page 132
    ... 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 133
    ... from you. If you are a beneficial owner, your broker, bank or other intermediary is not entitled to vote on the election of directors 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...

  • Page 134
    ... accommodations, please contact Pier 1 Imports' Investor Relations Department on or before June 9, 2016. You may make your request by mail to Pier 1 Imports, Inc., Attn.: Investor Relations Department, 100 Pier 1 Place, Fort Worth, Texas 76102 or by telephone at (817) 252-7835 or toll-free at (888...

  • Page 135
    ... To be included in the proxy statement relating to the 2017 annual meeting of shareholders, shareholder proposals made pursuant to SEC Rule 14a-8 must be received by Pier 1 Imports' corporate secretary no later than 5:00 p.m., local time, January 12, 2017. In order to bring a matter before the 2017...

  • Page 136
    ... in order 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...

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    ...-Free 1-888-884-8086 www.computershare.com/investor Annual Meeting The annual meeting of shareholders will be held at 10:00 a.m. local time, Thursday, June 23, 2016, on the Mezzanine Level, Conference Center Room C, of Pier 1 Imports, Inc. Corporate Headquarters, Fort Worth, Texas. Annual Report...

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