Definitive Proxy Statement
Table of Contents

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under 240.14a-12

PIER 1 IMPORTS, INC.

 

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LOGO

 

 

100 Pier 1 Place

Fort Worth, Texas 76102

May 16, 2018

Dear Shareholder:

The 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 Tuesday, June 26, 2018, at our corporate headquarters, Mezzanine Level, Conference Center Room C, 100 Pier 1 Place, Fort Worth, Texas 76102. The formal notice of the annual meeting of shareholders and proxy statement are attached.

We have chosen to furnish our proxy statement and annual report to our shareholders over the Internet, as allowed by the rules of the Securities and Exchange Commission. Rather than mailing paper copies, we believe that this e-proxy process will expedite shareholder receipt of the materials, lower our expenses associated with this process and eliminate unnecessary printing and paper usage. As a shareholder of Pier 1 Imports, you are receiving by mail (or email) a Notice of Internet Availability of Proxy Materials (“Notice”), which will instruct you on how to access and review the proxy statement and annual report over the Internet. The Notice will also instruct you how to vote your shares over the Internet. Shareholders who would like to receive a paper copy of the Pier 1 Imports proxy statement and annual report, free of charge, should follow the instructions on the Notice. Shareholders who request paper copies will also receive a proxy card or voting instruction form which will instruct them on how to vote their shares by mail, by telephone, or over the Internet.

It is important that your shares be voted at the meeting in accordance with your preference. If you do not plan to attend, you may vote your shares by following the instructions in the Notice, proxy card, or voting instruction form. If you are able to attend the meeting and wish to vote in person, you may withdraw your proxy at that time. See the response to the question “How do I vote?” in the proxy statement for a more detailed description of voting procedures and the response to the question “Do I need an admission ticket to attend the annual meeting?” in the proxy statement for our procedures for admission to the meeting.

Sincerely,

 

LOGO

 

  

LOGO

 

Alasdair B. James

President and Chief Executive Officer

  

Terry E. London

Chairman of the Board




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LOGO

 

100 Pier 1 Place

Fort Worth, Texas 76102

NOTICE OF ANNUAL

MEETING OF SHAREHOLDERS

To Be Held June 26, 2018

Notice is hereby given that the annual meeting of shareholders of Pier 1 Imports, Inc., a Delaware corporation (“Pier 1 Imports” or “the Company”), will be held on Tuesday, June 26, 2018, 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 for the following purposes, as more fully described in the accompanying proxy statement:

 

Proposal No. 1 –   to elect as directors the nine nominees named in the accompanying proxy statement to hold office until the next annual meeting of shareholders and until their successors are elected and qualified;
Proposal No. 2 –   to vote to adopt a non-binding, advisory resolution to approve the compensation of Pier 1 Imports’ named executive officers; and
Proposal No. 3 –   to vote to ratify the audit committee’s engagement of Ernst & Young LLP as Pier 1 Imports’ independent registered public accounting firm for fiscal 2019.

In their discretion, the proxies are authorized to vote, as described in the accompanying proxy statement, upon any other business as may properly come before the annual meeting or any adjournment or postponement of the meeting.

Only shareholders of record at the close of business on April 27, 2018, are entitled to receive notice of and to vote their shares at, the annual meeting.

We are pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their shareholders over the Internet. We believe that this process allows us to provide you with the information you need while lowering the costs associated with the annual meeting. You are cordially invited to attend the annual meeting in person. However, to ensure that your vote is counted at the annual meeting, please vote as promptly as possible.

By order of the board of directors,

 

LOGO

Michael A. Carter

Executive Vice President, Compliance and General Counsel, Secretary

May 16, 2018

Fort Worth, Texas


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LOGO

 

100 Pier 1 Place

Fort Worth, Texas 76102

TABLE OF CONTENTS

 

VOTING INFORMATION

   1

 

WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?

   1

 

HOW DO I VOTE?

   1

 

ROADMAP OF VOTING MATTERS

   2

 

ADDITIONAL INFORMATION

   2

GOVERNANCE

   3

 

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

   3

 

Board Member Qualification Criteria

  

3

 

Nominees for Director

  

4

 

KEY SKILLS AND QUALITIES OF THE BOARD

   8

 

BOARD LEADERSHIP STRUCTURE

   9

 

DIRECTOR NOMINATION PROCESS

   10

 

Internal Process for Identifying Candidates

   10

 

Shareholder Recommendations for Directors

   10

 

Shareholder Nominations at Annual Meeting

   10

 

COMMITTEES OF THE BOARD OF DIRECTORS AND RISK OVERSIGHT

   10

 

DIRECTOR ATTENDANCE AT BOARD AND COMMITTEE MEETINGS AND AT THE ANNUAL MEETING OF SHAREHOLDERS

   13

 

DIRECTOR INDEPENDENCE AND RELATED PERSON TRANSACTIONS

   13

 

Independence Considerations

   13

 

Related Person Transaction Policies and Procedures

   14

 

Transactions with Related Persons

   14

 

MEETINGS OF INDEPENDENT DIRECTORS WITHOUT MANAGEMENT PRESENT

   14

 

PROCEDURES FOR COMMUNICATING WITH DIRECTORS

   15

 

NON-EMPLOYEE DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED MARCH 3, 2018

   15

 

Fees Paid to Directors

   15

 

Fiscal 2018 Non-Employee Director Compensation Table

   16

 

OTHER GOVERNANCE MATTERS

   18

 

Prohibition on Hedging and Pledging

   18

 

Clawback Policy

   18

SHARE OWNERSHIP

   19

 

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

   19

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

   20

 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   20


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COMPENSATION

   21

 

PROPOSAL NO. 2 –  ADVISORY APPROVAL OF THE COMPENSATION OF PIER 1 IMPORTS’ NAMED EXECUTIVE OFFICERS

   21

 

COMPENSATION DISCUSSION AND ANALYSIS

   22

 

Message from the Compensation Committee

   22

 

Introduction

   24

 

Fiscal 2018 Business Performance

   24

 

Executive Summary

   27

 

Chief Executive Officer Pay At-A-Glance

   28

 

Aligning Pay with Performance

   29

 

Compensation Factors and Governance for Fiscal 2018

   30

 

Shareholder Input on Executive Compensation

   31

 

Elements of the Executive Compensation Program

   32

 

Analysis of Fiscal 2018 Compensation

   33

 

Retirement and Other Plans

   37

 

Pier 1 Imports’ Guidelines on Share Ownership

   38

 

Pier 1 Imports’ Policy on Section 162(m)

   38

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   38

 

COMPENSATION RISK

   38

 

COMPENSATION COMMITTEE REPORT

   39

 

SUMMARY COMPENSATION TABLE FOR THE FISCAL YEARS ENDED MARCH 3, 2018, FEBRUARY 25, 2017, AND FEBRUARY 27, 2016

   40

 

GRANTS OF PLAN-BASED AWARDS FOR THE FISCAL YEAR ENDED MARCH 3, 2018

   42

 

OUTSTANDING EQUITY AWARDS TABLE FOR THE FISCAL YEAR ENDED MARCH 3, 2018

   44

 

OPTION EXERCISES AND STOCK VESTED TABLE FOR THE FISCAL YEAR ENDED MARCH 3, 2018

   45

 

NON-QUALIFIED DEFERRED COMPENSATION TABLE FOR THE FISCAL YEAR ENDED MARCH 3, 2018

   46

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

   48

CHIEF EXECUTIVE OFFICER PAY RATIO

   50

EQUITY COMPENSATION PLAN INFORMATION

   51

AUDIT MATTERS

   52

 

AUDIT COMMITTEE REPORT

   52

 

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

   53

 

PROPOSAL NO. 3 –  RATIFICATION OF ENGAGEMENT OF ERNST & YOUNG LLP

   53

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

   53

 

PRE-APPROVAL OF NON-AUDIT FEES

   53
QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING    54
OTHER BUSINESS    57
SHAREHOLDER PROPOSALS FOR 2019 ANNUAL MEETING OF SHAREHOLDERS    57
YOUR VOTE IS IMPORTANT    57


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VOTING INFORMATION

Who is entitled to vote at the annual meeting?

Holders of our common stock at the close of business on April 27, 2018, are entitled to vote their shares at the annual meeting. As of that date, there were 82,968,675 shares of common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the annual meeting.

How do I vote?

You may vote using any of the following methods:

 

  By Internet

  

  By telephone

 

If you are a shareholder of record, you will need the control number included on the Notice to access the proxy materials. Follow the instructions in the Notice to vote your shares electronically over the Internet. Voting over the Internet authorizes the proxies approved by the board of directors and named in the proxy card to vote your shares in the same manner as if you marked, signed and returned a proxy card. If you are a beneficial owner of shares, you may vote your shares electronically over the Internet by following the instructions sent to you by your broker, bank or other intermediary.

  

 

If you are a shareholder of record, you may vote your shares telephonically by calling the toll-free number that is referenced in the proxy materials available over the Internet or by mail. Voting by telephone authorizes the proxies approved by the board of directors and named in the proxy card to vote your shares in the same manner as if you marked, signed and returned a proxy card. If you are a beneficial owner of shares, you may vote your shares telephonically by following the instructions sent to you by your broker, bank or other intermediary.

 

  By mail

  

 

  In person at the annual meeting

 

If you are a shareholder of record, you may request printed copies of the proxy materials from us by following the instructions on the Notice, which will include a proxy card. If you are a beneficial owner of shares, you may vote your shares by mail by following the instructions sent to you by your broker, bank or other intermediary. Be sure to complete, sign and date the proxy card or voting instruction form and return it in the prepaid envelope.

  

 

All shareholders of record may vote in person at the annual meeting. You can request a ballot at the meeting. You may also be represented by another person at the annual meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other intermediary and present it to the inspector of election with your ballot to be able to vote at the annual meeting.

 

 

 

 

Internet and telephone voting facilities for shareholders of record will be available 24 hours a day, and will close at 11:59 p.m. Eastern Time on June 25, 2018. The availability of Internet and telephone voting for beneficial owners will depend on the voting processes of your broker, bank or other intermediary. We therefore recommend that you follow the voting instructions in the materials provided to you by your broker, bank or other intermediary. If you vote over the Internet or by telephone, you do not have to return a proxy card or voting instruction form. If you are located outside the United States 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.

 

 

 

 

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    1


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  VOTING INFORMATION

 

 

Roadmap of Voting Matters

Shareholders will be asked to vote on the following proposals:

 

  

 

 

 

 

BOARD
RECOMMENDATION    

 

 


 

 

 

Proposal No. 1 – Election of Directors (page 3)

        

 

The board of directors is seeking the election of nine director nominees. The board of directors believes that the nine director nominees possess the qualifications to provide effective leadership and oversight of Pier 1 Imports’ management and to effectively direct the long-term strategy of Pier 1 Imports.

    

FOR EACH DIRECTOR    

NOMINEE

 

 

 

Proposal No. 2 – Advisory Approval of the Compensation of Pier 1 Imports’ Named Executive Officers (page 21)

        

 

Pier 1 Imports is seeking a non-binding, advisory resolution to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion below under the caption “Compensation.”

     FOR  

 

Proposal No. 3 – Ratification of Engagement of Ernst & Young LLP (page 53)

        

 

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 2019.

     FOR  

In their discretion, the proxies are authorized to vote, as described in this proxy statement, upon any other business as may properly come before the annual meeting or any adjournment or postponement of the meeting. We are not aware of any additional matters that will be presented for consideration at the annual meeting.

Additional Information

Please see the Questions and Answers section beginning on page 54 for important information about the proxy materials, voting, the annual meeting, and related documents and communications.

 

2    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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GOVERNANCE

 

The board of directors believes that good corporate governance is a prerequisite to achieving business success. Pier 1 Imports’ board of directors has adopted written corporate governance guidelines and policies designed to strengthen our corporate governance. Pier 1 Imports’ Corporate Governance Guidelines include information related to the board’s role and responsibilities, director qualifications and standards for determining whether a director is independent. Each standing committee of the board of directors has adopted a charter, which sets forth the role and responsibilities of the respective committee. In addition, we have adopted a Code of Business Conduct and Ethics applicable to all of our directors, officers and employees, including our chief executive officer, chief financial officer and principal accounting officer. The nominating and corporate governance committee is responsible for overseeing and reviewing the Corporate Governance Guidelines and the Code of Business Conduct and Ethics at least annually, and recommending any proposed changes to the full board for approval. The Pier 1 Imports Corporate Governance Guidelines, Code of Business Conduct and Ethics and charters for the audit, compensation, and nominating and corporate governance committees are available on our website at www.pier1.com by selecting “Investor Relations” under the “OUR COMPANY” section on the home page, selecting “Corporate Governance” then “Documents and Charters.” The Code of Business Conduct and Ethics may be amended, modified, or waived by the board of directors, and waivers may also be granted by the nominating and corporate governance committee, subject to the disclosure and other provisions of the Securities Exchange Act of 1934 (the “Exchange Act”), the rules thereunder and the applicable rules of the New York Stock Exchange (“NYSE”), and may be posted on our website within four days of such approval.

PROPOSAL NO. 1 – Election of Directors

The shareholders will vote to elect as directors the nine nominees named below at the annual meeting of shareholders. Those elected will serve on the board of directors until the next annual meeting of shareholders and until their successors are elected and qualified. The board of directors, upon the recommendation of the nominating and corporate governance committee, has nominated each person listed below to stand for election. Although we do not anticipate that any of the nominees will be unable or unwilling to serve as a director, in the event that is the case, the board of directors may reduce its size or choose a substitute for that nominee.

In order to be elected, a nominee for director must receive the affirmative vote of a majority of the votes cast with respect to such nominee by the shares of common stock present in person or represented by proxy at the annual meeting and entitled to

vote on the election of directors. An “affirmative vote of a majority of the votes cast” means that the number of votes cast “For” a nominee exceeds the number of votes cast “Against” the nominee. Abstentions and broker non-votes are not considered as votes cast.

Pursuant to our bylaws, all incumbent directors are required to deliver an irrevocable pre-election resignation to the corporate secretary prior to the filing of this proxy statement with the Securities and Exchange Commission (“SEC”). If a director fails to receive an affirmative vote of a majority of the votes cast for her or his election, the nominating and corporate governance committee, or other committee of independent directors designated by the board, will determine whether to accept such resignation in accordance with the bylaws.

Board Member Qualification Criteria

The board of directors has adopted Board Member Qualification Criteria, which are contained in the Corporate Governance Guidelines, that set out the attributes and qualifications considered by the nominating and corporate governance committee in evaluating nominees for director. The primary qualities and characteristics the committee looks for in nominees for director are:

 

  leadership and management experience;

 

  relevant knowledge and diversity of background and experience; and

 

  personal and professional ethics, integrity and professionalism.

The committee believes that the board of directors should be comprised of individuals who have achieved a high level of distinction in their careers. As a group, the board of directors should possess a diverse and broad range of skills, perspectives and experience relevant to Pier 1 Imports’ business, such as:

 

  financial expertise;

 

  knowledge of the consumer and retail industry;

 

  digital/e-Commerce and technology experience;

 

  international experience; and

 

  knowledge of public company director duties and responsibilities and governance processes.

The nominating and corporate governance committee considers whether each nominee contributes to the diverse and broad range of skills, perspectives and experience required of Pier 1 Imports’ board of directors.

 

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    3


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  GOVERNANCE

 

 

Nominees for Director

The nominating and corporate governance committee believes the nine nominees possess the primary qualities and characteristics that it looks for in nominees for director. The specific experiences, qualifications, attributes and skills of each individual which support her or his nomination are included in the individual discussions below. The following illustrations show the average age, average tenure (as of May 16, 2018), and gender breakdown for the group of nominees with comparisons to the Company’s peer group for executive compensation purposes and companies in the S&P 500.

 

LOGO

 

 

 

 The board of directors unanimously recommends a vote “For” the election of each of the following nominees as a director.

 

 

 

 

  CLAIRE H. BABROWSKI

 

LOGO

 

 

Ms. Babrowski brings to the board experience in key leadership roles in leading global and domestic multi-unit retail companies. She possesses significant experience in operations, finance and international and general management, as well as global exposure.

  

 

Director Since: 2011

Age: 60

Committees: Audit, Compensation

 

  

 

 

Retail Executive Experience:

Ms. Babrowski most recently served as executive vice president and chief operating officer of Toys “R” Us, Inc. from 2007 to 2010. From 2005 to 2006, Ms. Babrowski worked for RadioShack Corporation serving as executive vice president and chief operating officer, and then president, chief operating officer and acting chief executive officer, overseeing RadioShack’s global operations and marketing and branding. She began her career at McDonald’s Corporation, spending 30 years in various roles, including direct responsibility for McDonald’s Asia Pacific, Middle East and Africa operations, and eventually serving as senior executive vice president and chief restaurant operations officer.

 

 

 

  

 

 

Director Experience:

From 2006 to 2016 Ms. Babrowski served as a director, audit committee member and nominating and corporate governance committee member of Delhaize Group, a Belgian company whose American Depository Receipts are traded on the NYSE and whose ordinary shares are traded on the NYSE Euronext in Brussels. While at Delhaize, Ms. Babrowski served on several ad hoc board committees which considered from time to time various transactions. Ms. Babrowski previously served as a director and chairman of Chipotle Mexican Grill, Inc. She also previously served on the board of managers of QCE Finance LLC, which is the ultimate parent company of Quiznos, from February 2012 through May 2014, including serving as the chair of its operations and development committee and serving on the marketing committee.

 

4    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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GOVERNANCE  

 

 

 

 CHERYL A. BACHELDER

 

LOGO

 

 

Ms. Bachelder is a restaurant industry executive who brings to the board over 35 years of retail brand building, guest experience, human capital and operations perspective from her recent leadership of a global public company.

  

 

Director Since: 2012

Age: 62

Committees: Compensation

(Chair)

 

 

  

 

 

 

Retail and Consumer Executive Experience:

Ms. Bachelder most recently served as chief executive officer of Popeyes Louisiana Kitchen, Inc., from 2007 to 2017, a quick service restaurant with more than 2,600 locations worldwide. From January 2001 to September 2003, she served as the president and chief concept officer for KFC Corporation in Louisville, Kentucky, where she was directly responsible for the U.S. business. From June 1995 to December 2000, Ms. Bachelder served as vice president, marketing and product development for Domino’s Pizza, Inc. She has previously held multiple executive positions with consumer industry companies including RJR Nabisco, Gillette Company and Procter & Gamble.

 

 

 

 

  

 

 

 

Director Experience:

Ms. Bachelder served on the board of Popeyes Louisiana Kitchen, Inc. from November 2006 to March 2017. She served on the board of True Value Corporation from July 2006 through February 2013.

 

 

 ROBERT L. BASS

 

LOGO

 

 

Mr. Bass brings to the board a broad consumer and retail background including significant experience in big box operations and supply chain. He is currently head of global supply chain operations for Best Buy Co., Inc.

  

 

Director Since: 2018

Age: 49

 

 

  

 

 

 

Retail and Other Executive Experience:

Mr. Bass currently serves as chief supply chain officer for Best Buy Co., Inc., a retailer of technology products, services and solutions in the United States, Canada and Mexico, a position he has held since October 2017. In his current role, Mr. Bass is responsible for full supply chain strategy in Best Buy’s day-to-day operations, including overseeing more than 20 distribution centers fulfilling over 1,000 stores. Mr. Bass joined Best Buy in August 2013 as vice president, supply chain, and was promoted to senior vice president, supply chain in December 2015 prior to serving in his current position.

 

 

 

 

  

 

 

 

Other Relevant Experience:

From July 2002 to August 2013, Mr. Bass held store operations and supply chain positions at Target Corporation, a general merchandising retailer operating in the United States, including serving as a district manager for stores, a director within store operations and as senior director, supply chain. Prior to that, Mr. Bass spent the first 10 years of his career as a commercial pilot serving in a captain’s leadership role first with Midwest Airlines and later with Sun Country Airlines.

 

 

 HAMISH A. DODDS

 

LOGO

 

 

Mr. Dodds brings to the board over 30 years of executive experience in the shipping, retail, consumer goods and hospitality industries. He has lived and worked in Europe, the Middle East, Africa, South America and the United States, gaining extensive international experience in finance, franchising, joint ventures and brand management.

  

 

Director Since: 2011

Age: 61

Committees: Nominating and Corporate

Governance (Chair)

Other Company Boards:

Dave & Buster’s Entertainment, Inc.

 

  

 

 

Entertainment and Consumer Goods Executive Experience:

Mr. Dodds most recently served as president and chief executive officer of Hard Rock International from 2004 through 2017, where he oversaw the strategic development and operations of restaurants, hotels, casinos and live music venues in more than 70 countries, including hands-on involvement in global logistics and brand building. Mr. Dodds has served as the chief executive officer of the Central America Beverage Corporation (CABCORP) and as division president for PepsiCo Beverages covering South America, Central America and the Caribbean.

 

 

 

  

 

 

Director Experience:

Mr. Dodds currently serves as a director, audit committee member and finance committee member of Dave & Buster’s Entertainment, Inc. Previously Mr. Dodds served as a board member and compensation committee member for CABCORP.

 

 

 

  

 

 

Other Relevant Experience:

Mr. Dodds is a fellow member of the Institute of Chartered Management Accountants and has served in a variety of general management and financial positions for PepsiCo, The Burton Group (now Arcadia Group) in the United Kingdom, and Overseas Containers, Ltd.

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    5


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  GOVERNANCE

 

 

 

 BRENDAN L. HOFFMAN

 

LOGO

 

 

Mr. Hoffman brings to the board a broad retail background including experience in direct marketing, fulfillment and e-Commerce operations.

  

 

Director Since: 2011

Age: 49

Committees: Audit

Other Company Boards:

Vince Holding Corp.

 

  

 

 

Retail Executive Experience:

Since October 2015, Mr. Hoffman has served as the chief executive officer of Vince Holding Corp., a leading contemporary fashion brand with worldwide distribution, including over 2,500 distribution locations across more than 40 countries. From February 2012 to September 2014, Mr. Hoffman served as president and chief executive officer of the Bon-Ton Stores, Inc., a department store chain with over 260 stores in more than 20 states, including nine furniture galleries and five clearance centers. From October 2008 to February 2012, Mr. Hoffman served as president and chief executive officer of Lord & Taylor, a division of Hudson’s Bay Company. Prior to that, Mr. Hoffman served six years as president and chief executive officer of Neiman Marcus Direct, where he oversaw the growth of neimanmarcus.com and the launch and growth of bergdorfgoodman.com and had direct responsibility for its international operations.

 

 

 

  

 

 

Director Experience:

Mr. Hoffman currently serves as a director of Vince Holding Corp.

 

 

 

  

 

 

Other Relevant Experience:

Mr. Hoffman held previous positions as vice president of Last Call Clearance Division at Neiman Marcus Stores, divisional merchandise manager of Bergdorf Goodman, Inc., a subsidiary of the Neiman Marcus Group, and divisional merchandise manager of Lord & Taylor, where he began his retail career in the executive training program. Mr. Hoffman also serves on the advisory board of the Jay H. Baker Retailing Initiative at The Wharton School.

 

 

 ALASDAIR B. JAMES

 

LOGO

 

 

Mr. James became president and chief executive officer and joined the board on May 1, 2017. He brings to the board over 25 years of retail and consumer goods experience in the U.S., U.K. and China, including marketing, sales, brand management, customer data analytics, supply chain consolidation, digital/omni-channel transformation and implementation of consumer-facing initiatives.

  

 

Director Since: 2017

Age: 47

 

  

 

 

Retail and Other Executive Experience:

Prior to joining Pier 1 Imports, Mr. James was employed by Sears Holdings Corporation as president of Kmart from August 2014 to March 2017. In that role he oversaw Kmart’s operations, merchandising mix, and localization strategy, as well as the strategic shift to a consumer-focused, digitally-enabled retailer. Prior to joining Sears Holdings, he served in various roles at Tesco PLC, a multinational grocery and general merchandise retailer, from June 2007 to August 2013, including commercial director of the global business unit, as well as executive vice president and commercial director of Tesco China. From June 2001 to June 2007, Mr. James served in various roles at GlaxoSmithKline PLC, a pharmaceutical company, including global marketing director for future brands. Prior to that, Mr. James spent his early career in international marketing and account management at PepsiCo.

 

 

 

  

 

 

Other Relevant Information:

The terms of Mr. James’ employment provide that Mr. James will be nominated for election to the board of directors for each election period occurring during his employment and the board will recommend his election to the shareholders of Pier 1 Imports.

 

 

 TERRY E. LONDON

 

 

LOGO

 

 

Mr. London serves as the non-executive chairman of the board. He served as interim president and chief executive officer and chairman of the board from January 1, 2017 through April 30, 2017, and executive chairman from May 1, 2017 through July 31, 2017 when he reassumed his role as non-executive chairman of the board. He provides the board with significant finance, accounting, media and public company board knowledge and experience.

  

 

Director Since: 2003

Chairman of the Board

Age: 68

Committees: Nominating and Corporate Governance

Other Company Boards:

Johnson Outdoors, Inc.

 

  

 

 

Entertainment Executive Experience:

Mr. London served as the chairman of the London Broadcasting Company, Inc., a Texas-based company formed to acquire and operate Texas media properties, until July 2015. Earlier in his career, Mr. London served as president and chief executive officer, chief financial officer and chief operating officer of Gaylord Entertainment Company, a hotel, resort, entertainment and media company.

 

 

 

  

 

 

Director Experience:

Mr. London currently serves as a director of Johnson Outdoors, Inc. and previously served as a director of Bass Pro Shops, Inc. In his role as director on other boards, Mr. London has served as the chairman of the audit committee and member of the compensation committee.

 

 

 

  

 

 

Other Relevant Experience:

Mr. London is a certified public accountant and was voted the Broadcaster of the Year in 2011 by the Texas Association of Broadcasters.

 

6    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


Table of Contents

 

GOVERNANCE  

 

 

 

 MICHAEL A. PEEL

 

LOGO

 

 

Mr. Peel brings to the board extensive human resources and broad business expertise and public company board experience.

  

 

Director Since: 2013

Age: 68

Committees: Compensation

Other Company Boards:

Sleep Number Corporation

 

  

 

 

Consumer Goods Executive Experience:

Mr. Peel spent 17 years at General Mills, a global manufacturer and marketer of consumer food products, where he served as senior vice president, worldwide human resources from 1991 to 2007 and as executive vice president of human resources and global business services from 2007 to 2008. From 1977 to 1991, Mr. Peel served in various capacities for PepsiCo, including as senior vice president, human resources for PepsiCo Worldwide Foods from 1987 to 1991, and as senior vice president, human resources for the Pepsi-Cola Bottling Group from 1984 to 1987.

 

 

 

  

 

 

Director Experience:

Mr. Peel has served on the board of directors of Sleep Number Corporation (formerly known as Select Comfort Corporation), a U.S.-based manufacturer of the Sleep Number and Comfortaire beds as well as foundations and bedding accessories, since 2003, previously serving as chair of its compensation and management development committee. He currently serves as chair of its corporate governance and nominating committee.

 

 

 

  

 

 

Other Relevant Experience:

In January 2018, Mr. Peel joined ghSMART & Company, Inc. as senior advisor and founding member of the firm’s chairman’s counsel. Previously, Mr. Peel was a Yale University officer and served as vice president, human resources and administration until his retirement in July 2017.

 

 

  ANN M. SARDINI

 

LOGO

 

 

Ms. Sardini’s 20 plus years serving in senior financial management positions for branded consumer products and media companies brings extensive, multi-faceted experience to the board.

  

 

Director Since: 2013

Age: 68

Committees: Audit (Chair)

Other Company Boards:

TreeHouse Foods, Inc.

Ideal Protein

 

 

  

 

 

Retail and Other Executive Experience:

From 2002 until her retirement in 2012, Ms. Sardini served as the chief financial officer of Weight Watchers International, Inc., where she oversaw global operations and successfully negotiated the acquisition of WeightWatchers.com and other targets. She served as chief financial officer of Vitamin Shoppe.com, Inc. from 1999 to 2001, and as executive vice president and chief financial officer for the Children’s Television Workshop from 1995 to 1999. In addition, Ms. Sardini held finance positions ranging from controller to chief financial officer at QVC, Inc., Chris Craft Industries and the National Broadcasting Company.

 

 

 

  

 

 

Director Experience:

Ms. Sardini currently serves on the board of directors of TreeHouse Foods, Inc., a manufacturer of packaged foods and beverages with more than 50 manufacturing facilities across the United States, Canada and Italy, where she chairs the compensation committee, and where she previously served as lead independent director, audit committee chair and as a member of its nominating and governance committee. Since January of 2016, Ms. Sardini has served as a director and audit committee chair of Ideal Protein, a privately held company, where she currently serves as chair of the board since 2017.

 

 

 

  

 

 

Other Relevant Experience:

Currently, Ms. Sardini serves in a consulting and advisory capacity to early and mid-stage technology-based consumer companies and private equity firms. Ms. Sardini also currently serves on the advisory boards of To The Market, PetTrax and Everplans. Previously, she served on the advisory board of Learnvest.com and the board of Promise Project Fund for the City of New York.

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    7


Table of Contents

 

  GOVERNANCE

 

 

 

Key Skills and Qualities of the Board

The following are key areas of expertise in which the members of the board have extensive management and leadership experience. The individual biographies on pages 4 through 7 provide additional information about each nominee’s specific background and experience.

 

 

CRITERIA

 

  

 

DEFINITION

 

 

BOARD EXPERIENCE

 

 

Public Company Board Experience

 

  

 

Experience serving on an outside public company board (last five years) and contributing to strategic planning, CEO succession and capital investment and allocation decisions

 

 

  INDUSTRY EXPERIENCES

 

 

Public Company CEO

 

  

 

Current or recently retired (last three years) CEO of a public company

 

 

Consumer and Retail Industry

 

  

 

Current or recently retired executive or director with significant experience leading a large organization with P&L ownership in a consumer-facing company or within the retail industry

 

 

Home Furnishings Industry

 

  

 

Current or recently retired executive or director in the home goods industry

 

 

Public Company M&A Experience

 

   Experience with M&A transactions as an executive or director

International Experience

  

 

Experience leading a global business and understanding the challenges of entering new markets and navigating local and regional geopolitical sensitivities

 

 

 

  FUNCTIONAL SKILLS

 

 

Financial Expertise

 

  

 

Identified as a qualified financial expert and/or has experience as a CEO, CFO or other senior financial leader

 

Digital / e-Commerce

  

 

Executive who understands the digital world and broader digital transformation and has experience implementing digital and omni-channel strategies and/or building an e-Commerce platform

 

Marketing and Branding

  

 

Current or retired CMO or CEO of a business with strong brands who has a strong foundation in consumer insights, understanding consumer trends and building/maintaining great brands

 

 

Merchandising

 

  

 

Experience as a CMO or other executive leading merchandising for a retail company

 

 

Human Capital

 

  

 

Current or retired CHRO or senior executive leading the human resources function in a large public company

 

Supply Chain

  

 

Active or recently retired C-Suite level executive who has helped a best-in-class organization transform their supply chain operations from a strategic standpoint and has experience with non-conveyable products

 

Operations

  

 

Experience as an operations executive (COO, SVP Operations) or CEO with direct experience overseeing store operations, real estate or back-office operations

 

 

Technology

 

  

 

Experience as a CIO/CTO or other relevant experience at a large company

 

 

8    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


Table of Contents

 

GOVERNANCE  

 

 

PIER 1

IMPORTS – BOARD

SKILLS MATRIX

 

TERRY E.
LONDON

(NON-
EXECUTIVE
CHAIRMAN)

 

 

ALASDAIR B.
JAMES

(CEO)

  CLAIRE H.
BABROWSKI
  CHERYL A.
BACHELDER
  ROBERT L.
BASS
  HAMISH A.
DODDS
  BRENDAN L.
HOFFMAN
  MICHAEL A.
PEEL
  ANN M.
SARDINI
   

 

BOARD EXPERIENCE

 

                                                                                             

 

Outside Public Company Board Experience

 

                                                                 

 

COMPETENCIES

 

                                                                                             

 

INDUSTRY EXPERIENCES

 

                                                                                             

 

Recent Public Company CEO (last 3 yrs.)

 

                                                                             

 

Consumer and Retail Industry

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

Home Furnishings Industry

 

                                                               

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

             

 

Public Company M&A Experience

 

                                                                             

 

International Experience

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

FUNCTIONAL SKILLS

 

                                                                                             

 

Financial Expertise

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

             

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

             

 

 

 

 

 

 

 

   

 

Digital /e-Commerce

 

             

 

 

 

 

 

 

 

                                           

 

 

 

 

 

 

 

             

 

 

 

 

 

 

 

   

 

Marketing and Branding

 

             

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

             

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

                       

 

Merchandising

 

             

 

 

 

 

 

 

 

                                 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

                       

 

Human Capital

 

                                                                         

 

 

 

 

 

 

 

             

 

Supply Chain

 

                                           

 

 

 

 

 

 

 

                                           

 

Operations

 

             

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

             

 

 

 

 

 

 

 

   

 

Technology

 

                                                               

 

 

 

 

 

 

 

                       

 

DEMOGRAPHICS

 

                                                                                             

 

Gender (33.33% female)

 

   

 

 

 

 

M

 

 

 

   

 

 

 

 

M

 

 

 

   

 

 

 

 

F

 

 

 

   

 

 

 

 

F

 

 

 

   

 

 

 

 

M

 

 

 

   

 

 

 

 

M

 

 

 

   

 

 

 

 

M

 

 

 

   

 

 

 

 

M

 

 

 

   

 

 

 

 

F

 

 

 

   

 

Age (average = 59.1)

 

   

 

 

 

 

68

 

 

 

   

 

 

 

 

47

 

 

 

   

 

 

 

 

60

 

 

 

   

 

 

 

 

62

 

 

 

   

 

 

 

 

49

 

 

 

   

 

 

 

 

61

 

 

 

   

 

 

 

 

49

 

 

 

   

 

 

 

 

68

 

 

 

   

 

 

 

 

68

 

 

 

   

The lack of a for a particular item does not mean that the director does not possess that skill, quality or experience. Pier 1 Imports looks to each director to be knowledgeable in each of the desired areas; however, the indicates an exceptional skill, quality or experience that the director brings to the board based on her or his individual background.

 

Board Leadership Structure

Pier 1 Imports’ bylaws require that the directors elect annually from among themselves a chairman of the board. The bylaws, however, grant the board of directors discretion as to whether the chairman of the board is an employee or an officer of Pier 1 Imports. A non-officer, non-employee elected as chairman of the board is designated as the “non-executive” chairman of the board. Pier 1 Imports’ Corporate Governance Guidelines contain general guidance that the positions of chairman of the board and chief executive officer should be held by separate individuals and that the chairman of the board should be a “non-executive.” Provisions are made in the guidelines for an independent lead director if the roles of chairman of the board and chief executive officer are combined.

Historically, since 2007, the roles of chairman and chief executive officer have been filled by separate individuals. This structure of separate individuals holding these positions focuses board

leadership and company leadership in separate and distinct individuals. Each leader can direct her or his respective group on the objectives at hand while at the same time developing and implementing strategies and financial and operational policies that affect the short- and long-term value of Pier 1 Imports.

Terry London began serving as the independent non-executive chairman in fiscal 2013 and served in this role until the departure of Alexander W. Smith as president and chief executive officer on December 31, 2016. At that time, Mr. London was appointed to the position of interim president and chief executive officer effective January 1, 2017.

Mr. London’s appointment effectively combined the roles of chairman of the board and chief executive officer during his tenure as interim president and chief executive officer. Due to the fact Mr. London’s service as interim president and chief executive officer was temporary in nature, the board of directors determined not to appoint a lead director at the time of his appointment.

 

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    9


Table of Contents

 

  GOVERNANCE

 

 

On April 3, 2017, we announced the appointment of Alasdair B. James as president and chief executive officer effective May 1, 2017. The board of directors appointed Mr. London as executive chairman upon Mr. James assuming his role as president and chief executive officer. Mr. London served in the role of executive chairman through July 31, 2017, at which time he reassumed the role of non-executive chairman of the board.

Director Nomination Process

Internal Process for Identifying Candidates

Members of the nominating and corporate governance committee or other Pier 1 Imports’ directors or executive officers may, from time to time, identify potential candidates for nomination for election to our board of directors. The committee typically considers candidates for nomination to our board of directors around March (the first month of the fiscal year) of each year. All proposed nominees, including candidates recommended for nomination by shareholders in accordance with the procedures described below, are evaluated in light of our Corporate Governance Guidelines, the Board Member Qualification Criteria and the projected needs of the board of directors at the time. The committee may retain a search firm to assist in identifying potential candidates for nomination to the board of directors. The search firm’s responsibilities may include identifying and evaluating candidates believed to possess the qualities and characteristics set forth in the Board Member Qualification Criteria, as well as providing background information on potential nominees and interviewing and screening nominees if requested to do so by the committee.

In April of 2018, the nominating and corporate governance committee recommended the nomination of Robert L. Bass to the board of directors. Mr. Bass was identified by a third-party search firm. On April 5, 2018, the board of directors increased the size of the board from nine to ten directors and elected Mr. Bass as a director. Ms. McCague notified the Company of her intent not to stand for re-election as a director on April 2, 2018. The size of the board is expected to be reduced to nine directors following the expiration of Ms. McCague’s term as a director at the annual meeting of shareholders.

Shareholder Recommendations for Directors

The nominating and corporate governance committee will consider candidates recommended by shareholders for nomination for election to Pier 1 Imports’ board of directors. In order for a candidate recommended by a shareholder to be considered by the committee for inclusion as a nominee for director at the 2019 annual meeting of shareholders, the candidate must meet the Board Member Qualification Criteria described above and must consent to and be expressly interested in and willing to serve as a Pier 1 Imports director. The committee will then consider the independence of the candidate and evaluate the candidate in light of our Corporate Governance Guidelines and Board Member Qualification Criteria described above.

A shareholder who wishes to recommend a candidate for consideration by the nominating and corporate governance committee for inclusion as a nominee for director at the 2019 annual meeting of shareholders should forward by certified or express mail the candidate’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, at Pier 1 Imports, Inc., 100 Pier 1 Place, Fort Worth, Texas 76102. To be properly considered by the committee, Pier 1 Imports’ corporate secretary must receive the recommendation and all required information no later than 5:00 p.m., local time, on January 16, 2019.

The corporate secretary will send properly submitted shareholder recommendations to the chair of the nominating and corporate governance committee. Individuals recommended to the committee by shareholders in accordance with these procedures will be evaluated by the committee in the same manner as individuals who are recommended through other means.

Shareholder Nominations at Annual Meeting

Pier 1 Imports’ bylaws also permit a shareholder to propose a candidate for election as a director who is not otherwise nominated by the board of directors through the process described above if the shareholder complies with the shareholder criteria, advance notice, shareholder and nominee information, consent and other provisions contained in the bylaws. To comply with these provisions of our bylaws, a shareholder who wishes to nominate a director for election at the 2019 annual meeting of shareholders must provide us written notice in proper form accompanied by the requisite materials and information no earlier than February 26, 2019 and no later than March 28, 2019. You may contact our corporate secretary to confirm the specific information that you must provide with the advance notice.

No shareholder followed the above procedures to recommend an individual for nomination for election to the board of directors at Pier 1 Imports’ 2018 annual meeting of shareholders, and no shareholder gave us advance written notice that the shareholder intends to nominate a person for election to the board of directors at the 2018 annual meeting of shareholders.

Committees of the Board of Directors and Risk Oversight

The standing committees of the board of directors are the audit committee, the compensation committee, and the nominating and corporate governance committee. Each committee functions pursuant to a charter that is available on our website at www.pier1.com by selecting “Investor Relations” under the “OUR COMPANY” section on the home page, selecting “Corporate Governance” then “Documents and Charters.” The following is a brief description of the roles and responsibilities of each committee:

Audit Committee. The audit committee’s purpose is to:

 

  assist the board of directors with oversight of:

 

  ¡    the integrity of Pier 1 Imports’ financial statements,
 

 

10    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


Table of Contents

 

GOVERNANCE  

 

 

  ¡    Pier 1 Imports’ system of internal control,

 

  ¡    Pier 1 Imports’ compliance with legal and regulatory requirements,

 

  ¡    Pier 1 Imports’ independent registered public accounting firm’s qualifications and independence (including the hiring, compensation and retention of such firm), and

 

  ¡    the performance of Pier 1 Imports’ internal audit function;

 

  prepare the audit committee report that is included in this proxy statement; and

 

  discuss with management Pier 1 Imports’ major financial risk exposures and the guidelines and policies governing risk assessment and management at Pier 1 Imports.

The board of directors exercises its risk oversight responsibilities directly and through delegation of specific responsibilities to the board’s committees through their charters. As part of fulfilling its role in risk oversight, the audit committee receives periodic reports from Pier 1 Imports’ management regarding their assessment and management of the full range of risks affecting Pier 1 Imports. These risks include strategic risks such as brand strategy, merchandise and talent management, operational risks such as inventory and supply chain management, cybersecurity and information technology, and financial, compliance and other risks, including product safety, financial reporting, and compliance with federal, state and local laws. The audit committee updates the board of directors regarding material risk developments. From time to time the entire board, another committee of the board or a specially designated committee of the board may assist the audit committee in this process. This process is also used to develop the risk factors set forth in Pier 1 Imports’ Annual Report on Form 10-K and in other filings with the SEC.

Each member of the audit committee is independent pursuant to the NYSE independence requirements. The board of directors has determined that each member is an audit committee financial expert, as defined by the SEC, and therefore has accounting or related financial management expertise and is financially literate within the meaning of NYSE listing standards.

Compensation Committee. The compensation committee’s purpose is to:

 

  develop, review, approve and modify Pier 1 Imports’ compensation philosophy as necessary to achieve our overall business strategies and goals, attract and retain key executives, link compensation to organizational performance and provide competitive compensation opportunities;

 

  discharge (except to the extent otherwise governed by an existing 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 directly to Pier 1 Imports’ chief executive officer;
  establish, oversee and administer (except to the extent delegated in a governing plan document or otherwise) the policies and plans that govern the components of the compensation of those individuals, including, but not limited to, cash, equity, short- and long-term incentives, bonus, special or supplemental benefits and perquisites; and

 

  receive a report from Pier 1 Imports’ management regarding succession planning, and the development and retention of executive management talent to ensure leadership continuity and organizational strength to achieve Pier 1 Imports’ business strategies and goals.

The compensation committee may retain outside compensation consulting firms to assist in the evaluation of executive officer and non-employee director compensation, and has the authority to obtain advice and assistance from independent legal counsel and other compensation advisers.

The compensation committee and board of directors believe that Pier 1 Imports’ success has resulted, in large part, from our ability to successfully attract, motivate and retain a qualified executive management team and that our future success will depend on our ability to continue to do so. Accordingly, Pier 1 Imports’ overall compensation philosophy is to structure our executive program to attract and retain highly skilled and motivated individuals who will lead Pier 1 Imports to successful short- and long-term performance and create shareholder value. We accomplish this by creating total compensation packages that are competitive in the retail industry, fair and equitable among our executives and provide strong incentives for the long-term success and performance of Pier 1 Imports. The compensation committee will continue to administer and develop Pier 1 Imports’ compensation programs in a manner designed to achieve these objectives. The compensation committee also believes that the total compensation opportunity provided for the executive officers must be evaluated against the compensation of comparable peer group companies.

Base salary and short- and long-term incentive compensation recommendations for the executive officers are typically presented to the compensation committee at one or more of the committee’s meetings prior to the beginning of the fiscal year and during the first month of the fiscal year. The presentations include recommendations by Pier 1 Imports’ chief executive officer, human resources compensation group, or both, on those elements of compensation, plus recommended plan design changes, if any, and a summary of all proposed awards to all eligible levels of management. The presentations may also include survey data from a peer group of retail companies for the compensation committee’s consideration along with studies and recommendations from an outside compensation consultant. At a meeting occurring around the first month of the fiscal year, the compensation committee and board of directors consider for approval compensation for the current fiscal year with awards generally made in April. Short- and long-term incentive compensation targets for the year are set as part of approval by the compensation committee and board of directors.

 

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    11


Table of Contents

 

  GOVERNANCE

 

 

The compensation committee retained Willis Towers Watson as its executive compensation consultant for fiscal 2018. Willis Towers Watson reported directly and was accountable to the compensation committee. Willis Towers Watson provided market data and recommendations to the compensation committee for fiscal 2018 regarding base salary, short- and long-term incentive elements of total executive compensation, and other services as directed by the committee. The market data was from a peer group of specialty retailers, all of which were publicly traded at the time the market data was provided, in addition to data provided by the Towers Watson Compensation Data Bank Retail/Wholesale Services Executive Database. Willis Towers Watson did not provide any other services to Pier 1 Imports during fiscal 2018, other than providing non-customized survey data used by management to evaluate employee compensation.

In compliance with SEC and NYSE requirements regarding the independence of compensation consultants, Willis Towers Watson has provided the compensation committee with a letter confirming its independence and the independence of its respective partners, consultants and employees who advise the compensation committee on executive compensation matters.

In addition to the compensation committee consultant described above, Pier 1 Imports’ management may, from time to time, retain an outside consultant for assistance in the formulation of new compensation programs and retirement plans and the modification of existing compensation programs and retirement plans. For fiscal 2018, Pier 1 Imports’ management did not retain an outside consultant to recommend the amount or form of executive compensation.

Each member of the compensation committee is independent pursuant to the NYSE independence requirements.

Nominating and Corporate Governance Committee. The nominating and corporate governance committee is responsible for considering and making recommendations to the board of directors regarding nominees for election as directors to the board and the membership of the various board of directors’ committees. The nominating and corporate governance committee is also responsible for board succession planning and overseeing corporate governance matters, including the Pier 1 Imports, Inc. Corporate Governance Guidelines described above on page 3. Each member of the nominating and corporate governance committee is independent pursuant to the NYSE independence requirements.

 

 

12    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


Table of Contents

 

GOVERNANCE  

 

 

Director Attendance at Board and Committee Meetings

and at the Annual Meeting of Shareholders

In fiscal 2018, each director attended at least 75% of the total number of board of directors meetings and meetings of the committees on which he or she served and that were held during the time of her or his service as a director and/or committee member. Although we have no formal policy on the matter, all directors are encouraged to attend Pier 1 Imports’ annual meeting of shareholders. All directors then serving attended the 2017 Pier 1 Imports annual meeting of shareholders. Committee memberships, the number of meetings of the full board and each standing committee, and each director’s dates of service for fiscal 2018 are shown in the table below.

 

 

  NAME

 

  

BOARD OF

DIRECTORS

 

    

AUDIT

COMMITTEE

 

    

COMPENSATION
COMMITTEE

 

    

 

NOMINATING AND
CORPORATE GOVERNANCE
COMMITTEE

 

 

 

Claire H. Babrowski

           

02/26/2017 to 03/03/2018

     Member        Member        

02/26/2017 to 12/30/2017

              Chair  

12/31/2017 to 03/03/2018

 

                      

 

Member

 

 

 

        

 

Cheryl A. Bachelder

           

02/26/2017 to 03/03/2018

 

    

 

Member

 

 

 

             

 

Chair

 

 

 

        

 

Hamish A. Dodds

           

02/26/2017 to 03/03/2018

     Member           

02/26/2017 to 12/30/2017

        Member           Member  

12/31/2017 to 03/03/2018

 

                               

 

Chair

 

 

 

 

Brendan L. Hoffman

           

02/26/2017 to 03/03/2018

 

    

 

Member

 

 

 

    

 

Member

 

 

 

                 

 

Alasdair B. James

           

05/01/2017 to 03/03/2018

 

    

 

Member

 

 

 

                          

 

Terry E. London

           

02/26/2017 to 07/31/2017

     Executive Chairman           

08/01/2017 to 03/03/2018

     Non-Executive Chairman           

12/31/2017 to 03/03/2018

 

                               

 

Member

 

 

 

 

Cynthia P. McCague

           

02/26/2017 to 03/03/2018

02/26/2017 to 12/30/2017

 

     Member                

 

Member

 

 

 

     Member  

 

Michael A. Peel

           

02/26/2017 to 03/03/2018

02/26/2017 to 12/30/2017

 

     Member                 Member       

 

Member

 

 

 

 

Ann M. Sardini

           

02/26/2017 to 03/03/2018

 

    

 

Member

 

 

 

    

 

Chair

 

 

 

                 

 

Number of Meetings in Fiscal 2018

 

  

 

 

 

 

13

 

 

 

 

  

 

 

 

 

11

 

 

 

 

  

 

 

 

 

8

 

 

 

 

  

 

 

 

 

7

 

 

 

 

 

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 independent directors. In addition, all members of the audit committee, compensation committee and nominating and corporate governance committee must be independent directors. To be considered independent, a director must satisfy both the subjective and objective independence requirements established by the NYSE. In assessing independence under the subjective test, the board of directors takes into account the standards in the objective tests, and reviews and discusses additional information provided by the directors and Pier 1 Imports with regard to each director’s

business and personal activities as they may relate to Pier 1 Imports and Pier 1 Imports’ management. Based on the foregoing, as required by NYSE rules, the board of directors makes a subjective determination as to each independent director that no material relationship exists with Pier 1 Imports. The board of directors will broadly consider all relevant facts and circumstances relating to a director in determining whether that director is independent.

Based on the NYSE independence requirements, the board of directors has determined that nine of the ten current members of the board of directors are independent. They are Ms. Babrowski, Ms. Bachelder, Mr. Bass, Mr. Dodds, Mr. Hoffman, Mr. London, Ms. McCague, Mr. Peel and Ms. Sardini. Ms. McCague notified the Company of her intent not to stand for re-election as a director on April 4, 2018. Pier 1 Imports’ president and chief executive officer, Alasdair B. James, is an employee director.

 

 

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Independence for the non-employee directors was considered under both the subjective and objective standards of the NYSE. In other words, none of the non-employee directors were disqualified from independent status under the objective standard, and each non-employee director was determined not to have a material relationship with Pier 1 Imports under the subjective standard. Mr. London was not considered independent during his tenure as interim president and chief executive officer and as executive chairman. Following August 1, 2017, the date on which Mr. London reassumed his role as non-executive chairman, the board evaluated Mr. London’s role and relationships with Pier 1 Imports pursuant to the requirements described above and affirmatively determined he had resumed his independent status.

 

For its independence determination, our board of directors, with input from the nominating and corporate governance committee, considered relationships that, while not constituting related party transactions in which a director had a direct or indirect material interest, nonetheless involved transactions between Pier 1 Imports and a company with which a director is or may be affiliated, whether through employment status or by virtue of family relationships. Included in the committee’s review were the following transactions, which occurred in the ordinary course of business. All of these matters were below the relevant thresholds for independence as set forth in the NYSE Listing Manual and our Corporate Governance Guidelines.

 

 

 

DIRECTOR

 

  

 

MATTERS CONSIDERED

 

 

Robert L. Bass

 

  

 

Ordinary course business transactions with Best Buy Co., Inc.

 

 

Claire H. Babrowski

 

  

 

Ordinary course business transactions with Sogeti, a wholly-owned subsidiary of the Capgemini Group.

 

 

Related Person Transaction Policies and Procedures

As part of our Code of Business Conduct and Ethics, Pier 1 Imports’ board of directors has adopted written Related Person Transaction Policies and Procedures that are administered by the nominating and corporate governance committee. Our Code of Business Conduct and Ethics is available on our website at www.pier1.com by selecting “Investor Relations” under the “OUR COMPANY” section on the home page, selecting “Corporate Governance” then “Documents and Charters.” The policy applies to any transaction or series of transactions in which Pier 1 Imports is a participant, the amount involved exceeds $120,000 annually and a related person has a direct or indirect material interest. The policy defines a “related person” as any (a) person who is or was (since the beginning of the last fiscal year for which Pier 1 Imports has filed a Form 10-K and proxy statement, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of Pier 1 Imports common stock, or (c) immediate family member of any of the foregoing.

Transactions that fall within the policy (“interested transactions”) will be reviewed by the committee for approval, ratification or other action. Based on its consideration of all of the relevant facts and circumstances, the committee will decide whether or not to approve the interested transaction and will approve only those interested transactions that are believed to be in the best interest of Pier 1 Imports.

The policy provides certain interested transactions are deemed to be pre-approved, even if the aggregate amount involved will exceed $120,000. Those interested transactions are: (a) employment of executive officers, (b) director compensation, (c) certain transactions with other companies if the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of the other company’s total annual revenues, (d) certain charitable contributions by Pier 1 Imports if the aggregate amount involved does not exceed the lesser of $10,000 or 2% of

the organization’s total annual receipts, (e) transactions where all shareholders receive proportional benefits (e.g., dividends), (f) transactions involving competitive bids, (g) regulated transactions, and (h) certain banking-related services. In addition, the policy delegates to the chair of the nominating and corporate governance committee the authority to pre-approve or ratify any interested transaction in which the aggregate amount involved is expected to be less than $250,000. During fiscal 2018, the chair of the nominating and corporate governance committee did not pre-approve or ratify any transactions.

Transactions with Related Persons

During fiscal 2018, there were no transactions in which Pier 1 Imports was or will become a participant and in which any related person had or will have a direct or indirect material interest that required review and approval by the nominating and governance committee.

We indemnify our directors and executive officers to the fullest extent permitted by law and have also entered into agreements with these individuals contractually obligating us to provide this indemnification.

Meetings of Independent Directors without Management Present

The independent directors of Pier 1 Imports met without management present during the last fiscal year at regularly scheduled executive sessions. Mr. London, while serving as non-executive chairman of the board of directors, presided over the meetings of the independent directors. While Mr. London served as interim president and chief executive officer and executive chairman, the independent directors were authorized to select an independent director to preside over each executive session or any other matter requiring action by the independent directors. Typically, one of the chairs of the board’s standing committees presided over those sessions.

 

 

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Procedures for Communicating with Directors

The board of directors has established a process by which shareholders and other interested parties can send communications to board members. Shareholders and other interested parties can send written communications to one 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 of the audit committee, compensation committee, or nominating and corporate governance committee by sending an email to auditchair@pier1.com, compchair@pier1.com, or corpgovchair@pier1.com, respectively, as well as with the independent directors as a group by sending an email to independentdirectors@pier1.com, or the chairman of the board by sending an email to boardchair@pier1.com.

Communications are distributed to the board of directors or to the individual director or directors, as appropriate, depending on the subject matter and facts and circumstances outlined in the communication. Communications that are not related to the duties and responsibilities of the board of directors or a committee will not be distributed, including spam, junk mail and mass mailings, product concerns or inquiries, new product suggestions, résumés and other forms of job inquiries, surveys and business solicitations or advertisements. In addition, we will not distribute unsuitable material to our directors, including material that is unduly hostile, threatening or illegal.

Non-Employee Director Compensation for the Fiscal Year Ended March  3, 2018

Fees Paid to Directors

In general, directors who are Pier 1 Imports employees do not receive any compensation for their board activities. For fiscal 2018, non-employee directors fees consisted of:

 

    An annual cash retainer of $150,000.

 

    An additional annual cash retainer of $25,000 for each committee chair, following the increase in retainer fees to the nominating and corporate governance committee to $25,000 in line with the other committee fees.

 

    An annual cash retainer of $125,000 for the chairman of the board.

For fiscal 2018, non-employee directors did not receive additional fees for attending meetings, nor did they receive stock option or restricted stock grants. During fiscal 2018, each

non-employee director was eligible to participate in the Pier 1 Imports’ Director Deferred Stock Unit Program, the Pier 1 Imports, Inc. Stock Purchase Plan and the Pier 1 Imports, Inc. Deferred Compensation Plan.

At the end of fiscal 2018 and the beginning of fiscal 2019 we made the following significant changes to our board of director compensation program to better align with the market and our peers, which are effective June 26, 2018:

 

    Non-employee directors will receive an annual cash retainer of $85,000.

 

    Non-employee directors will also receive an annual equity award following their election at each annual meeting consisting of a number of restricted stock units valued at $100,000 based on the 30-day trailing average of the closing price of the common stock of Pier 1 Imports as of the grant date. The restricted stock units will vest in full over a one-year period ending on the date of the following year’s annual meeting of shareholders.

The board of directors increased the equity portion of non-employee director compensation to further link their interests with our shareholders. Each committee chair will continue to receive an annual cash retainer of $25,000, and the chairman of the board will continue to receive an annual cash retainer of $125,000.

During Mr. London’s service as interim president and chief executive officer from January 1, 2017 to April 30, 2017 and as executive chairman from May 1, 2017 to July 31, 2017, he continued to receive an annual cash retainer, paid monthly, of $125,000 for his service as chairman; however, he ceased receiving the non-employee director cash retainer of $150,000 during his dual-service period. In recognition for his past service as chairman of the board, and in order to provide an incentive for his continued service as chairman of the board, Mr. London received a grant of 142,857 shares of time-based restricted stock on May 1, 2017, with vesting to occur 40% on each of the first two anniversaries of the grant date and 20% on the third anniversary, provided he is still serving as a director on the respective vest dates. He began receiving his annual non-employee director cash retainer again in August of 2017.

During fiscal 2018, all of our non-employee directors, other than Mmes. Babrowski and Sardini, participated in Pier 1 Imports’ Director Deferred Stock Unit Program. The program provides an optional deferral of up to 100% of the monthly cash director fees. Deferred fees (but not committee chair or chairman fees) are matched 25% by Pier 1 Imports and the total deferred fees and matching contributions are converted into an equivalent value of deferred stock units (“DSUs”) up to a maximum calendar year limit of 750,000 units per individual. Deferred fees plus matching contributions are converted to DSUs based on the closing price of Pier 1 Imports common stock on the day the fees are payable. The DSUs are credited to an account maintained by Pier 1 Imports for each non-employee director. Each DSU is the economic equivalent of one share of Pier 1 Imports common stock. Each DSU is eligible to receive dividends payable on Pier 1 Imports common stock in additional DSUs equal to the dividend per share of common stock divided by the closing price of Pier 1

 

 

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Imports common stock on the dividend payable date. The DSUs do not have voting rights. The DSUs will be exchanged one-for-one for shares of Pier 1 Imports common stock on the date the person ceases to be a member of the board of directors and the shares will be transferred to the person within five business days of such date, except that DSUs will be settled in cash to the extent applicable plan limitations at such time preclude the issuance of Pier 1 Imports common stock.

Mmes. Babrowski and Sardini and Mr. Dodds participated in the Pier 1 Imports, Inc. Stock Purchase Plan during fiscal 2018. The stock purchase plan is a broad-based plan available to all non-employee directors and all eligible employees. The plan provides that non-employee directors may contribute to the plan all or a portion of their monthly cash director fees. Pier 1 Imports will contribute to the plan an amount equal to 25% of each non-employee director’s contribution. The contributed funds are

used to make monthly purchases of shares of Pier 1 Imports common stock based on the NYSE closing price for Pier 1 Imports common stock on the last trading day of the calendar month. Shares purchased are allocated to the accounts of participants in proportion to the funds received from each respective account. All shares in a participant’s account are automatically released to the participant at least once each calendar year without affecting the participant’s participation in the plan. The participant may hold the released shares in the plan or sell or transfer the released shares. A participant’s account is credited with all dividends paid on shares held in her or his account and those cash dividends are reinvested under the plan in Pier 1 Imports common stock.

None of the non-employee directors participated in the Pier 1 Imports, Inc. Deferred Compensation Plan in fiscal 2018.

 

 

Fiscal 2018 Non-Employee Director Compensation Table

The following table sets forth a summary of the non-employee director compensation with respect to the fiscal year ended March 3, 2018, for services rendered in all capacities to Pier 1 Imports:

 

    NAME

 

 

 

FEES

EARNED OR

PAID IN

CASH(1)

($)

 

    

STOCK

AWARDS(4)

($)

 

    

ALL OTHER
COMPENSATION
(5)

($)

 

  

TOTAL       

($)       

 

 

    Claire H. Babrowski(2)

 

     

 

$180,833

 

 

       $

 

0

 

 

     $37,813

 

     $

 

218,646       

 

 

 

    Cheryl A. Bachelder

 

     

 

$175,000

 

 

       $

 

63,720

 

 

    

 

     $

 

238,720       

 

 

 

    Hamish A. Dodds

 

     

 

$154,167

 

 

       $

 

38,717

 

 

     $15,625

 

     $

 

208,509       

 

 

 

    Brendan L. Hoffman

 

     

 

$150,000

 

 

       $

 

34,342

 

 

     $         0

 

     $

 

184,342       

 

 

 

    Terry E. London(3)

 

     

 

$211,607

 

 

       $

 

60,367

 

 

    

 

     $

 

271,974       

 

 

 

    Cynthia P. McCague

 

     

 

$150,000

 

 

       $

 

32,443

 

 

    

 

     $

 

182,443       

 

 

 

    Michael A. Peel

 

     

 

$150,000

 

 

       $

 

61,175

 

 

    

 

     $

 

211,175       

 

 

 

    Ann M. Sardini

 

     

 

$175,000

 

 

       $

 

0

 

 

     $16,500

 

     $

 

191,500       

 

 

 

(1)    This column represents the amount of cash compensation earned in fiscal 2018 for board and committee service. As described in footnote 4 below, certain percentages of this cash compensation were deferred by certain directors into the Pier 1 Imports’ Director Deferred Stock Unit Program.
(2)      Ms. Babrowski received a one-time payment of $10,000 in recognition of the additional time associated with the chief executive officer search.
(3)   While serving as interim president and chief executive officer during fiscal 2018 (from February 26, 2017 – April 30, 2017) and as executive chairman (from May 1, 2017 – July 31, 2017), Mr. London continued to receive an annual cash retainer for serving as chairman of the board of directors, but did not receive the annual retainer for non-employee directors. Mr. London’s compensation for serving as interim president and chief executive officer and as executive chairman is presented in the Summary Compensation Table on page 40.
(4)    This column represents the dollar value of Pier 1 Imports’ 25% match on monthly cash director fees (but not committee chair or chairman fees) deferred by each director into the Pier 1 Imports’ Director Deferred Stock Unit Program. This column also includes dividends paid on DSUs held in her or his account. These amounts were converted to DSUs as shown in the table below. The dollar amount represents the grant date fair value of such DSUs granted in fiscal 2018 in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation-Stock 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 to calculate the grant date fair value of the DSUs. For dividends, the number of DSUs is calculated using the closing price of Pier 1 Imports common stock on the dividend payable date.
(5)   See Fiscal 2018 All Other Compensation table below.

 

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The following table shows fiscal 2018 DSUs for each non-employee director given her or his deferral percentage and Pier 1 Imports’ match:

 

      NAME

 

  

DEFERRAL

%

 

  

 

FISCAL
YEAR 2018
FEES
DEFERRED

($)

 

  

 

DSUS
CONVERTED
FROM
DEFERRED
FEES

(#)

  

DSUS
CONVERTED
FROM 25%
COMPANY
MATCH

(#)

  

DIVIDENDS
DEFERRED
DURING
FISCAL
YEAR 2018

($)

  

DSUS
CONVERTED
FROM
DEFERRED
DIVIDENDS

(#)

  

AGGREGATE   

DSUS   

OWNED AT   

FISCAL 2018   

YEAR-END   

(#)   

 

    Claire H. Babrowski

 

   0%

 

     $

 

0

 

 

      

 

0

 

 

      

 

0

 

 

     $

 

0

 

 

      

 

0

 

 

      

 

0

 

 

 

    Cheryl A. Bachelder

 

   100%/0%(1)

 

     $

 

145,833

 

 

      

 

29,976

 

 

      

 

6,423

 

 

     $

 

32,470

 

 

      

 

7,578

 

 

      

 

139,125

 

 

 

    Hamish A. Dodds

 

   50%/70%(1)

 

     $

 

82,917

 

 

      

 

18,882

 

 

      

 

4,505

 

 

     $

 

18,717

 

 

      

 

4,342

 

 

      

 

85,087

 

 

 

    Brendan L. Hoffman

 

   50%/0%(1)

 

     $

 

62,500

 

 

      

 

12,847

 

 

      

 

3,212

 

 

     $

 

18,717

 

 

      

 

4,342

 

 

      

 

77,759

 

 

 

    Terry E. London

 

   10%/0%(1)

 

     $

 

11,295

 

 

      

 

2,643

 

 

      

 

360

 

 

     $

 

58,827

 

 

      

 

13,401

 

 

      

 

221,397

 

 

 

    Cynthia P. McCague

 

   50%

 

     $

 

75,000

 

 

      

 

16,542

 

 

      

 

4,135

 

 

     $

 

13,693

 

 

      

 

3,199

 

 

      

 

63,639

 

 

 

    Michael A. Peel

 

   100%/50%(1)

 

     $

 

137,500

 

 

      

 

29,388

 

 

      

 

7,347

 

 

     $

 

26,800

 

 

      

 

6,266

 

 

      

 

120,477

 

 

 

    Ann M. Sardini

 

   0%

 

     $

 

0

 

 

      

 

0

 

 

      

 

0

 

 

     $

 

0

 

 

      

 

0

 

 

      

 

0

 

 

 

(1)    Effective January 1, 2018, Messrs. Dodds and Peel elected to defer 70% and 50%, respectively, of their cash fees, and Ms. Bachelder and Messrs. Hoffman and London elected to no longer defer any of their cash fees.

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 date fair value of each DSU in accordance with FASB ASC Topic 718.

 

FISCAL MONTH IN WHICH
FEES WERE EARNED

 

  

 

CLOSING PRICE OF PIER 1 IMPORTS

COMMON STOCK ON LAST

TRADING DAY OF EACH FISCAL MONTH

 

 

March 2017

 

  

$7.16

 

 

April 2017

 

  

$6.74

 

 

May 2017

 

  

$5.23

 

 

June 2017

 

  

$5.19

 

 

July 2017

 

  

$4.69

 

 

August 2017

 

  

$4.19

 

 

September 2017

 

  

$4.19

 

 

October 2017

 

  

$4.41

 

 

November 2017

 

  

$4.45

 

 

December 2017

 

  

$4.14

 

 

January 2018

 

  

$3.64

 

 

February 2018

 

  

$3.16

 

 

 

DATE OF DIVIDEND

 

  

 

CLOSING PRICE OF PIER 1 IMPORTS

COMMON STOCK

 

 

May 10, 2017

 

  

$6.87

 

 

August 2, 2017

 

  

$4.52

 

 

November 1, 2017

 

  

$4.19

 

 

January 31, 2018

 

  

$3.32

 

 

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The following table describes each component of All Other Compensation for fiscal 2018:

 

 

   FISCAL 2018 ALL OTHER COMPENSATION

 

 

    NAME

 

  

 

PAYMENTS
RELATING
TO STOCK
PURCHASE
PLAN
(1)

 

      

OTHER
EXPENSES
(2)

 

      

TOTAL

ALL OTHER
COMPENSATION

 

 

 

    Claire H. Babrowski

 

    

 

            $37,813

 

 

 

      

 

$0         

 

 

 

      

 

                $37,813

 

 

 

 

    Cheryl A. Bachelder

 

    

 

N/A

 

 

 

      

 

–         

 

 

 

      

 

 

 

 

 

    Hamish A. Dodds

 

    

 

$15,625

 

 

 

      

 

–         

 

 

 

      

 

                $15,625

 

 

 

 

    Brendan L. Hoffman

 

    

 

N/A

 

 

 

      

 

$0         

 

 

 

      

 

$         0

 

 

 

 

    Terry E. London

 

    

 

N/A

 

 

 

      

 

–         

 

 

 

      

 

 

 

 

 

    Cynthia P. McCague

 

    

 

N/A

 

 

 

      

 

–         

 

 

 

      

 

 

 

 

 

    Michael A. Peel

 

    

 

N/A

 

 

 

      

 

–         

 

 

 

      

 

 

 

 

 

    Ann M. Sardini

 

    

 

$16,500

 

 

 

      

 

$0         

 

 

 

      

 

                $16,500

 

 

 

 

(1)  This column reports aggregate matching contributions to the account of each director who participated in the Stock Purchase Plan.
(2)  Perquisites and personal benefits aggregating less than $10,000 are not shown.

Other Governance Matters

Prohibition on Hedging and Pledging

We have a written insider trading policy that, among other things, prohibits directors, officers and employees from selling short a Pier 1 Imports security, from trading in options on a Pier 1 Imports security, including calls, puts, and other derivative securities, from engaging in other forms of hedging or monetization transactions, such as equity swaps, exchange funds, collars or variable forwards, with respect to a Pier 1 Imports security, holding Pier 1 Imports securities in a margin account or pledging Pier 1 Imports securities as collateral for a loan, or placing standing or limit orders on a Pier 1 Imports security (except standing or limit orders under approved rule 10b5-1 trading plans).

Clawback Policy

We have a policy with respect to the recovery of cash and equity-based incentive compensation, commonly referred to as a “clawback policy,” applicable to our 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 our website at www.pier1.com by selecting “Investor Relations” under the “OUR COMPANY” section on the home page, selecting “Corporate Governance” then “Documents and Charters,” and governs the recovery of incentive-based compensation given the occurrence of certain events which could lead to an adjustment of that compensation.

 

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SHARE OWNERSHIP

Security Ownership of Directors and Executive Officers

The following table indicates the beneficial ownership of Pier 1 Imports common stock by each director nominee, each named executive officer shown below in the table included under the caption “Summary Compensation Table for the Fiscal Years Ended March 3, 2018, February 25, 2017, and February 27, 2016,” and all directors and executive officers as a group, as of April 27, 2018, unless otherwise indicated below:

 

   NAME OF BENEFICIAL OWNER

  

COMMON SHARES
BENEFICIALLY
             OWNED
(1)(2)            

 

  

 

        PERCENT        
        OF CLASS        

 

 

  Claire H. Babrowski

 

    

 

 

 

 

77,627

 

 

 

    

 

 

 

 

*

 

 

 

 

  Cheryl A. Bachelder

 

    

 

 

 

 

141,187

 

 

 

    

 

 

 

 

*

 

 

 

 

  Michael R. Benkel

 

    

 

 

 

 

354,325

 

 

 

    

 

 

 

 

*

 

 

 

 

  Jeffrey N. Boyer

 

    

 

 

 

 

19,784

 

 

 

    

 

 

 

 

*

 

 

 

 

  Catherine David

 

    

 

 

 

 

410,956

 

 

 

    

 

 

 

 

*

 

 

 

 

  Hamish A. Dodds

 

    

 

 

 

 

122,257

 

 

 

    

 

 

 

 

*

 

 

 

 

  Brendan L. Hoffman

 

    

 

 

 

 

77,759

 

 

 

    

 

 

 

 

*

 

 

 

 

  Alasdair B. James

 

    

 

 

 

 

616,046

 

 

 

    

 

 

 

 

*

 

 

 

 

  Terry E. London

 

    

 

 

 

 

364,254

 

 

 

    

 

 

 

 

*

 

 

 

 

  Cynthia P. McCague

 

    

 

 

 

 

65,916

 

 

 

    

 

 

 

 

*

 

 

 

 

  Michael A. Peel

 

    

 

 

 

 

122,755

 

 

 

    

 

 

 

 

*

 

 

 

 

  Darla D. Ramirez

 

    

 

 

 

 

54,831

 

 

 

    

 

 

 

 

*

 

 

 

 

  Ann M. Sardini

 

    

 

 

 

 

56,871

 

 

 

    

 

 

 

 

*

 

 

 

 

  Bhargav J. Shah

 

    

 

 

 

 

163,517

 

 

 

    

 

 

 

 

*

 

 

 

 

  Nancy A. Walsh

 

    

 

 

 

 

182,481

 

 

 

    

 

 

 

 

*

 

 

 

 

  All directors and executive

  officers as a group

  (18 individuals)

 

    

 

 

 

 

3,311,409

 

 

 

    

 

 

 

 

3.96

 

 

%

 

 

*   Represents less than 1% of the outstanding shares of the class.
(1)    The table includes shares that the person has the right to acquire within 60 days of April 27, 2018, upon the exercise of stock options: Mr. Benkel (10,000 shares). The table also includes unvested shares of restricted stock over which the person has sole voting power.
(2)    The table includes DSUs as of April 27, 2018, for Ms. Bachelder (139,125 DSUs), Mr. Dodds (88,701 DSUs), Mr. Hoffman (77,759 DSUs), Mr. London (221,397 DSUs), Ms. McCague (65,916 DSUs) and Mr. Peel (122,755 DSUs). The DSUs will be exchanged one-for-one for shares of Pier 1 Imports common stock when the director ceases to be a member of the board of directors, as described above under the caption “Non-Employee Director Compensation for the Fiscal Year Ended March 3, 2018 – Fees Paid to Directors.” A DSU is the economic equivalent of one share of Pier 1 Imports common stock and does not carry any voting rights.

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    19


Table of Contents

 

  SHARE 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, 2018, to beneficially own more than 5% of Pier 1 Imports common stock:

 

   NAME AND ADDRESS OF BENEFICIAL OWNER

  

 

COMMON SHARES
BENEFICIALLY
            OWNED            

          PERCENT        
         OF CLASS        

 

  Towle & Co.

  1610 Des Peres Road, Suite 250

  St. Louis, MO 63131

       8,722,580 (1)       10.51 %

 

  Dimensional Fund Advisors LP

  Building One

  6300 Bee Cave Road

  Austin, TX 78746

       7,044,967 (2)       8.49 %

  The Vanguard Group

  100 Vanguard Blvd.

  Malvern, PA 19355

       6,128,633 (3)       7.39 %

  BlackRock, Inc.

  55 East 52nd Street

  New York, NY 10055

       5,600,050 (4)       6.75 %

  JPMorgan Chase & Co

  270 Park Avenue

  New York, NY 10017

       4,290,482 (5)       5.17 %

 

(1)    Based on information contained in a Schedule 13G filed with the SEC on February 7, 2018. Towle & Co. has sole voting power over the 8,722,580 shares shown and sole dispositive power over the 8,722,580 shares shown. The Schedule 13G filed by Towle & Co. provides information as of February 7, 2018, and, consequently, the beneficial ownership of Towle & Co. may have changed between February 7, 2018 and the printing of this proxy statement.
(2)    Based on information contained in a Schedule 13G/A filed with the SEC on February 9, 2018, Dimensional Fund Advisors LP has sole voting power over 6,762,674 of the shares shown and sole dispositive power over the 7,044,967 shares shown. The Schedule 13G filed by Dimensional Fund Advisors LP provides information as of February 9, 2018, and, consequently, the beneficial ownership of Dimensional Fund Advisors LP may have changed between February 9, 2018 and the printing of this proxy statement.
(3)    Based on information contained in a Schedule 13G/A filed with the SEC on February 9, 2018, The Vanguard Group has sole voting power over 88,435 of the shares shown, shared voting power over 8,241 of the shares shown, sole dispositive power over 6,037,564 of the shares shown, and shared dispositive power over 91,069 of the shares shown. The Schedule 13G/A filed by The Vanguard Group provides information as of February 7, 2018, and, consequently, the beneficial ownership of The Vanguard Group may have changed between February 9, 2018 and the printing of this proxy statement.
(4)    Based on information contained in a Schedule 13G/A filed with the SEC on January 29, 2018, BlackRock, Inc. has sole voting power over 5,370,683 of the shares shown and sole dispositive power over the 5,600,050 shares shown. The Schedule 13G/A filed by BlackRock, Inc. provides information as of January 24, 2018, and, consequently, the beneficial ownership of BlackRock, Inc. may have changed between January 29, 2018 and the printing of this proxy statement.
(5)    Based on information contained in a Schedule 13G filed with the SEC on January 11, 2018, JPMorgan Chase & Co has sole voting power over 3,777,382 shares shown and sole dispositive power over the 4,290,482 shares shown. The schedule 13G filed by JPMorgan Chase & Co provides information as of January 11, 2018, and, consequently, the beneficial ownership of JPMorgan Chase & Co may have changed between January 11, 2018 and the printing of this proxy statement.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of Pier 1 Imports’ equity securities, to file with the SEC reports disclosing their ownership and changes in ownership of Pier 1 Imports common stock or other equity securities. Our executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish Pier 1 Imports with copies of all Section 16(a) reports they file. To our 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.

 

20    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION

PROPOSAL NO. 2 – Advisory Approval of the Compensation of Pier 1 Imports’ Named Executive Officers

A proposal to adopt a 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 Compensation Discussion and Analysis, compensation tables and narrative discussion under the caption “Compensation.”

Under rules adopted by the SEC pursuant to Section 14A of the Exchange Act, our shareholders are entitled to vote not less frequently than every three years upon an advisory, non-binding resolution approving the compensation of Pier 1 Imports’ named executive officers (“NEOs”), as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion (commonly called the “say-on-pay vote”). At our annual meeting of shareholders held on June 22, 2017, our shareholders indicated in an advisory vote that they overwhelmingly favored an annual say-on-pay vote. Accordingly, we are soliciting a non-binding, advisory shareholder vote on Pier 1 Imports’ executive compensation as described in this proxy statement. Shareholders are being asked to vote on the following resolution:

 

 

 

 

 

RESOLVED, that 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 Compensation Discussion and Analysis, compensation tables and narrative discussion under the caption “Compensation,” is hereby APPROVED.

 

 

 

The compensation of the NEOs is discussed and disclosed below in the Compensation Discussion and Analysis, compensation tables and narrative under the caption “Compensation.” As discussed in those disclosures, the board of directors and management believe that our compensation policies, principles, objectives and practices are focused on pay for performance and are strongly aligned with the long-term interests of our shareholders. Our compensation programs are designed to enable us 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. The vote will not be construed to create or imply any change to the fiduciary duties of the board of directors, or to create or imply any additional fiduciary duties for the board of directors. However, Pier 1 Imports’ board of directors values the opinions of shareholders, and, if the shareholders do not adopt the resolution set forth above, the compensation committee will consider shareholder concerns and evaluate whether any actions are necessary to address those concerns.

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 resolution is required to approve this resolution. Abstentions will be counted as represented and entitled to vote on this resolution and will have the effect of a vote “Against” the resolution. Broker non-votes will not be considered entitled to vote on this resolution and will not be counted in determining the number of shares necessary for approval of 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 Compensation Discussion and Analysis, compensation tables and narrative discussion under the caption “Compensation.”

 

 

 

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    21


Table of Contents

 

  COMPENSATION

 

 

 

Compensation Discussion and Analysis

 

Message from the Compensation Committee

Fiscal 2018 was the start of what we believe will be a significant transformation for the Pier 1 Imports business to grow our customer base with a highly relevant and differentiated brand, style and value proposition. To support this new vision, which we refer to as Pier 1 2021: A New Day, we hired new leadership in key positions, strengthened our focus on pay for performance, and repositioned our executive compensation philosophy and principles, which will lead to changes to our executive compensation programs for fiscal 2019. We have set significant and aspirational milestones for our business and tied executive compensation programs specifically to those milestones. We believe we are well-positioned for fiscal 2019 and the future.

A New Leadership Team

To accomplish the Pier 1 2021 vision, assembling a best-in-class leadership team is a top priority. In April 2017, the board recruited Alasdair James to become our president and chief executive officer effective May 1, 2017. Mr. James came to the position with deep industry expertise and a compelling vision for the future. His leadership has focused the organization and instilled renewed energy for the future.

Beyond the appointment of Mr. James, we welcomed other key leaders whose vast experiences will further drive our transformational business strategies.

 

     Kelly Cook, executive vice president, marketing and chief marketing officer, started with Pier 1 Imports in March 2018. Ms. Cook’s expertise will be critical in launching a new brand strategy to drive top-line growth.

 

     Nancy Walsh, executive vice president and chief financial officer, started with Pier 1 Imports in January 2018. Ms. Walsh’s significant retail experience will be invaluable to our profit improvement initiatives.

 

     William Savage, executive vice president, sourcing, started with Pier 1 Imports in December 2017. Mr. Savage’s deep retail sourcing experience will accelerate our cost savings and inventory goals.

 

     Bhargav Shah, senior vice president and chief information officer, started with Pier 1 Imports in August 2017. Mr. Shah’s broad-based technology, digital and supply chain expertise will fuel the growth of our IT and digital strategy.

While there was substantial rebuilding of our leadership team in fiscal 2018, we believe the new team in place is a strong one that has the talent, expertise, drive and passion to deliver the results defined in our three-year strategic plan.

Our Commitment to Pay for Performance

Pier 1 Imports’ performance in fiscal 2018 did not meet our expectations for shareholder value creation, and as such, pay for our executives was impacted as follows:

 

     None of our current named executive officers received a base pay increase (only small increases were provided for our former chief financial officer and our interim chief financial officer)

 

     No bonuses were paid to our named executive officers for fiscal 2018 performance

 

     No vesting occurred for our fiscal 2016-2018 performance-based restricted stock and our other outstanding performance-based stock awards are currently not projected to vest

While our pay programs are designed to be competitive with the market and our peers when targeted performance is achieved, our executives have actually earned significantly less than the compensation targets for their positions in recent years. This clear relationship between performance and pay reflects a compensation plan design that is highly results driven and closely aligned with shareholder interests. We believe we now have the transformational strategies and leadership team in place to deliver sustainable long-term value to our shareholders and, by doing so, the competitiveness of the actual compensation levels paid to company executives will be restored to targeted levels.

Repositioning our Executive Compensation Philosophy and Principles

As we begin the implementation of Pier 1 2021: A New Day with a talented new team in place, we determined that it was time for a thoughtful review of our compensation philosophy and principles. The alignment of pay and performance remains a cornerstone of our philosophy – married with the goals of high team engagement and retention – to bring the Pier 1 2021 vision to fruition.

 

22    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

Highlights of our Fiscal 2019 Executive Compensation Philosophy

 

     Decisive and differentiated action for specific leadership talent required to accomplish the plan

 

     Performance tightly linked to the key execution milestones of the transformation

 

     Goals balanced to reflect both individual accountability and team collaboration required to deliver results

 

     Attention to short-term foundational requirements, while building to long-term sustainable performance

 

     Consideration given to affordability over time

 

     Aimed to ensure we build a high-performance company that delivers substantial value creation over time

Highlights of our Fiscal 2019 Executive Compensation Programs

 

     Changed metrics for short- and long-term incentive plans to align more directly with the results and outcomes of our strategic transformation

 

     Shifted mix slightly of our long-term incentive vehicles to increase retention value while still maintaining a strong connection to creating shareholder value

 

     Developed a goal-setting process that maintains a high degree of rigor and challenge while reflecting the rapidly changing nature of both our business and the broader retail industry

The compensation committee is committed to assessing our executive compensation programs on a regular basis. We strongly believe that in the near term, the above actions were necessary to drive performance, retention and motivation of our leadership team – all of which are essential to a successful transformation. As we monitor the execution of the business plan, the committee will regularly re-evaluate its compensation approach and adjust as merited.

In conclusion, Pier 1 Imports is pursuing a bold transformation of the Company, requiring new strategy, a new set of metrics and outcomes and a leadership team that is energized, excited and focused. The actions we have taken as a compensation committee reflect these priorities while also continuing to drive a strong pay-for-performance orientation. We are convinced that these compensation plans will allow Pier 1 Imports to attract and retain the very best leadership to drive successful results for both the Company and its shareholders and is the foundation for our support of the board’s recommendation to vote “YES” on say-on-pay (Proposal No. 2).

COMPENSATION COMMITTEE

Cheryl A. Bachelder, Chair

Claire H. Babrowski

Michael A. Peel

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    23


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  COMPENSATION

 

 

Introduction

At Pier 1 Imports, our ability to successfully attract, motivate and retain a qualified executive management team in a challenging and highly competitive retail environment is essential to our success. It is important that we offer competitive compensation that is structured to promote the long-term success and performance of our Company, is in the best interest of our shareholders, and delivers value to our executives. With this in mind, we set out to ensure our fiscal year 2018 executive compensation programs met the following objectives and philosophy:

 

 

LOGO

In fiscal 2018, we had significant transition in leadership as we built a strong executive team that would be well positioned to lead us through a successful transformation. This Compensation Discussion and Analysis describes the compensation of our named executive officers listed in the table below for fiscal 2018:

 

 

  NAMED EXECUTIVE OFFICERS

 

 

 

POSITION

 

 

 

DATES IN ROLE

 

 

  Alasdair B. James

 

 

 

President and Chief Executive Officer

 

 

 

Appointed May 1, 2017

 

 

  Nancy A. Walsh

 

 

 

Executive Vice President and Chief Financial Officer

 

 

 

Appointed January 25, 2018

 

 

  Michael R. Benkel

 

 

 

Executive Vice President, Global Supply Chain

 

 

 

Appointed July 26, 2015

 

 

  Bhargav J. Shah

 

 

 

Senior Vice President and Chief Information Officer

 

 

 

Appointed August 7, 2017

 

 

  Terry E. London

 

 

 

Former Interim President and Chief Executive Officer

 

 

 

Served January 1, 2017 – April 30, 2017

 

 

  Darla D. Ramirez

 

 

 

Former Interim Chief Financial Officer

 

 

 

Served October 4, 2017 – January 24, 2018

 

 

  Jeffrey N. Boyer

 

 

 

Former Executive Vice President and Chief Financial Officer

 

 

 

Served July 27, 2015 – October 3, 2017

 

 

  Catherine David

 

 

 

Former Executive Vice President, Merchandising

 

 

 

Served August 3, 2009 – May 1, 2018

 

 

 

 

 

 

Fiscal 2018 Leadership Transitions

 

On May 1, 2017, Mr. James joined Pier 1 Imports as president and chief executive officer, replacing Mr. London who had been serving as the interim president and chief executive officer and executive chairman between January 1, 2017 and April 30, 2017. Mr. London continued to serve as executive chairman through July 31, 2017, after which Mr. London returned to his former role as non-executive chairman.

 

On January 25, 2018, Ms. Walsh joined Pier 1 Imports as executive vice president and chief financial officer, replacing Ms. Ramirez who had been serving as the interim chief financial officer since the departure of the former chief financial officer, Mr. Boyer, in October 2017. Ms. Ramirez continued in her role as the Company’s principal accounting officer and as vice president – controller of Pier 1 Imports’ operating subsidiaries subsequent to Ms. Walsh’s hire.

 

 

 

 

Fiscal 2018 Business Performance

Fiscal 2018 was a challenging year and was marked by inconsistent financial performance due to a combination of factors, including a highly promotional competitive environment, a lack of freshness in our assortments and a value equation that did not compel customers to buy.

Fiscal 2018 financial results include:

  Net sales decreased 1.6% to $1.8 billion.

  Company comparable sales on a 52-week basis decreased 2.0%.

  E-Commerce sales exceeded $450 million, with sales penetration reaching approximately 26%, up from approximately 20% in fiscal 2017.

 

24    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

 Selling, general and administrative expenses were $576.9 million, or 32.1% of net sales, compared to $587.8 million, or 32.1% of net sales, during   fiscal 2017, reflecting ongoing cost control measures.

 Net income was $11.6 million, or $0.14 per share. Adjusted net income (non-GAAP) was $16.8 million, or $0.21 per share.(1)

 Positive cash flow from operations of $66 million.

 Cash and cash equivalents at year-end of $135 million.

 Inventories at the end of fiscal 2018 decreased 13.4% to $347.4 million, compared to $401.0 million at the end of fiscal 2017.

 A total of 15 net stores closed in fiscal 2018 as part of the real estate optimization initiative announced in fiscal 2016.

 

(1)   This proxy statement references adjusted net income and adjusted earnings per share, which exclude the impact of legal and regulatory costs related to California wage-and-hour litigation and an ongoing Consumer Product Safety Commission inquiry and the related tax impact. Pier 1 Imports believes these non-GAAP financial measures are useful in comparing its year-over-year operating performance. Adjusted net income and adjusted earnings per share should be considered supplemental and not a substitute for Pier 1 Imports’ net income and earnings per share results reported in accordance with GAAP for the periods presented. See page 27 of the Pier 1 Imports Annual Report on Form 10-K for the fiscal year ended March 3, 2018, as filed with the SEC on May 1, 2018 for a reconciliation of these amounts.

We recently embarked on a new three-year strategic plan, Pier 1 2021: A New Day, designed to improve the Company’s brand proposition, drive sales growth and capture operating efficiencies.

While we are moving quickly to facilitate change, our fiscal 2018 results did not meet the threshold performance needed to deliver payouts (as shown in the charts below). Therefore, highlighting a strong commitment to our pay-for-performance philosophy, our named executive officers did not receive short-term incentive plan awards and no vesting occurred for our fiscal 2016-2018 performance-based restricted stock awards.

FISCAL 2018 PERFORMANCE

SHORT-TERM INCENTIVE

 

PROFIT GOAL

Dollars in Millions

 

  

MERCHANDISE MARGIN

Dollars in Millions

 

LOGO    LOGO

LONG-TERM INCENTIVE

 

3-YEAR PROFIT GOAL

Dollars in Millions

  

RELATIVE 3-YEAR TOTAL SHAREHOLDER

RETURN PERFORMANCE

 

LOGO

  

 

LOGO

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    25


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  COMPENSATION

 

 

Under Pier 1 2021: A New Day, the Company will be focused on:

 Improving brand proposition by segmenting the marketplace and focusing on targeted consumer groups, refining merchandise assortments,   delivering value, ensuring that Pier 1 fits her style and creating ease of shopping;

 Driving sales growth through new marketing strategies around content, digital communications and customer experience, reimagining the shopping   experience and leveraging and strengthening the Company’s omni-channel platform; and

 Capturing operating efficiencies through initiatives across pricing and promotion, inventory reduction, sourcing and supply chain.

We remain fully committed to a pay-for-performance culture. Our leadership is equally committed to transforming the business through the successful execution of Pier 1 2021: A New Day to create value for our shareholders.

 

26    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

Executive Summary

 

 

 

Factors That

Guided Our

Decisions

      

 

  Financial performance of the Company that was below expectations

 

  Executive compensation philosophy and objectives

 

  Need for a strong leadership team to drive our business transformation

 

  Market pay practices of our peer group and broader competitors for leadership talent

 

  The dynamic and challenging retail environment

 

   

   

   

   

   

Key Fiscal

2018 Compensation  

Decisions

    

 

The compensation decisions outlined below demonstrate our strong, sustained commitment to paying for performance.

 

New Named Executive Officer Pay Packages

 

Filling key executive positions in fiscal 2018 was a top priority. The compensation committee designed pay packages that are competitive within the retail industry and our peer group in order to attract and retain key talent to lead the development and execution of Pier 1 2021: A New Day.

 

 

 

 

               

Alasdair B. James                   

President and CEO                   

 

    

Nancy A. Walsh                   

CFO                  

 

    

Bhargav J. Shah         

CIO         

 

    

 

Starting Salary

 

      

 

 

 

 

$1,000,000                  

 

 

 

 

      

 

 

 

 

$575,000                  

 

 

 

 

      

 

 

 

 

$425,000

 

 

         

 

    

 

Signing Bonus

 

      

 

 

 

 

$300,000(1)                

 

 

 

 

      

 

 

 

 

$200,000(2)                

 

 

 

 

      

 

 

 

 

$150,000

 

 

(3) 

 

    

 

New-Hire Grants

      

 

 

 


 

 

$1,000,000                  

(stock options)                  

 

$500,000                  

(time-based                   
restricted stock)                  

 

 

 

 

 

 

 
 

 

      

 

 


 

$750,000                  

(time-based                   
restricted stock)                  

 

 

 
 

            
    

 

Long-Term Incentive Grant

(Time-Based Restricted

Stock)

 

         $500,000                                           $170,000  
    

 

Long-Term Incentive Grant

(Performance-Based

Restricted Stock)

 

         $1,500,000                                           $255,000  
    

 

(1) Subject to a clawback if he left the Company or was terminated for cause within 12 months of his May 1, 2017 hire date.

(2) Subject to a pro rata clawback in the event she leaves the Company or is terminated for cause within 12 months of her January 25, 2018 hire date.

(3) Payment to offset forfeited short-term incentive opportunity related to his transition.

  

 

 

      

 

Short-Term Incentive

 

  All named executive officers were eligible to receive short-term incentive awards in fiscal 2018, except for Ms. Walsh, due to her hire date, and Mr. London, who did not participate.

 

  Fiscal 2018 short-term incentive performance targets for Profit Goal and merchandise margin dollars were not met, therefore no named executive officers received a short-term incentive award payout.

 

Long-Term Incentives

 

  Named executive officers employed before April 14, 2017 received the following grants of performance-based restricted stock and time-based restricted shares.

 

¡  Approximately 60% of the shares granted for fiscal 2018 were performance-based, with half vesting based on achievement of a cumulative three-year Profit Goal (Profit Goal performance-based shares) and the other half vesting based on three-year average ROIC (ROIC performance-based shares).

 

¡  Approximately 40% of the shares granted for fiscal 2018 were time-based, vesting in substantially equal amounts on each of the first three anniversaries of the grant date.

 

  The awards are subject to an increase or decrease of 10% based on a TSR modifier.

 

  Named executive officers hired after April 14, 2017 received the grants set forth in the table above.

 

  No vesting occurred for our fiscal 2016-2018 performance-based restricted stock awards based on the Profit Goal and TSR performance measures.

 

   

   

 

   

   

   

   

   

   

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    27


Table of Contents

 

  COMPENSATION

 

 

 

Fiscal Year 2019

Program Updates

 

 

 

To support a key objective of our executive compensation plan — attracting, motivating and retaining a highly qualified and effective executive team — and reflect the unique and transformational priorities for our business, we are updating features of our incentive plans for fiscal 2019 as follows:

 

 Changing the metrics in the short- and long-term incentive plans to align more directly with the results and outcomes of our strategic    plan

 

 Changing the mix of our long-term incentive vehicles to increase the retention value while still maintaining a strong connection to    creating shareholder value

 

 Developing a goal setting process that maintains a high degree of rigor and challenge while reflecting the uncertain nature of both our    business and the broader retail industry

 

As we monitor the execution of the business plan, the committee will regularly re-evaluate the compensation approach and adjust as merited.

 

Chief Executive Officer Pay At-A-Glance

Mr. James’ target total direct compensation (base salary, target short-term incentive and target long-term incentive grants) for fiscal 2018 was determined when he was hired in May 2017. A significant portion of Mr. James’ total direct compensation is “at-risk.” His new-hire grants included a substantial stock option award that provides a direct link between his future compensation and the value he creates for shareholders, and 75% of his annual long-term incentive award is performance based. To the extent stock price increases and target performance measures are not achieved, or they are exceeded, our chief executive officer’s resulting compensation will be below or above the target total compensation, supporting our pay-for-performance philosophy.

CHIEF EXECUTIVE OFFICER FISCAL 2018 COMPENSATION MIX

 

 

LOGO

 

MR. JAMES’ LONG-TERM INCENTIVE PAY “AT RISK”

 

   

 

TARGET OR FAIR MARKET VALUE AT GRANT

 

   

 

RISK METRIC

 

 

Annual Awards

 

           

 

Performance-Based

Restricted Stock

 

 

 

 

 

$1,500,000

 

 

 

50% Profit Goal —three-year cliff vest  

50% ROIC — three-year cliff vest  

 

 

Time-Based Restricted Stock

 

 

 

 

$500,000

 

 

 

 

    vest 33% year 1; 33% year 2;
34% year 3    

 

 

Awards Related to Mr. James’ Hire

 

           

 

Stock Options

 

 

 

 

$1,000,000

 

 

 

 

vest 25% year 3; 25% year 4; 50%
year 5

 

 

Time-Based Restricted Stock

 

   

 

$500,000

 

 

 

 

three-year cliff vest

 

 

28    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

Interim CEO Pay

During Mr. London’s services as interim president and chief executive officer, he received a base salary but no short- or long-term incentive awards. When he returned to his role as chairman, he received a grant of 142,857 shares of time-based restricted stock in recognition for his past service as chairman of the board, and in order to provide an incentive for his continued service as chairman of the board. See page 36 for further details on the LTI grant.

Aligning Pay with Performance

The importance of executive leadership cannot be overstated in today’s challenging and highly competitive retail industry. Our executives must be motivated to execute as a team to achieve our strategic transformation in the short term, which we believe will lead to positive long-term results and value creation for our shareholders.

To accomplish this focus, we provide both short- and long-term incentives to our executives to encourage the effective management of major functions, teamwork, and strategy development and execution, which contribute to increased shareholder value. Therefore, the majority of named executive officer compensation is “at-risk” and tied to Pier 1 Imports’ performance.

We continue to set rigorous performance targets based on profitability as well as other financial return metrics in the near term while considering Pier 1 Imports’ performance compared to its peers.

Rewarding results linked to short- and long-term Company performance (pay for performance) is one of the four principles that comprise our executive compensation philosophy. To ensure that we are adhering to this principle, we evaluate the degree of alignment of our incentive compensation to our business results, which are reflected in our performance metrics. The three performance metrics used in our executive compensation program for fiscal 2018 align with our strategy for long-term value creation and included the following:

 

LOGO

 

Profit Goal Earnings before interest, taxes, depreciation and amortization, and which may be adjusted for certain recurring non-cash items and unusual or non-recurring items each as determined by the compensation committee Merchandise Margin Dollars Gross Profit plus delivery and fulfillment net costs and store occupancy costs Return on Invested Capital (ROIC) Calculated by dividing the Company’s operating income for any particular fiscal year, less taxes, by the sum of (i) the average of the beginning and ending fiscal year inventory balances, plus (ii) the average of the beginning and ending fiscal year net fixed asset balances, less (iii) the average of the beginning and ending fiscal year accounts payable balances

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    29


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  COMPENSATION

 

 

Both the Profit Goal and the ROIC performance-based shares granted in fiscal 2018 are subject to an increase or decrease of 10% as shown in the table below based on Pier 1 Imports’ Total Shareholder Return percentile rank within a peer group comprised of all of the companies in the Russell 1000 Specialty Retail Index as of the beginning of fiscal 2018 plus any other specialty retailers in Pier 1 Imports’ fiscal 2018 peer group.

 

 

COMPANY’S PERCENTILE
RANK WITHIN PEER GROUP

 

 

MODIFICATION OF VESTED SHARES

 

 

75th% and above

 

 

 

+ 10%*

 

 

above 25th% and below 75th%

 

 

 

no modification

 

 

25th% and below

 

 

 

-10%

 

 

*   Provided Pier 1 Imports’ absolute TSR is not negative

The structure of our program ensures that as an executive’s scope of responsibility increases, a greater portion of that executive’s compensation will come from performance-based pay. For fiscal 2018, our compensation program was designed based on the following objectives and metrics:

 

   

 

SHORT-TERM INCENTIVE

 

 

 

LONG-TERM INCENTIVE

 

 

 

LONG-TERM INCENTIVE

 

 

Type of Award

 

 

Annual Award

 

 

Performance-Based Restricted Stock (60% of award)

 

 

Time-Based Restricted Stock (40% of award)

 

 

Form

 

 

 

Cash

 

 

Equity

 

 

Equity

 

Objective

 

 

Reward achievement of short-term corporate performance goals

 

 

  Reward long-term financial results that drive shareholder value creation

  Reinforce ownership in the Company

 

 

  Reward long-term shareholder value creation

  Reinforce ownership in the Company

  Support retention of executives

 

 

Time Horizon

 

 

 

1 year

 

 

3 years

 

 

3 years

 

Metrics

 

 

80% Profit Goal

20% merchandise margin dollars

 

 

50% Profit Goal

50% ROIC

Stock Price

 

Profit Goal and ROIC long-term incentive awards are subject to a +/- 10% modifier for Total Shareholder Return above the 75th percentile or below the 25th percentile compared to the peer group

 

 

 

Stock Price

Continued Employment

Compensation Factors and Governance for Fiscal 2018

The compensation committee evaluates many factors when designing executive compensation plans and targets. The following table outlines our key practices:

 

 

  WHAT WE DO

 

  

 

WHAT WE DON’T DO

 

 

Set aggressive short- and long-term performance metrics and have a majority of targeted pay for executives tied to performance

 

Use long-term incentives to encourage management retention

 

Tie a significant portion of executives’ pay to performance metrics critical to the business

 

Mitigate undue risk by using a cap on maximum payouts for short- and long-term plans and performing an annual internal risk assessment of compensation programs

 

Have stock ownership guidelines that reinforce alignment between shareholders and our executive officers

 

Maintain a clawback policy

 

Have an independent compensation consultant reporting directly to the compensation committee

  

 

Ò  Have employment agreements

 

Ò   Apply across-the-board base salary increases

 

Ò   Have tax gross-ups upon change in control

 

Ò   Automatically vest equity awards under stock incentive plans upon a change in control

 

Ò   Allow hedging, short sales, option trading or pledging of Pier 1 Imports common stock

 

Ò   Pay dividends on unvested restricted stock or above-market earnings on deferred compensation arrangements

 

Ò   Reprice underwater stock options

 

30    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

Role of the Compensation Committee

The compensation committee determines the appropriate level of compensation for all executive officers, including the chief executive officer.

 

LOGO

Role of the Independent Executive Compensation Consultant

Willis Towers Watson, the compensation committee’s independent executive compensation consultant, provided consulting advice regarding executive compensation in fiscal year 2018, as well as data from the Willis Towers Watson Compensation Data Bank Retail/Wholesale Services Executive Database and public sources such as proxy filings. These resources ensure that we maintain competitive compensation practices compared to our peers and the broader retail industry.

During fiscal 2018, Willis Towers Watson did not provide any other services to Pier 1 Imports other than executive compensation consulting.

Shareholder Input on Executive Compensation

In evaluating the design of our executive compensation programs and the specific compensation decisions for each of our named executive officers, the compensation committee considers shareholder input, including the advisory “say-on-pay” vote at our annual meeting.

In 2017, approximately 97% of the votes cast approved the compensation for our named executive officers.

 

 

LOGO

Shareholder Engagement

Our board of directors and our compensation committee value the opinions of our shareholders. In fiscal 2018, we continued with the compensation foundation developed in fiscal 2017 which reflected shareholder feedback, sound corporate governance and continued alignment of pay with performance. To that end, we:

 

    Continued focus on performance-based long-term equity with three-year cliff vesting

 

    Continued to apply a comprehensive target-setting process to ensure rigorous performance goals are established for both our short- and long-term plans

 

    Continued to evaluate executive salaries on a case-by-case basis rather than utilizing across-the-board increases

 

    Continued to include analysis of external data in the setting of our named executive officers’ compensation

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    31


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  COMPENSATION

 

 

 

 

Peer Group Used for Comparison

The fiscal 2018 peer group included the following companies, which at the time of selection were publicly traded and were direct competitors, retail industry competitors and/or local area competitors for executive talent:

 

 

     Bed Bath & Beyond Inc.

 

     Chico’s FAS Inc.

 

     DSW, Inc.

 

     Finish Line, Inc.

 

 

     Fossil Group, Inc.

 

 

Haverty Furniture Companies, Inc.

 

Kirkland’s, Inc.

 

Restoration Hardware Holdings, Inc.

 

Select Comfort Corp.

 

 

Stage Stores, Inc.

  

 

Stein Mart, Inc.

 

The Container Store Group, Inc.

 

Ulta Salon, Cosmetics & Fragrance, Inc.

 

Williams Sonoma, Inc.

These companies were selected by the compensation committee, with the advice of its independent executive compensation consultant, because their revenues and/or operating characteristics are comparable to those of Pier 1 Imports.

 

 

 

Total Compensation Target

We generally target total compensation packages for executive officers to reflect the 50th percentile of Pier 1 Imports’ peer group when planned financial and operational goals are achieved. We design our total compensation packages to provide pay above or below the 50th percentile compared to our peer group when results exceed or do not meet planned financial and operational goals.

In some cases, the compensation required to attract new executives may result in compensation packages exceeding the 50th percentile due to the intense competition for talent in the retail sector.

 

Elements of the Executive Compensation Program

The following chart highlights key elements of our executive compensation program and how each is linked to the objectives of our executive compensation philosophy.

 

   

 

OBJECTIVE

 

 

TYPE OF
COMPENSATION

 

 

 

KEY FEATURES

 

 

Base Salary

 

 

To provide competitive fixed pay that is tied to the market and allows us to attract, retain and motivate executives within the national retail and broader market

 

 

 

Cash

 

 

Based on individual skills, experience, responsibilities and performance over time

 

Short-Term Incentive

 

 

To encourage focus on business performance

 

 

Cash

 

 

  Rewards achievement of short-term corporate performance goals

  Pays only if threshold performance levels or above are met

 

 

Long-Term

Incentives

Performance-Based Restricted Stock

 

 

To increase multi-year profitability and stock price and to demonstrate effective use of Pier 1 Imports’ capital

 

 

Long-Term Equity

 

 

  Rewards achievement of long-term corporate performance goals

  Vests only if threshold performance levels or above are met

  Links value to stock price

 

 

Long-Term

Incentives

Time-Based

Restricted Stock

 

 

 

To closely align executive and shareholder interests and aid in retention

 

 

Long-Term Equity

 

 

  Promotes retention and enhances executive stock ownership

  Links value to stock price

 

Executive Agreements

 

 

To ensure named executive officers remain focused on creating sustainable performance

 

 

 

Benefit

 

 

Protects the Company and the named executive officers from certain termination events by providing economic stability

 

Other Benefits

 

 

To aid in attracting and retaining executive talent

 

 

Benefit

 

 

Includes:

  Non-qualified deferred compensation plan

  Employee Stock Purchase Plan

  Broad-based benefits available to all employees

 

 

32    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

Analysis of Fiscal 2018 Compensation

Base Salary

Base salaries for the named executive officers reflect the individual’s skills, experience, responsibilities and performance over time. The compensation committee determines the base salary, and any increases, for named executive officers using external surveys of salary practices for positions with similar levels of responsibility within our peer group as well as the broader industry and taking into account the performance of the individual and the Company.

The compensation committee reviews base salaries for our named executive officers annually but does not uniformly raise base salaries each year.

In fiscal 2018, none of our NEOs received a base salary increase with the exception of Mr. Boyer who received a 5% increase prior to his departure; and Ms. Ramirez, who received a base salary increase of 13% that was partially merit-based and partially in connection with her interim role.

 

  NAMED EXECUTIVE OFFICER

 

  

ANNUALIZED FISCAL
2017 BASE SALARY

 

  

ANNUALIZED FISCAL
2018 BASE SALARY

 

  

PERCENT INCREASE  

 

 

Alasdair B. James

 

      

 

N/A

 

 

 

   $1,000,000

 

      

 

N/A

 

 

 

Nancy A. Walsh

 

      

 

N/A

 

 

 

   $   575,000

 

      

 

N/A

 

 

 

Bhargav J. Shah

 

      

 

N/A

 

 

 

   $   425,000

 

      

 

N/A

 

 

 

 

Michael R. Benkel

 

      

 

$360,000

 

 

   $   360,000

 

      

 

0%

 

 

 

 

Terry E. London (Former Interim President and Chief Executive Officer,
January 1, 2017 through April 30, 2017)

 

      

 

$875,000

 

 

   $   875,000

 

      

 

0%

 

 

 

 

Darla D. Ramirez (Former Interim Chief Financial Officer, October 4,
2017 through January 24, 2018)

 

    

 

 

 

$221,000

 

  

 

$   250,000

    

 

 

 

13%

 

 

 

Jeffrey N. Boyer (Former Executive Vice President and Chief Financial
Officer, resigned October 3, 2017)

 

    

 

 

 

$500,000

 

  

 

$   525,000

    

 

 

 

5%

 

 

 

Catherine David (Former Executive Vice President, Merchandising,
resigned May 1, 2018)

 

    

 

 

 

$450,000

 

  

 

$   450,000

    

 

 

 

0%

 

 

Short-Term Incentives

 

 

 

 No Bonus Payouts for Fiscal Year 2018

 Our aggressive target levels of performance for fiscal 2018 were not achieved; therefore, no named executive officer received an award payout.

 

 

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    33


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  COMPENSATION

 

 

Our short-term incentive program is designed to reward our executives for overall Company financial performance over the fiscal year. Eighty percent of the incentive was based upon achievement of the Profit Goal and 20% was based upon achievement of merchandise margin dollars.

 

 

LOGO

 

 

Merchandise Margin Dollars

Aligns product assortments with Pier 1 Imports’ customers’ tastes to provide a strong value proposition, and promotes increased efficiencies within Pier 1 Imports’ supply chain.

 

 

 

 

 

Profit Goal

A measure of Pier 1 Imports’ financial and operational performance designed to reward executives for high levels of operating performance, which will lead to increased profitability over time. This goal focuses on factors that an individual participant’s actions can affect because it largely eliminates the effects of financing and tax decisions as well as unusual charges.

 

 

 

 

All named executive officers were eligible to receive a cash award in fiscal 2018, except for Mr. London, who did not participate in the program, and Ms. Walsh due to the timing of her hire date. Ms. Walsh received a sign-on bonus of $200,000 after thirty days of employment subject to a pro rata clawback in the event she leaves Pier 1 Imports or is terminated for cause within 12 months of her hire date. She will be eligible to participate in the fiscal 2019 short-term incentive program at 125% of her salary, and at a level commensurate with other senior officers in subsequent years.

 

34    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

In setting the short-term incentive program targets for fiscal 2018, the compensation committee reviewed the Company’s actual performance in fiscal 2017 and considered management’s projections for fiscal 2018, while also ensuring the target performance percentage levels were competitive when compared to Pier 1 Imports’ peer group. The targets for each named executive officer are shown below. The fiscal 2018 Profit Goal at target represented an increase above the actual amount of the Profit Goal achieved, or Realized Profit, for fiscal 2017. No award payout was possible unless the Realized Profit for 2018 met or exceeded the threshold.

 

    

FISCAL 2018 ANNUAL SHORT-TERM INCENTIVE OPPORTUNITY  
AS A PERCENTAGE OF BASE SALARY

 

        

 

  NAMED EXECUTIVE OFFICER

  

AT THRESHOLD
PERFORMANCE
LEVELS

 

    

AT TARGET
PERFORMANCE
LEVELS

 

    

AT MAXIMUM
PERFORMANCE
LEVELS

 

    

ACTUAL
FISCAL 2018  
AWARD

 

 

Alasdair B. James

 

    

 

30%          

 

 

 

    

 

100%          

 

 

 

    

 

200%          

 

 

 

    

 

$0          

 

 

 

Nancy A. Walsh(1)

 

    

 

N/A          

 

 

 

    

 

N/A          

 

 

 

    

 

N/A          

 

 

 

    

 

N/A          

 

 

 

Bhargav J. Shah

 

    

 

22.5%          

 

 

 

    

 

75%          

 

 

 

    

 

150%          

 

 

 

    

 

$0          

 

 

 

Michael R. Benkel

 

    

 

22.5%          

 

 

 

    

 

75%          

 

 

 

    

 

150%          

 

 

 

    

 

$0          

 

 

 

Terry E. London (Former Interim President and Chief Executive Officer, January 1, 2017 through April 30, 2017)(2)

 

     N/A                  N/A                  N/A                  N/A            

Darla D. Ramirez (Former Interim Chief Financial Officer, October 4, 2017 through January 24, 2018)

 

     9%                  30%                  60%                  $0            

Jeffrey N. Boyer (Former Executive Vice President and Chief Financial Officer, resigned October 3, 2017)(3)

 

     22.5%                  75%                  150%                  N/A            

Catherine David (Former Executive Vice President, Merchandising, resigned May 1, 2018)

 

     22.5%                  75%                  150%                  $0            

 

(1)   Ms. Walsh was not eligible to receive a short-term incentive payout for fiscal 2018 because she was hired late in the fiscal year.
(2)   Mr. London did not participate in the short-term incentive program for fiscal 2018.
(3)   Mr. Boyer was not eligible to receive a short-term incentive payout for fiscal 2018 because he departed prior to the end of the fiscal year. The program requires participants to be employed with Pier 1 Imports at fiscal year end to receive a cash award.

Long-Term Incentives

Our long-term incentive program is designed to reward performance over the long term and to serve as a retention tool. During fiscal 2018, equity grants were a mix of performance-based restricted stock targeting achievement of two different performance measures with a 10% modifier based on total shareholder return (TSR), and time-based restricted stock.

 

 

LOGO

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    35


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  COMPENSATION

 

 

Approximately 60% of the shares granted at target in fiscal 2018 were performance-based, with half vesting based on achievement of a cumulative three-year Profit Goal and the other half vesting based on three-year average ROIC. Both awards can be modified upwards or downwards based on relative total shareholder return over the period. The performance metrics were designed to align with our long-term strategy by accomplishing the following:

  Profit Goal: Reward core performance without having to factor in financing decisions, accounting decisions or tax environments.

  ROIC: Reward efficient use of capital to generate returns over an asset base.

  TSR: Align with shareholder value creation.

The Profit Goal and ROIC performance targets were based on the three-year business plan and set by the compensation committee after a detailed review which included benchmarking performance and evaluating the practices of peer group companies. The shares vest if Pier 1 Imports achieves the specified performance over a three-year fiscal period ending with fiscal 2020. Participants will receive:

  50% of the award at the threshold level

  100% of the award at the target level, and

  200% of the award at the maximum level

These amounts are prior to application of the 10% TSR modifier discussed above.

Approximately 40% of the shares granted at target in fiscal 2018 were time-based, vesting in substantially equal amounts on the first, second and third anniversary of the grant date.

 

 

 

 2016 Performance-Based Share Grants Did Not Vest in Fiscal 2018

Performance-based restricted stock grants awarded in fiscal 2016 were eligible to vest in April of fiscal 2018. These grants were tied to a three-year fiscal performance period ending with fiscal 2018 based on the achievement of Profit Goal and TSR performance metrics. Performance for each of the metrics was below threshold levels, and no shares vested as a result.

 

 

In addition to the annual grants described above, we made the following grants to newly-hired named executive officers in fiscal 2018:

 

    Mr. James, as part of his offer of employment, received a grant of stock options valued at $1,000,000 on May 2, 2017 (vesting 25% on the third anniversary of the grant, 25% on the fourth anniversary, and 50% on the fifth anniversary). Mr. James also received a grant of restricted stock valued at $500,000 (cliff vesting on the third anniversary). Mr. James’ annual long-term incentive grants included $1,500,000 in performance-based restricted stock (cliff vesting at the end of a three-year performance period ending in fiscal 2020) and $500,000 in time-based restricted stock (vesting in substantially equal installments on each of the first three anniversaries of the grant date). Mr. James’ mix of 75% performance-based restricted stock is higher than the other named executive officers, whose performance-based awards are 60% of the total award.

 

    Ms. Walsh, as part of her offer of employment, received a grant of restricted stock on January 25, 2018, valued at $750,000, vesting in substantially equal installments on each of the first three anniversaries of the grant date.

 

    Mr. Shah, as part of his offer of employment, received a grant of restricted stock on August 8, 2017, valued at $425,000, 40% of which was time-based (vesting in substantially equal installments on each of the first three anniversaries of the grant date) and 60% of which were performance-based (cliff vesting at the end of a three-year period ending in fiscal 2021).

We also made a grant of time-based restricted stock to Terry London on May 1, 2017, valued at $1,000,000, in recognition for his past service as chairman of the board and in order to provide an incentive for his continued service as chairman of the board. The grant will vest 40% on each of the first two anniversaries of the grant date and 20% on the third anniversary, provided he is still serving as a director on the vest date.

 

36    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


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COMPENSATION  

 

 

The table below provides a breakdown of the awards granted to the named executive officers in fiscal 2018.

 

 

  NAMED EXECUTIVE OFFICER

 

PROFIT GOAL
PERFORMANCE – BASED

RESTRICTED STOCK
SHARES AT TARGET
(1)

 

ROIC
PERFORMANCE – BASED

RESTRICTED STOCK
SHARES AT TARGET
(1)

 

TIME-BASED

RESTRICTED
STOCK
SHARES
(2)

 

STOCK
OPTION
SHARES

 

VALUE AT  
TARGET
(3)   

 

 

Alasdair B. James

 

 

 

 

 

107,450

 

 

 

 

 

 

 

107,450

 

 

 

 

 

 

 

143,266

 

 

 

 

 

 

 

310,969

 

 

 

 

 

 

 

$3,500,000

 

 

 

 

Nancy A. Walsh

 

 

 

 

 

N/A

 

 

 

 

 

 

 

N/A

 

 

 

 

 

 

 

182,481

 

 

 

 

 

 

 

N/A

 

 

 

 

 

 

 

$   750,000

 

 

 

 

Michael R. Benkel

 

 

 

 

 

15,651

 

 

 

 

 

 

 

15,653

 

 

 

 

 

 

 

20,869

 

 

 

 

 

 

 

N/A

 

 

 

 

 

 

 

$   360,000

 

 

 

Bhargav J. Shah

 

 

 

27,419

 

 

 

 

27,420

 

 

 

 

36,558

 

 

 

 

N/A

 

 

 

 

$   425,000

 

 

Terry E. London (Former Interim President and Chief Executive Officer, January 1, 2017 through April 30, 2017)

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

142,857

 

 

 

 

N/A

 

 

 

 

$1,000,000

 

 

Darla D. Ramirez (Former Interim Chief Financial Officer, October 4, 2017 through January 24, 2018)

 

 

 

 

2,732

 

 

 

 

2,732

 

 

 

 

5,464

 

 

 

 

N/A

 

 

 

 

$     75,000

 

 

Jeffrey N. Boyer (Former Executive Vice President and Chief Financial Officer, resigned October 3, 2017)

 

 

 

 

22,825

 

 

 

 

22,827

 

 

 

 

30,434

 

 

 

 

N/A

 

 

 

 

$   525,000

 

 

Catherine David (Former Executive Vice President, Merchandising, resigned May 1, 2018)

 

 

 

 

19,565

 

 

 

 

19,566

 

 

 

 

26,086

 

 

 

 

N/A

 

 

 

 

$   450,000

 

 

(1)  Named executive officers must be employed on the date of filing of Pier 1 Imports’ Annual Report on Form 10-K with the SEC for fiscal 2020 to be eligible for vesting and to receive the shares contemplated by the award.
(2)  Named executive officers must be employed on the vesting date to receive the shares.
(3)  Number of shares is determined by dividing the target value by the 30-day trailing average of the closing price of Pier 1 Imports common stock as of the grant date. Grant date fair value may differ from target value as a result of differences between the stock price on the grant date and the 30-day trailing average stock price.

Special One-Time Cash Retention Award and Bonus for Ms. Ramirez

In September of 2017, the Company awarded Ms. Ramirez a one-time special cash retention award of $125,000 to retain her services during the chief financial officer transition. Ms. Ramirez’s award will vest on September 5, 2018, one year from the award date, and is contingent on her continued service through the vest date. In addition, following Ms. Walsh’s appointment as chief financial officer, Ms. Ramirez received a discretionary cash bonus of $15,000 upon completion of her service as interim chief financial officer.

Retirement and Other Plans

We offer a non-qualified deferred compensation plan, referred to as the Pier 1 Imports, Inc. Deferred Compensation Plan, to our executives and key members of management. The plan is designed to provide certain executives with post-employment financial security and to mitigate the effects of deferral limitations on highly compensated individuals in qualified plans such as Pier 1 Imports’ 401(k) plan. The plan also assists us in attracting and retaining executives and key members of management. The plan is described and discussed below under the caption “Non-Qualified Deferred Compensation Table for the Fiscal Year Ended March 3, 2018.”

We have historically maintained a supplemental executive retirement plan for certain executive officers. During fiscal 2018, no named executive officer participated in the supplemental retirement plan.

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    37


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  COMPENSATION

 

 

Pier 1 Imports’ Guidelines on Share Ownership

Our board of directors believes it is critical for executives to be closely aligned with shareholders’ interests over both the short and long term. Our stock ownership guidelines are designed to accomplish this linkage. These guidelines provide a targeted ownership level of shares of Pier 1 Imports common stock for each named executive officer position equal to a multiple of his or her base salary. The targeted ownership level should be acquired within five years of election as an officer. Shares counted toward ownership include shares beneficially owned directly or indirectly (other than shares which might be acquired by exercise of an option or unvested performance-based restricted stock) and unvested time-based restricted stock.

 

  POSITION

 

  

OWNERSHIP GUIDELINE

 

 

Chief Executive Officer

 

  

 

6 times base salary

 

 

Senior Executive Vice President

 

  

 

3 times base salary

 

 

Executive Vice President

 

  

 

2.5 times base salary

 

 

Senior Vice President

 

  

 

2 times base salary

 

 

Vice President

 

  

 

1 times base salary

 

The guidelines provide that once an executive achieves compliance, such executive will remain in compliance with the guidelines provided that he or she continues to hold or beneficially own the same or a greater number of eligible shares and/or units that were sufficient at that time to meet the targeted ownership level.

Our board of directors has also adopted stock ownership guidelines for its non-employee directors to encourage direct ownership in Pier 1 Imports. These guidelines will be updated to reflect the new director compensation structure and state that each non-employee director should, within five years of becoming a member of the board of directors, acquire ownership of shares of Pier 1 Imports common stock equal in value to five times the non-employee director annual retainer (i.e., 5 X $85,000) effective as of June 26, 2018. Shares counted toward ownership include shares beneficially owned directly or indirectly (other than shares which might be acquired by exercise of an option or unvested performance-based restricted stock), unvested time-based restricted stock and DSUs credited to the non-employee director.

Pier 1 Imports’ Policy on Section 162(m)

We have historically considered the effect of limitations on deductibility of compensation for federal income tax purposes. Historically, section 162(m) of the Internal Revenue Code of 1986 generally denied public companies like Pier 1 Imports a federal income tax deduction for compensation paid to the chief executive officer or any of the three other most highly compensated officers (not including the principal financial officer) that exceeded $1,000,000 for each such officer during the tax year unless such compensation was qualifying performance-based compensation. The Tax Cuts and Jobs Act, enacted in December of 2017, eliminated the exception for deductibility for qualifying performance-based compensation paid pursuant to plans approved by shareholders. For fiscal 2018, the deductibility of officer compensation was not limited by Section 162(m).

Compensation Committee Interlocks and Insider Participation

Each director of Pier 1 Imports who served as a member of the compensation committee during the fiscal year ended March 3, 2018 is identified above under the caption “Director Attendance at Board and Committee Meetings and at the Annual Meeting of Shareholders.” During fiscal 2018, there were no compensation committee interlocks or insider participation.

Compensation Risk

Pier 1 Imports’ internal audit department assists us in assessing compensation risk by conducting an annual risk assessment of our compensation policies. Internal audit’s evaluation consists of a review of all incentive plans and their compensation elements: base salary, short- and long-term incentives, performance measurement mechanics, compensation features and performance targets. Based on that assessment, we do not believe that our compensation policies, principles, objectives or practices are structured to promote inappropriate risk taking by our executives or employees whose behavior would be most affected by performance-based incentives. We believe that this focus on our overall compensation program encourages our employees to take a balanced approach that focuses on increasing and sustaining Pier 1 Imports’ profitability.

 

38    PIER 1 IMPORTS, INC.  |  2018 Proxy Statement


Table of Contents

 

COMPENSATION  

 

 

Compensation Committee Report

The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis above. Based on the review and discussion, the compensation committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in Pier 1 Imports’ 2018 proxy statement.

COMPENSATION COMMITTEE

Cheryl A. Bachelder, Chair

Claire H. Babrowski

Michael A. Peel

 

PIER 1 IMPORTS, INC.  |  2018 Proxy Statement    39


Table of Contents

 

  COMPENSATION

 

 

 

 

Summary Compensation Table for the Fiscal Years Ended March 3, 2018, February 25, 2017, and February 27, 2016

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, the former interim chief executive officer, the chief financial officer, the former chief financial officer, the former interim chief financial officer, and the three other most highly compensated executive officers.

   
NAME  AND
PRINCIPAL
POSITION
 

FISCAL

YEAR

 

SALARY (1)

($)

 

BONUS (2)

($)

 

STOCK

AWARDS (3)

($)

 

OPTION

AWARDS  (4)
($)

 

NON-EQUITY

INCENTIVE

PLAN

COMPENSATION (5)
($)

 

 

CHANGE IN

PENSION

VALUE AND

NON-QUALIFIED

DEFERRED

COMPENSATION

EARNINGS

($)

 

  ALL OTHER
COMPENSATION
 (6)
($)
 

TOTAL

($)

 

Alasdair B. James

President and

Chief Executive Officer

(appointed May 1, 2017)

 

 

2018

   

 

$

 

826,923

 

   

 

$

 

300,000

 

   

 

$

 

1,674,782

 

   

 

 

 

1,001,320

 

   

 

$

 

0

 

   

 

$

 

0

 

   

 

$

 

78,568

 

   

 

$

 

3,881,593

 

 

Terry E. London (7)

Former Interim President and

Chief Executive Officer

(January 1, 2017 through April 30, 2017)

 

 

2018

   

 

$

 

370,192

 

   

 

$

 

0

 

   

 

$

 

939,999

 

   

 

 

 

N/A

 

   

 

 

 

N/A

 

   

 

$

 

0

 

   

 

$

 

2,901

 

   

 

$

 

1,313,092

 

  2017     $ 134,615     $ 0       N/A       N/A       N/A     $ 0     $ 528     $ 135,143
                                   
                                                                                   

 

Nancy A. Walsh

Executive Vice President and

Chief Financial Officer

(appointed January 25, 2018)

 

 

2018

   

 

$

 

48,654

 

   

 

$

 

200,000

 

   

 

$

 

671,530

 

   

 

 

 

N/A

 

   

 

 

 

N/A

 

   

 

$

 

0

 

   

 

$

 

23,335

 

   

 

$

 

943,519

 

 

Jeffrey N. Boyer

Former Executive Vice President and

Chief Financial Officer

(resigned October 3, 2017)

  2018     $ 332,404     $ 0     $ 350,977       N/A     $ 0     $ 0     $ 21,767     $ 705,148
  2017     $ 500,000     $ 0     $ 466,359       N/A     $ 177,000     $ 0     $ 33,308     $ 1,176,667
  2016

 

    $

 

298,077

 

 

    $

 

0

 

 

    $

 

480,671

 

 

     

 

N/A

 

 

    $

 

0

 

 

    $

 

0

 

 

    $

 

153,530

 

 

    $

 

932,278

 

 

 

Darla D. Ramirez (8)

Former Interim Chief Financial Officer

(October 4, 2017 through January 24, 2018)

 

 

2018

   

 

$

 

235,740

 

   

 

$

 

15,000

 

   

 

$

 

54,012

 

   

 

 

 

N/A

 

   

 

$

 

0

 

   

 

$

 

0

 

   

 

$

 

18,550

 

   

 

$

 

323,302

 

 

Catherine David

Former Executive Vice President,

Merchandising (resigned May 1, 2018)

 

 

2018

   

 

$

 

450,000

 

   

 

$

 

225,000

 

   

 

$

 

300,840

 

   

 

 

 

N/A

 

   

 

$

 

0

 

   

 

$

 

0

 

   

 

$

 

33,614

 

   

 

$

 

1,009,454

 

  2017     $ 450,000     $ 0     $ 436,868       N/A     $ 159,300     $ 0     $ 31,694     $ 1,077,862
  2016     $ 446,923     $ 0     $ 532,391       N/A     $ 0     $ 0     $ 34,917     $ 1,014,231

 

Michael R. Benkel

Executive Vice President,