Pier 1 2016 Annual Report Download - page 55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net periodic benefit cost included the following actuarially determined components during fiscal 2016, 2015 and 2014 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.
2016 2015 2014
Service cost $1,468 $1,402 $1,456
Interest cost 634 823 765
Amortization of unrecognized prior service cost 59 410 410
Amortization of net actuarial loss 1,394 1,329 1,392
Settlement — 1,248 —
Curtailment — 781 —
Net periodic benefit cost $3,555 $5,993 $4,023
As of February 27, 2016 and February 28, 2015, cumulative other comprehensive loss included amounts that had not been
recognized as components of net periodic benefit cost related to prior service cost of $118,000 and $178,000, and net actuarial
loss of $3,601,000 and $4,183,000, respectively. During fiscal 2016, 2015 and 2014, $(812,000), $(2,772,000) and
$188,000, 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 2017 are $59,000 and $1,800,000, respectively.
NOTE 6 — MATTERS CONCERNING SHAREHOLDERS’ EQUITY
The Pier 1 Imports, Inc. 2015 Stock Incentive Plan (“2015 Plan”) was approved by the shareholders on June 25, 2015. The
aggregate number of shares available for issuance under the 2015 Plan included a new authorization of 2,500,000 shares, plus
shares (not to exceed 2,507,407 shares) that remained available for grant under the Pier 1 Imports, Inc. 2006 Stock Incentive
Plan (“2006 Plan”), increased by the number of shares subject to outstanding awards under the 2006 Plan as of June 25, 2015
(not to exceed 3,009,974 shares), that cease for any reason to be subject to such awards (other than by reason of exercise or
settlement of the awards to the extent that they are exercised for or settled in vested and non-forfeitable shares of common stock
or that are withheld for payment of applicable employment taxes and/or withholding obligations of an award), subject to
adjustment in the event of stock splits and certain other corporate events. As of February 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 agreement for the Chief
Executive Officer (“CEO”). This renewal and extension provided that a total of 1,125,000 shares of restricted stock were awarded
over a three-year period that began during fiscal 2014. 540,000 of the shares were time-based and the remaining 585,000
shares were 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 2016, 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 his employment agreement and related 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 2016 and
the Company began expensing these shares during fiscal 2016. The remaining two-thirds of the performance shares did not
PIER 1 IMPORTS, INC. 2016 Form 10-K 49