pir-def14a_20190619.htm

 

 SCHEDULE 14A INFORMATION

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

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Soliciting Material under §240.14a-12

PIER 1 IMPORTS, INC.

 

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100 Pier 1 Place

Fort Worth, Texas 76102

May 9, 2019

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 Wednesday, June 19, 2019, 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 proxy 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 e-mail) a Notice of Internet Availability of Proxy Materials (the “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 in 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,

 

 

 

Cheryl A. Bachelder

Interim Chief Executive Officer

Terry E. London

Chairman of the Board

 

 


 

 

 

100 Pier 1 Place

Fort Worth, Texas 76102

NOTICE OF ANNUAL

MEETING OF SHAREHOLDERS

To Be Held June 19, 2019

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 Wednesday, June 19, 2019, 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 eight nominees named in the accompanying proxy statement to hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified;

Proposal No. 2 –

to adopt a non-binding, advisory resolution to approve the compensation of Pier 1 Imports’ named executive officers;

Proposal No. 3 –

to approve an amendment to Pier 1 Imports’ Restated Certificate of Incorporation to effect a reverse stock split of Pier 1 Imports common stock and a corresponding reduction in authorized shares, in the discretion of the board of directors, at any time prior to the 2020 annual meeting of shareholders; and

Proposal No. 4 –

to ratify the audit committee’s engagement of Ernst & Young LLP as Pier 1 Imports’ independent registered public accounting firm for fiscal 2020.

 

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 22, 2019, 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 e-proxy 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,

Robert E. Bostrom

Executive Vice President, Chief Legal and Compliance Officer and Corporate Secretary

May 9, 2019

Fort Worth, Texas


 


 

 

 

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

9

 

BOARD LEADERSHIP STRUCTURE

11

 

DIRECTOR NOMINATION PROCESS

11

 

Internal Process for Identifying Candidates

11

 

Shareholder Recommendations for Directors

11

 

Shareholder Nominations at Annual Meeting

12

 

Changes in Board Composition During Fiscal 2019

12

 

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

12

 

COMMITTEES OF THE BOARD OF DIRECTORS

12

 

RISK OVERSIGHT

14

 

DIRECTOR INDEPENDENCE AND RELATED PERSON TRANSACTIONS

14

 

Independence Considerations

14

 

Related Person Transaction Policies and Procedures

15

 

Transactions with Related Persons

15

 

MEETINGS OF INDEPENDENT DIRECTORS WITHOUT MANAGEMENT PRESENT

16

 

PROCEDURES FOR COMMUNICATING WITH DIRECTORS

16

 

NON-EMPLOYEE DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED MARCH 2, 2019

16

 

Fees Paid to Directors

16

 

Fiscal 2019 Non-Employee Director Compensation Table

17

 

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

 

 


 

 

COMPENSATION

21

 

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

21

 

COMPENSATION DISCUSSION AND ANALYSIS

22

 

Executive Summary and Message from the Compensation Committee

22

 

Our Executive Team and Key Leadership Transitions

23

 

Fiscal 2019 Business Performance

24

 

Fiscal 2019 Compensation Actions and Decisions

25

 

CEO Pay at a Glance

26

 

Aligning Pay with Performance

26

 

Shareholder Input on Executive Compensation

28

 

Peer Group Used for Comparison

28

 

Elements of the Executive Compensation Program

29

 

Analysis of Fiscal 2019 Compensation

29

 

Retirement and Other Plans

34

 

Pier 1 Imports’ Guidelines on Share Ownership

34

 

Compensation Factors and Governance for Fiscal 2019

 

35

 

COMPENSATION RISK

36

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

36

 

COMPENSATION COMMITTEE REPORT

36

 

SUMMARY COMPENSATION TABLE FOR THE FISCAL YEARS ENDED MARCH 2, 2019, MARCH 3, 2018, AND FEBRUARY 25, 2017

37

 

GRANTS OF PLAN-BASED AWARDS FOR THE FISCAL YEAR ENDED MARCH 2, 2019

39

 

OUTSTANDING EQUITY AWARDS TABLE FOR THE FISCAL YEAR ENDED MARCH 2, 2019

40

 

STOCK VESTED TABLE FOR THE FISCAL YEAR ENDED MARCH 2, 2019

41

 

NON-QUALIFIED DEFERRED COMPENSATION TABLE FOR THE FISCAL YEAR ENDED MARCH 2, 2019

42

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

43

 

 

CHIEF EXECUTIVE OFFICER PAY RATIO

44

 

 

 

PROPOSAL NO. 3 – REVERSE STOCK SPLIT

45

 

 

EQUITY COMPENSATION PLAN INFORMATION

52

 

 

AUDIT MATTERS

53

 

AUDIT COMMITTEE REPORT

53

 

RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

54

 

PROPOSAL NO. 4 – RATIFICATION OF ENGAGEMENT OF ERNST & YOUNG LLP

54

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

54

 

PRE-APPROVAL OF NON-AUDIT FEES

54

 

 

 

 

QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING

55

 

 

OTHER BUSINESS

59

 

 

SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING OF SHAREHOLDERS

59

 

 

YOUR VOTE IS IMPORTANT

59

 

 

appendix a – certificate of amendment to the restated certificate of incorporation of pier 1 imports, inc.

60

 

 

 


 

Voting Information

Who is entitled to vote at the annual meeting?

Holders of our common stock at the close of business on April 22, 2019, are entitled to vote their shares at the annual meeting. As of that date, there were 85,013,806 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. Other than common stock, there are no voting securities of Pier 1 Imports outstanding.

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, which will include a proxy card, from us by following the instructions in the Notice. 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 Daylight Time, on June 18, 2019. The availability of Internet and telephone voting for you as a beneficial owner 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.   |   2019 Proxy Statement   |   1


 

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 eight director nominees. The board of directors believes that the eight 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)

 

 

The board of directors is seeking approval of 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 – Approval of an Amendment to Pier 1 Imports’ Restated Certificate of Incorporation to Effect a Reverse Stock Split of Pier 1 Imports common stock and a corresponding reduction in authorized shares (page 45)

 

 

The board of directors is seeking adoption and approval by the shareholders of an amendment to Pier 1 Imports’ Restated Certificate of Incorporation to effect a reverse stock split and a corresponding reduction in authorized shares, in the discretion of the board of directors, at any time prior to the 2020 annual meeting of shareholders.

FOR

 

Proposal No. 4 – Ratification of Engagement of Ernst & Young LLP (page 54)

 

 

The board of directors and the audit committee are seeking ratification of the engagement of Ernst & Young LLP as Pier 1 Imports’ independent registered public accounting firm for fiscal 2020.

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 55 for important information about the proxy materials, voting, the annual meeting, and related documents and communications.

 

 

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   2


 

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 on the election as directors of the eight 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 duly 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. The individuals named as proxies cannot vote for more than eight nominees for election as directors at the annual meeting.

In order to be elected, a nominee for election as a 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 and, therefore, will have no effect on Proposal No. 1.

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 his or her election, the nominating and corporate governance committee, or other committee of independent directors designated by the board of directors, will determine whether to accept such resignation in accordance with our bylaws.

Board Member Qualification Criteria

The board of directors has adopted Board Member Qualification Criteria, which are contained in Appendix C to 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 nominating and corporate governance 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 nominating and corporate governance 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.   |   2019 Proxy Statement   |   3


 

GOVERNANCE

 

Nominees for Director

The nominating and corporate governance committee believes the eight 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 his or her nomination are included in the individual discussions below. The following illustrations show the average age, average tenure (as of March 2, 2019), 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.

 

 

 

 

 

 

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

 

 

 CHERYL A. BACHELDER

 

 

Ms. Bachelder was appointed interim chief executive officer on December 18, 2018.  She is a restaurant industry executive who brings to the board over 40 years of retail brand building, guest experience, human capital, operations and financial perspective from her recent leadership of a global public company.

 

Director Since: 2012

Age: 63

Other Public Company Board:

US Foods Holding Corp.

Other Company Board:

Chick-fil-A, Inc.

 

 

 

 

 

Retail and Consumer Executive Experience:

Ms. Bachelder served as chief executive officer of Popeyes Louisiana Kitchen, Inc., a quick service restaurant with more than 2,600 locations worldwide, from 2007 to 2017. 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. Prior thereto, she held multiple executive positions with consumer industry companies including RJR Nabisco Inc., The Gillette Company and Procter & Gamble Co.

 

 

 

 

 

 

Director Experience:

Ms. Bachelder currently serves as a director and nominating and corporate governance committee member of US Foods Holding Corp., a leading food service distributor, and as a director of Chick-fil-A, Inc., a family owned and privately held restaurant company based in Atlanta, Georgia.  She previously served on the board of Popeyes Louisiana Kitchen, Inc. from November 2006 to March 2017 and on the board of True Value Company from July 2006 through February 2013.

 


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   4


 

GOVERNANCE

 

 

 

 Robert L. Bass

 

 

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: 50

Committee:  Audit

 

 

 

 

 

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, as 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

 

 

 

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: 62

Committee: Nominating and Corporate

Governance (Chair)

Other Public Company Board:

Dave & Buster’s Entertainment, Inc.

Other Company Board:

Fogo de Chão, 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 previously 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., an American restaurant and entertainment business, and as a director of Fogo de Chão, Inc., a restaurant holding company based in Texas.  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.   |   2019 Proxy Statement   |   5


 

GOVERNANCE

 

 

 BRENDAN L. HOFFMAN

 

 

 

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

 

Director Since: 2011

Age: 50

Committee: Audit

Other Public Company Board:

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 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.

 

 

 Katherine M. A. (“Allie”) Kline

 

 

Ms. Kline brings to the board deep marketing, communications and transformation expertise. Most recently she served as chief marketing and communications officer for Oath Inc., the Verizon Communications, Inc. subsidiary consisting of 20+ distinctive digital brands reaching 1 billion consumers including AOL, HuffPost, MAKERS, TechCrunch, Tumblr, and Yahoo.

 

Director Since: 2018

Age: 47

Committee: Compensation

Other Public Company Board:

Huntington Bancshares Incorporated

 

 

 

 

Executive Experience:

Ms. Kline most recently served as chief marketing and communications officer for Oath, from Oath’s formation in 2017 following Verizon’s acquisition of Yahoo to July 2018, where she was responsible for all consumer and B2B marketing, external and internal communications, brand strategy and creative, and corporate citizenship and cause marketing. She also served as the head of MAKERS, Oath’s prominent womens media brand. Ms. Kline held the position of chief marketing and communications officer for AOL from 2013 to 2017 prior to and following Verizon’s acquisition of AOL in 2015.

 

 

 

 

Director Experience:

Ms. Kline currently serves as a director of Huntington Bancshares Incorporated, a regional bank holding company headquartered in Columbus, Ohio. She also serves as a director of National Forest Foundation, the non-profit partner of the U.S. Forest Service.  She previously chaired the Oath Foundation board, was a member of the executive committee for the Internet Advertising Bureau board of directors, and served on the board of The Female Quotient.

 

 

 

 

Other Relevant Experience:

From 2011 to 2012, Ms. Kline held the position of chief marketing officer for 33across, a leading data and analytics company in the digital advertising space. Prior to that from 2008 to 2011, Ms. Kline held the position of vice president, marketing for Brand Affinity Technologies, a digital sports and celebrity endorsement marketing platform. Earlier in her career she held digital media and marketing leadership positions with Launch Ideas, Unicast (acquired by Sizmek), InterVU (acquired by Akamai Technologies), and the Washington Wizards.

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   6


 

GOVERNANCE

 

 

 TERRY E. LONDON

 

 

 

Mr. London serves as the 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: 69

Committee: Nominating and Corporate Governance

Other Public Company Board:

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., a leading global innovator of outdoor recreation equipment and technology, and previously served as a director of Bass Pro Shops, Inc. In his role as a director on other boards, Mr. London has served as the chair of the audit committee and member of the compensation committee.

 

 

 

 

Other Relevant Experience:

Mr. London served as interim president and chief executive officer and chairman of the board of Pier 1 Imports from January 1, 2017 through April 30, 2017, and executive chairman of the board from May 1, 2017 through July 31, 2017 when he reassumed his role as non-executive chairman of the board.  He is a certified public accountant and was voted the Broadcaster of the Year in 2011 by the Texas Association of Broadcasters.

 

 

 MICHAEL A. PEEL

 

 

 

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

 

Director Since: 2013

Age: 69

Committees: Compensation (Chair), Nominating and Corporate Governance

Other Public Company Board:

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 executive 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. Mr. Peel is also chair of the board of trustees of DeVry University and a member of the board of managers of HireRight Corporation.  Through his company, Peel Global Advisory, LLC, he provides human capital consulting services for a wide range of businesses ranging from start-ups to Fortune 500 companies.  Previously, Mr. Peel was a Yale University officer and served as vice president, human resources and administration from October 2008 until his retirement in July 2017.

 

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GOVERNANCE

 

 

 ANN M. SARDINI

 

 

 

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: 69

Committee: Audit (Chair)

Other Public Company Board:

TreeHouse Foods, Inc.

Other Company Board:

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 of Ideal Protein, a privately-held company, where she has served as chair of the board since 2017 and currently serves as chair of the audit committee.

 

 

 

 

Other Relevant Experience:

In 2013, Ms. Sardini founded her consulting and advisory practice providing strategic and operational guidance to early and mid-stage technology-based consumer companies and private equity firms. In addition to providing client consulting services, Ms. Sardini 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.

 

 

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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 8 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 or as a major functional leader 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

 

 

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GOVERNANCE

 

 

PIER 1 IMPORTS

BOARD

SKILLS MATRIX

TERRY E.
LONDON

(NON-
EXECUTIVE
CHAIRMAN)

 

CHERYL A.
BACHELDER

(INTERIM

CEO)

ROBERT L.
BASS

HAMISH A.
DODDS

BRENDAN L.
HOFFMAN

KATHERINE M. A.

(“ALLIE”)

KLINE

MICHAEL A.
PEEL

ANN M.
SARDINI

 

BOARD EXPERIENCE

 

 

 

 

 

 

 

 

 

 

Outside Public Company Board Experience

 

 

 

 

COMPETENCIES

 

 

 

 

 

 

 

 

 

 

INDUSTRY EXPERIENCES

 

 

 

 

 

 

 

 

 

 

Recent Public Company CEO
(last 3 years)

 

 

 

 

 

 

 

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 (37.5% female)

 

 

M

 

 

F

 

 

M

 

 

M

 

 

M

 

 

F

 

 

M

 

 

F

 

 

Age (average = 59.77)

 

 

69

 

 

63

 

 

50

 

 

62

 

 

50

 

 

47

 

 

69

 

 

69

 

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 his or her individual background.

 

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GOVERNANCE

 

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.” This structure of separate individuals holding these positions focuses board leadership and company leadership in separate and distinct individuals. Each leader can direct his or her 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. Provisions are made in the Corporate Governance Guidelines for an independent lead director if the roles of chairman of the board and chief executive officer are combined.

Currently, the chairman of the board and chief executive officer roles are held by separate individuals. The chairman of the board has served in this role throughout the most recent fiscal year. He is neither an employee nor an officer of Pier 1 Imports and is therefore considered a non-executive chairman. During the prior fiscal year, the chairman temporarily served as interim president and chief executive officer from January 1, 2017 through April 30, 2017, and as executive chairman from May 1, 2017 through July 31, 2017, following which he reassumed the role of non-executive chairman.

 

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 nominating and corporate governance 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 nominating and corporate governance 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 nominating and corporate governance committee.

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 nominating and corporate governance committee for inclusion as a nominee for director at the 2020 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 nominating and corporate governance 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 in the proxy statement as a nominee for director at the 2020 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 10, 2020.

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

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GOVERNANCE

 

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 2020 annual meeting of shareholders must provide us written notice in proper form accompanied by the requisite materials and information no earlier than February 20, 2020 and no later than March 21, 2020, provided that the date of the annual meeting is not more than 30 days before or after June 19, 2020. 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’ 2019 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 2019 annual meeting of shareholders.

Changes in Board Composition During Fiscal 2019

On April 4, 2018, Cynthia P. McCague notified the Company of her intent not to stand for re-election as a director at the 2018 annual meeting of shareholders. 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. The size of the board was reduced accordingly from ten to nine directors on June 26, 2018 following the expiration of Ms. McCague’s term as a director at the annual meeting of shareholders. In September of 2018, the nominating and corporate governance committee recommended the nomination of Katherine M. A. (“Allie”) Kline to the board of directors. Ms. Kline was identified by a third-party search firm. On September 25, 2018, the board of directors increased the size of the board from nine to ten directors and elected Ms. Kline as a director. On April 4, 2019, the board of directors decreased the size of the board from ten to nine directors following the resignation of Alasdair B. James as the Company’s president and chief executive officer and as a member of the board of directors. Claire H. Babrowski notified the Company of her intent not to stand for re-election as a director on April 1, 2019. The size of the board is expected to be reduced to eight directors following the expiration of Ms. Babrowski’s term as a director at the annual meeting of shareholders.

Director Attendance at Board and Committee Meetings and at the Annual Meeting of Shareholders

In fiscal 2019, each incumbent 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 his or her 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 standing for re-election at the Pier 1 Imports 2018 annual meeting of shareholders were in attendance at the meeting. The board of directors met 11 times in fiscal 2019.

Committees of the Board of Directors

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.” Information regarding the members of each committee who served during fiscal 2019, along with a brief description of the roles and responsibilities of each committee, is provided below.

Audit Committee.

The members of the audit committee were:

 

Ann M. Sardini (Chair)

 

Claire H. Babrowski (through September 25, 2018)

 

Robert L. Bass (joined September 25, 2018)

 

Brendan L. Hoffman

The audit committee’s purpose is to:

 

assist the board of directors with oversight of:

 

o

the integrity of Pier 1 Imports’ financial statements,

 

o

Pier 1 Imports’ system of internal control,

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   12


 

GOVERNANCE

 

 

o

Pier 1 Imports’ compliance with legal and regulatory requirements,

 

o

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

 

o

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.

Each member of the audit committee is independent pursuant to the NYSE independence requirements. The board of directors has determined that each member is financially literate within the meaning of NYSE listing standards, and Ms. Sardini and Mr. Hoffman have each been designated as an audit committee financial expert, as defined by the SEC, and therefore each has accounting or related financial management expertise. The audit committee met 13 times in fiscal 2019.

Compensation Committee.

The members of the compensation committee were:

 

Michael A. Peel (Chair) (appointed Chair on December 18, 2018)

 

Cheryl A. Bachelder (Chair through December 18, 2018)

 

Claire H. Babrowski

 

Katherine M. A. (“Allie”) Kline (joined September 25, 2018)

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 the individuals identified in the preceding bullet, including, but not limited to, cash, equity, short- and long-term incentive compensation, 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 retained Willis Towers Watson as its executive compensation consultant for fiscal 2019. Willis Towers Watson reported directly and was accountable to the compensation committee.

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 2019, Pier 1 Imports’ management did not retain an outside consultant to advise on executive compensation.

Each member of the compensation committee is independent pursuant to the NYSE independence requirements. The compensation committee met 11 times in fiscal 2019.

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GOVERNANCE

 

Nominating and Corporate Governance Committee.

The members of the nominating and corporate governance committee were:

 

Hamish A. Dodds (Chair)

 

Cheryl A. Bachelder (June 26, 2018 through December 18, 2018)

 

Terry E. London

 

Cynthia P. McCague (through June 26, 2018)

 

Michael A. Peel (joined February 1, 2019)

The nominating and corporate governance committee’s purpose is to:

 

consider and make 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;

 

oversee corporate governance matters, including the Pier 1 Imports, Inc. Corporate Governance Guidelines described above on page 3; and

 

assist and advise the board of directors with respect to CEO succession planning.

Each member of the nominating and corporate governance committee is independent pursuant to the NYSE independence requirements. The nominating and corporate governance committee met six times in fiscal 2019.

Risk Oversight

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, in-store experience 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 full 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. The compensation committee considers whether the Company’s incentive plans encourage participants to take risks that would be reasonably likely to have a material adverse impact on the Company, and to the extent necessary, reviews and discusses with management any related risk mitigation features and disclosures determined to be advisable.

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, the compensation committee and the nominating and corporate governance committee must be independent directors. To be considered independent, a director must satisfy the independence requirements established by the NYSE. In assessing independence, the board of directors must affirmatively determine that the director has no disqualifying relationship as set forth in the listing tests of the NYSE’s corporate governance standards, and has no material relationship with Pier 1 Imports, either directly or indirectly as a partner, shareholder or officer of an organization that has a relationship 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 all members of the board of directors who served at any time during fiscal 2019 were independent during their service, except for Mr. James and Ms. Bachelder. Ms. Bachelder was determined to be independent prior to her appointment as interim chief executive officer effective December 18, 2018 following the resignation of Alasdair B. James; however, she is not considered to be independent while she serves in that role.

 

The board of directors determined that the former service of Mr. London as interim president and chief executive officer and chairman of the board of Pier 1 Imports from January 1, 2017 through April 30, 2017, and as executive chairman from May 1, 2017 through July 31, 2017, when he reassumed his role as non-executive chairman of the board, does not preclude a finding of independence with respect to Mr. London. In making this determination, the board of directors considered the fact that NYSE has specifically provided within its independence tests (through commentary) that such former service should not disqualify a director from being considered independent following that employment and that compensation received for such former service need not be considered in determining independence under the tests within the NYSE automatic disqualifiers.

 


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GOVERNANCE

 

For its independence determination, the 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 Listed Company Manual.

 

 DIRECTOR

MATTERS CONSIDERED

 

Claire H. Babrowski

 

 

Ordinary course of business transactions with Sogeti USA, LLC, a member of Capgemini Group. Ms. Babrowski’s brother had formerly been employed within Capgemini Group until June 2018.

 

 

Robert L. Bass

 

 

Ordinary course of business transactions with Best Buy Co., Inc., including the sublease by Pier 1 Imports (U.S.), Inc., a subsidiary of Pier 1 Imports, of one store. Mr. Bass has served as chief supply officer for Best Buy Co., Inc. since 2017. He was not involved in the negotiation of the terms of the sublease, which occurred prior to his joining Best Buy Co., Inc., and has no direct or indirect material interest in any of the business transactions with Best Buy Co., Inc.

 

 

 

Katherine M. A. (“Allie”) Kline

 

 

Ordinary course of business transactions with Verizon Business for telephone service, with the payments made by Pier 1 Imports in each of the last three fiscal years being nominal in amount. Ms. Kline formerly served as chief marketing and communications officer for AOL from 2013 to 2017 prior to and following Verizon’s acquisition of AOL in 2015.

 

Ordinary course banking transactions by several Pier 1 stores with branches of the banking subsidiaries of Huntington Bancshares Incorporated, with such transactions being nominal in amount in each of the last three fiscal years. Ms. Kline was elected as a director of Huntington Bancshares Incorporated on April 18, 2019. Her only interest in the underlying business relationship arises from her service as a director of Huntington Bancshares Incorporated.

 

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 directly or indirectly 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 the person does 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 nominating and corporate governance committee for approval, ratification or other action. Based on its consideration of all of the relevant facts and circumstances, the nominating and corporate governance 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 that 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 2019, the chair of the nominating and corporate governance committee did not pre-approve or ratify any transactions.

Transactions with Related Persons

During fiscal 2019, 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.


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GOVERNANCE

 

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. The non-executive chairman of the board of directors presided over the meetings of the independent directors.

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 2, 2019

Fees Paid to Directors

Beginning in fiscal 2019, we made significant changes to our board of director compensation program to better align our directors’ compensation with the market and our peers. Effective June 26, 2018, we decreased the annual cash retainer payable to non-employee directors from $150,000 to $85,000 and added an equity award valued at $100,000 to further link the interests of our non-employee directors with our shareholders. Each committee chair continued to receive an annual cash retainer of $25,000, and the chairman of the board continued to receive an annual cash retainer of $125,000. All retainers are payable in equal monthly installments on the last business day of each fiscal month.

The annual equity awards are made to each non-employee director following his or her election at each annual meeting and consist of a number of restricted stock units (“RSUs”) 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 RSUs will vest in full on the date of the following year’s annual meeting of shareholders. The award agreements for the RSUs provide for accelerated vesting upon death or disability and upon the occurrence of a corporate change, as defined in the award agreements.

Ms. Kline was appointed as a non-employee director on September 25, 2018 and received an equity award of RSUs valued at $75,000, which was prorated for her actual service during the board year, 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 RSUs will vest on September 25, 2019.  Future equity awards will be made annually after her election to the board at the annual meeting.

For fiscal 2019, non-employee directors did not receive additional fees for attending meetings. During fiscal 2019, 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. In general, directors who are Pier 1 Imports employees do not receive any compensation for their board activities.

Ms. Bachelder began serving as interim president and chief executive officer on December 18, 2018, and will forgo the non-employee director cash retainer of $85,000 during her dual-service period.

Pier 1 Imports offers its directors a Director Deferred Stock Unit Program (the “DSU Program”) that provides an optional deferral of up to 100% of the monthly cash retainers earned by the directors. Deferred retainers (but not committee chair or chairman retainers) are matched 25% by Pier 1 Imports and the total deferred retainers 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 retainers plus matching contributions are converted to DSUs based on the closing price of Pier 1 Imports common stock on the last trading day of the fiscal month in which the fees were earned. The DSUs are credited to an account maintained by Pier 1 Imports for each non-employee

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   16


 

GOVERNANCE

 

director. Each DSU is the economic equivalent of one share of Pier 1 Imports common stock, and 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 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. During fiscal 2019, Messrs. Dodds and Peel and Ms. McCague elected to defer a portion of their cash retainers to the DSU Program.

Directors may participate in the Pier 1 Imports, Inc. Stock Purchase Plan (the “SPP”). The SPP provides that non-employee directors may contribute to the SPP all or a portion of their monthly cash retainers, and Pier 1 Imports will contribute to the SPP 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 SPP. The participant may hold the released shares in the SPP or sell or transfer the released shares. A participant’s account is credited with all dividends paid on shares held in his or her account and those cash dividends are reinvested under the SPP in Pier 1 Imports common stock. Mmes. Babrowski and Sardini participated in the SPP during fiscal 2019.

None of the non-employee directors participated in the Pier 1 Imports, Inc. Deferred Compensation Plan in fiscal 2019.

No dividends were paid in fiscal 2019.

 

Fiscal 2019 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 2, 2019, for services rendered in all capacities to Pier 1 Imports. We provide limited perquisites to our directors including the opportunity to purchase Pier 1 Imports merchandise at a discount. No director had perquisites in an amount greater than $10,000 for fiscal 2019.

 

NAME

FEES

EARNED OR

PAID IN

CASH (1)

($)

RESTRICTED

STOCK UNIT AWARDS (2)

($)

STOCK

AWARDS

($)

TOTAL

($)

Claire H. Babrowski

$104,964

$107,998

$26,241 (3)

$231,205

Cheryl A. Bachelder

$106,917

$107,998

-

$206,917

Robert L. Bass

$  93,697

$107,998

-

$193,697

Hamish A. Dodds

$129,964

$107,998

$17,660 (4)

$247,624

Brendan L. Hoffman

$104,964

$107,998

-

$204,964

Katherine M. A. (“Allie”) Kline (5)

$  37,845

$  61,249

-

$112,845

Terry E. London

$229,964

$107,998

-

$329,964

Cynthia P. McCague (6)

$  46,071

-

$  5,759 (4)

$  51,830

Michael A. Peel

$110,262

$107,998

$11,350 (4)

$221,612

Ann M. Sardini

$129,964

$107,998

$  9,000 (3)

$238,964

 

(1)

This column represents the amount of cash compensation earned in fiscal 2019 for board and committee service. As described in footnotes 3 and 4 below, in lieu of some or all of their cash compensation, certain directors elected to receive DSUs pursuant to the Pier 1 Imports Director DSU Program or shares of common stock pursuant to the SPP. Ms. Bachelder no longer received her director retainers after her appointment as interim chief executive officer on December 18, 2018.

(2)

Effective June 26, 2018, the annual cash retainer payable to non-employee directors was decreased from $150,000 to $85,000 and an equity award of RSUs valued at $100,000 was added. Ms. Babrowski, Ms. Bachelder, Mr. Bass, Mr. Dodds, Mr. Hoffman, Mr. London, Mr. Peel and Ms. Sardini each received 36,363 RSUs, which will vest in full as of June 19, 2019, the annual meeting date. Ms. Kline was appointed as a non-employee director on September 25, 2018, and received a prorated equity award of RSUs valued at $75,000. Ms. Kline received 41,666 RSUs which will vest on September 25, 2019.

(3)

This amount represents the dollar value of Pier 1 Imports’ 25% match on monthly cash retainer fees contributed by each director into the SPP. These amounts were converted to common stock and are held by the SPP until released to the participant. The number of shares is calculated using the closing price of Pier 1 Imports common stock on the last trading day of each calendar month in which the contributions were made.

(4)

This amount represents the dollar value of Pier 1 Imports’ 25% match on monthly cash retainer fees (but not committee chair or chairman fees) deferred by each director into the Pier 1 Imports Director DSU Program. These amounts were converted to DSUs as shown in the table below. The dollar amount represents the grant date fair value of the DSUs granted in fiscal 2019 in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“ASC 718”). The number of DSUs is calculated using the closing price of Pier 1 Imports common stock on the last trading day of the fiscal month in which the fees were earned.

(5)

Ms. Kline was appointed as a non-employee director on September 25, 2018.

(6)

Ms. McCague did not stand for re-election as a director at the annual meeting of shareholders on June 26, 2018.

 

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   17


 

GOVERNANCE

 

The following table shows fiscal 2019 DSUs granted to each non-employee director given his or her deferral percentage and Pier 1 Imports’ match:

 

NAME

DEFERRAL

%

FISCAL

YEAR 2019

FEES

DEFERRED

($)

DSUS

CONVERTED

FROM

DEFERRED

FEES

(#)

DSUS

CONVERTED

FROM 25%

COMPANY

MATCH

(#)

AGGREGATE

DSUS

OWNED AT

FISCAL 2019

YEAR-END

(#)

Claire H. Babrowski

0%

-

-

-

-

Cheryl A. Bachelder

0%

-

-

-

139,125

Robert L. Bass

0%

-

-

-

-

Hamish A. Dodds

70%/50%(1)

$87,308

58,174

11,540

154,801

Brendan L. Hoffman

0%

-

-

-

  77,759

Katherine M. A. (“Allie”) Kline

0%

-

-

-

-

Terry E. London

0%

-

-

-

221,397

Cynthia P. McCague (2)

50%

$23,036

  8,542

  2,135

-

Michael A. Peel

50%/0%(1)

$45,964

29,420

  7,026

156,923

Ann M. Sardini

0%

-

-

-

-

 

(1)

Effective January 1, 2019, Messrs. Dodds and Peel elected to defer 50% and 0%, respectively, of their annual cash retainers.

(2)

Ms. McCague did not stand for re-election to the board at the 2018 annual meeting of shareholders. On June 26, 2018, 74,316 DSUs were converted, one-for-one, to 74,316 shares of Pier 1 Imports common stock and delivered to Ms. McCague.

The following table shows the Pier 1 Imports common stock closing price by month used to calculate the number of DSUs received for deferred director fees plus any Pier 1 Imports’ match. 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 2018

$3.43

April 2018

$2.32

May 2018

$2.42

June 2018

$2.58

July 2018

$2.13

August 2018

$1.84

September 2018

$1.51

October 2018

$1.55

November 2018

$1.44

December 2018

$0.43

January 2019

$0.82

February 2019

$1.42

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, trading in options on a Pier 1 Imports security, including calls, puts, and other derivative securities, 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.

 

 

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   18


 

 

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 2, 2019, March 3, 2018, and February 25, 2017,” and all directors and executive officers as a group, as of April 22, 2019, unless otherwise indicated below:

 

NAME OF BENEFICIAL OWNER

SHARES OF

COMMON STOCK

BENEFICIALLY

OWNED(1)(2)(3)

PERCENT

OF CLASS

Claire H. Babrowski

    217,333

*

Cheryl A. Bachelder

    907,477

1.07%

Robert L. Bass

      36,363

*

Robert E. Bostrom

    657,894

*

Kelly N. Cook

    -

*

Hamish A. Dodds

    232,423

*

Mark R. Haley

    262,752

*

Brendan L. Hoffman

    114,122

*

Alasdair B. James

      68,275

*

Katherine M. A. (“Allie”) Kline

    -

*

Terry E. London

    410,617

*

Michael A. Peel

    193,286

*

Ann M. Sardini

    133,686

*

William H. Savage

    274,374

*

Nancy A. Walsh

    478,261

*

All directors and executive

officers as a group

(15 individuals)

4,295,599

4.99%

 

*

Represents less than 1% of the outstanding shares of the class.

(1) 

The table includes unvested shares of restricted stock over which the person has sole voting power.

(2) 

The table includes DSUs as of April 22, 2019, for Ms. Bachelder (139,125 DSUs), Mr. Dodds (162,504 DSUs), Mr. Hoffman (77,759 DSUs), Mr. London (221,397 DSUs) and Mr. Peel (156,923 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 2, 2019 – 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.

(3) 

The table includes 36,363 RSUs vesting within 60 days of April 22, 2019 for all directors except Ms. Kline. For directors who elected to defer the conversion of their RSUs, the RSUs will be exchanged one-for-one for shares of Pier 1 Imports common stock when the deferral election chosen by the director lapses. All such deferrals will lapse as of the director’s termination of service to the board.

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   19


 

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 22, 2019, to beneficially own more than 5% of Pier 1 Imports common stock based on 85,013,806 shares outstanding:

 

NAME AND ADDRESS OF BENEFICIAL OWNER

COMMON SHARES

BENEFICIALLY

OWNED

PERCENT

OF CLASS

Dimensional Fund Advisors LP

Building One

6300 Bee Cave Road

Austin, TX 78746

 

6,635,202 (1)

7.8%

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

 

5,511,193 (2)

6.5%

Charles Schwab Investment Management Inc.

211 Main Street

San Francisco, CA 94105

 

4,413,120 (3)

5.2%

 

(1) 

Based on information contained in a Schedule 13G/A filed with the SEC on February 8, 2019, Dimensional Fund Advisors LP has sole voting power over 6,363,165 of the shares shown and sole dispositive power over the 6.635,202 shares shown. The Schedule 13G/A filed by Dimensional Fund Advisors LP provides information as of December 31, 2018, and, consequently, the beneficial ownership of Dimensional Fund Advisors LP may have changed prior to the printing of this proxy statement.

(2) 

Based on information contained in a Schedule 13G/A filed with the SEC on February 6, 2019, BlackRock, Inc. has sole voting power over 5,207,480 of the shares shown and sole dispositive power over the 5,511,193 shares shown. The Schedule 13G/A filed by BlackRock, Inc. provides information as of December 31, 2018, and, consequently, the beneficial ownership of BlackRock, Inc. may have changed prior to the printing of this proxy statement.

(3)

Based on information contained in a Schedule 13G filed with the SEC on February 14, 2019, Charles Schwab Investment Management Inc. has sole voting power and sole dispositive power over the 4,413,120 shares shown. The Schedule 13G filed by Charles Schwab Investment Management Inc. provides information as of December 31, 2018, and, consequently, the beneficial ownership of Charles Schwab Investment Management Inc. may have changed prior to 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 fiscal 2019 were met.

 

 

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   20


 

 

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 SEC, 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. In accordance with this vote, we intend to hold an annual say-on-pay vote until the next vote on say-on-pay frequency, which is scheduled to occur at the 2023 annual meeting of shareholders. 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 SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion under the caption “Compensation.”

 

 

 

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   21


 

COMPENSATION

 

Compensation Discussion and Analysis

Executive Summary and Message from the Compensation Committee

Fiscal 2019 was a challenging year for the company and business performance was disappointing. In April 2018, Pier 1 began to change its merchandise, marketing, and store presence designed to make the overall offering more relevant to changing customer wants and needs. While we believe that the objectives of this transformation were sound, the amount of simultaneous changes to the Company’s business model proved to exceed the Company’s executional capabilities. The acceleration of category promotion cadence and continued variation in customer shopping and buying patterns further compounded these executional shortfalls.

 

As a result of these challenges, the Company took decisive action to narrow the strategic focus and improve execution, while at the same time strengthening the senior leadership team and making sure we retained key leaders essential to performance improvement and future success.

 

Particularly with tightening labor markets and the transition the Company was undergoing, the attraction and retention of the top talent required to achieve the Company’s short- and long-term objectives was an important consideration. Our objectives were, and they remain, to keep our executive compensation programs highly performance oriented and geared to important executional milestones, differentiate compensation actions based on criticality to the business, and maintain affordability. To accomplish this, in fiscal 2019 the measurement period for our long-term incentive program was reduced, the goal setting process carefully focused on strategic plan objectives, and the mix of pay shifted to aid retention.

 

We believe these compensation actions struck the best balance between short- and long-term and between performance orientation and retention. Nonetheless, Company results fell short of expectations which greatly impacted the compensation earned by named executive officers and leaders throughout the Pier 1 Imports business. There was no short-term incentive payout for fiscal 2019, making it the fifth fiscal year out of the last six in which there was zero payout.

 

While the pay for performance design of our compensation programs was clearly in evidence in fiscal 2019, we are also working hard to upgrade and motivate the Pier 1 Imports organization to fully accomplish the Company’s transformation plan and business objectives. We believe these actions will translate into improved performance in the coming fiscal year and beyond and will continue to monitor closely how our compensation programs can best be utilized to incentivize organizational excellence.

 

COMPENSATION COMMITTEE

Michael A. Peel, Chair

Claire H. Babrowski

Katherine M. A. (“Allie”) Kline


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   22


 

COMPENSATION

 

Our Executive Team and Key Leadership Transitions

 

We continued to experience significant transition in our leadership team for fiscal 2019 particularly as we shifted our strategic focus.

 

 

 

Fiscal 2019 Leadership Transitions

 

Cheryl A. Bachelder was appointed Interim Chief Executive Officer on December 18, 2018, replacing Mr. James who stepped down as President and Chief Executive Officer.

 

Donna N. Colaco was appointed Chief Customer Officer on December 3, 2018. This newly-created role was designed to bring together merchandising, product development, planning and allocations, stores, marketing and e-Commerce to continue to strengthen our customer-centric mindset across the Company.

 

Robert E. Bostrom was appointed as Executive Vice President, Chief Legal and Compliance Officer and Corporate Secretary on January 23, 2019, replacing Michael A. Carter who retired from the Company in September 2018.

 

Lance J. Wills was appointed Executive Vice President and Chief Information Officer on February 4, 2019, replacing Bhargav J. Shah who stepped down on November 30, 2018.

 

Kelly N. Cook stepped down as Executive Vice President and Chief Marketing Officer on February 19, 2019.

 

 

 

This Compensation Discussion and Analysis describes the compensation of our named executive officers listed in the table below for fiscal 2019, and includes our executive officers who served as chief executive officer during the fiscal year, our former chief financial officer, and our three other most highly compensated executive officers serving at the end of the fiscal year, as well as Kelly Cook, a former executive officer who would have been among the most highly compensated executive officers had she been serving as of the fiscal year end.

 

 

NAMED EXECUTIVE OFFICERS

 

 

POSITION

 

 

DATES IN ROLE

 

 

 

 

 

  Cheryl A. Bachelder

 

Interim Chief Executive Officer

 

 

Appointed December 18, 2018

 

 

  Nancy A. Walsh (1)

 

 

Former Executive Vice President and Chief Financial Officer

 

 

Served January 25, 2018 – April 17, 2019

 

 

  William H. Savage

 

Executive Vice President, Global Supply Chain

Appointed December 7, 2017

 

  Mark R. Haley

 

Executive Vice President, Store Sales & Operations

Appointed June 26, 2018

 

  Robert E. Bostrom

 

 

 Executive Vice President, Chief Legal and Compliance
Officer and Corporate Secretary

 

 

Appointed January 23, 2019

 

 

  Alasdair B. James

 

 

Former President and Chief Executive Officer

 

 

Served May 1, 2017 – December 18, 2018

 

 

  Kelly N. Cook

 

Former Executive Vice President and Chief Marketing Officer 

 

Served March 19, 2018 – February 19, 2019

 

(1)

Ms. Walsh departed from the Company effective April 17, 2019 and was succeeded by Deborah Rieger-Paganis, who is serving as interim chief financial officer. Ms. Rieger-Paganis is employed as a managing director of AlixPartners, LLP, a global consulting firm, and will continue in that capacity while serving as interim chief financial officer. Darla D. Ramirez, the Company’s principal accounting officer, was appointed to succeed Ms. Walsh as interim principal financial officer.

 

Additionally, we have included disclosure within this Compensation Discussion and Analysis for Donna N. Colaco due to the fact that Ms. Colaco is a key member of our leadership team and her compensation was similar to our other most highly compensated executive officers in fiscal 2019.


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   23


 

COMPENSATION

 

Fiscal 2019 Business Performance

In fiscal 2019, Pier 1 Imports embarked on a strategic plan designed to improve the Company’s brand proposition, capture operating efficiencies and drive sales growth. Execution issues related to product and marketing resulted in disappointing financial performance, particularly during the second half of the year. Our results include:

 

Company comparable sales decreased 11% compared to fiscal 2018;

 

Net sales decreased 13.7% to $1.6 billion compared to fiscal 2018;

 

Net loss of $198.8 million, or ($2.46) per share;

 

Inventory of $347.6 million, flat to fiscal 2018 year end; and

 

Cash and cash equivalents of $54.9 million at year end, $50 million of borrowings under the Company’s FILO tranche and an undrawn revolver facility.

 

Pier 1 Imports has developed an action plan to reset its operating model and rebuild the business for the future. Our fiscal 2019 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 payouts under the short-term incentive program and no vesting occurred for our fiscal 2017-2019 performance-based restricted stock awards.  In addition, no performance-based restricted shares were earned under the first fiscal year of our 2019-2021 performance

cycle based on the Earnings Per Share as adjusted measure.

 

FISCAL 2019 PERFORMANCE

 

SHORT-TERM INCENTIVE

 

          

 

 

LONG-TERM INCENTIVE

 

            

* Earnings per share of ($2.46) was not adjusted due to the difference between the target and actual performance for this metric. No threshold was established for fiscal 2019.

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   24


 

COMPENSATION

 

Fiscal 2019 Compensation Actions and Decisions

 

In view of the challenges facing our business, we articulated the factors impacting pay and made compensation decisions accordingly. This relationship is outlined below:

 

Our Principles

Take decisive and differentiated action for specific leadership talent required to accomplish our strategic plan

Tightly link performance with the key execution milestones of our business strategy

Focus attention on short-term foundational requirements, while building to long-term sustainable performance

Consider affordability over time

Factors that Guided Our Decisions

Financial performance of the Company that was below expectations

Our pay-for-performance 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 2019 Compensation Decisions

Short-Term Incentives

 

Fiscal 2019 short-term incentive performance targets for profit and revenue were not met; therefore, no named executive officers received a short-term incentive award payout.

 

Long-Term Incentives

 

No vesting occurred for our fiscal 2017-2019 performance-based restricted stock awards based on the Profit Goal and ROIC performance measures.

No performance-based restricted shares were earned under the first fiscal year of our 2019-2021 performance cycle based on the earnings per share as adjusted measure.

Named executive officers employed before June 29, 2018, with the exception of Mr. Savage, received the following grants of performance-based restricted stock and time-based restricted stock.

oApproximately 50% of the restricted stock granted for fiscal 2019 was performance-based, vesting based on the achievement of Earnings Per Share as adjusted.

oApproximately 50% of the restricted stock granted for fiscal 2019 was time-based, vesting in substantially equal amounts on each of the first three anniversaries of the grant date.

In lieu of the annual long-term performance-based incentive award and per his offer letter, Mr. Savage received a one-time performance-based restricted stock award based on attaining significant cost savings in sourcing expenses over a three-year period.

In lieu of the annual long-term time-based incentive award and per her offer letter, Ms. Cook received a one-time long-term incentive award vesting in substantially equal installments over a three-year period.

Mr. Bostrom and Ms. Colaco, who were hired after June 29, 2018, received a time-based restricted stock award in connection with their employment; they will be eligible for and participate in the fiscal 2020 long-term incentive program similar to the other executives.

Ms. Bachelder was provided a time-based restricted stock award upon her appointment as interim chief executive officer.

Named executive officers who separated from the Company during fiscal 2019 forfeited all unvested performance-based and time-based long-term incentive awards except for a limited number of shares of time-based restricted stock that were vested in connection with Mr. James’ separation.

 

Select One-Time Cash Retention Awards

Due to the significant leadership transition and continued uncertainty within our business, we believed it was critical to take action to secure the commitment of our leadership team.

To that end, we provided select one-time cash retention awards to Ms. Walsh, Mr. Haley, Mr. Savage and Ms. Cook between December 2018 and January 2019.

oThe awards for Ms. Walsh, Mr. Savage and Mr. Haley are subject to a pro-rata clawback in the event the executive leaves Pier 1 Imports other than for good reason or is terminated for cause as set forth in the respective agreement.

oThe award provided to Ms. Cook will be paid in December 2019.

 

New-Hire Cash Awards

Mr. Bostrom, Ms. Colaco and Ms. Cook received one-time cash awards in connection with their employment, subject to a pro-rata clawback as set forth in the respective agreements.

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   25


 

COMPENSATION

 

CEO Pay at a Glance

Mr. James served as President and Chief Executive Officer from May 1, 2017 until December 18, 2018.

 

 

 

Mr. James’ target total direct compensation (base salary, target short-term incentive grant and target long-term incentive grants) for fiscal 2019 was generally aligned with our broader executive compensation program and philosophy and a significant portion of Mr. James’ total direct compensation was “at-risk.” Illustrated in the table below, the majority of outstanding equity awards and performance-based cash awards were forfeited upon Mr. James’ separation.

 

 

CHIEF EXECUTIVE OFFICER TARGET VERSUS REALIZED COMPENSATION

 

 

 

TARGET VALUE AT GRANT

VALUE REALIZED

Base Salary

$1,000,000

$815,385

 

 

 

Short-Term Incentive

$1,250,000

$            0

 

 

 

Annual Awards in Fiscal Year 2019

 

 

Performance-Based Restricted Stock

$   687,500

$            0

Time-Based Restricted Stock

$   687,500

$            0

Performance-Based Long-Term Cash

$1,000,000

$            0

 

 

 

Annual Awards in Fiscal Year 2018

 

 

Performance-Based Restricted Stock

$1,500,000

$            0

Time-Based Restricted Stock

$   500,000

$  57,677

 

 

 

Awards Related to Mr. James’ Hire in Fiscal Year 2018

 

 

Stock Options

$1,000,000

$            0

Time-Based Restricted Stock

$   500,000

    $  72,349 (1)

 

(1)

Represents 71,633 shares of time-vested restricted stock that were vested in connection with Mr. James’ separation, valued at the closing share price of $1.01 on December 18, 2018.

 

Interim CEO Pay

During Ms. Bachelder’s service as interim chief executive officer, she will receive a base salary of $1.25 million but will not be eligible to receive a short-term incentive award. Ms. Bachelder was provided a time-based restricted stock award of 729,927 shares, vesting in substantially equal installments over a three-year period, which was valued at $1.0 million based on the thirty-day trailing average of the Company’s common stock as of December 18, 2018, the date of her appointment as interim chief executive officer. Due to the difference in the stock price between the time the award was determined and the actual grant date, the fair value of the award on the grant date was $226,277. Ms. Bachelder will forgo her cash directors’ retainers during her period of dual service.

Aligning Pay with Performance

Having a committed leadership team in place is critical to our future success in this challenging business and the highly competitive retail industry. Our executives must be incentivized to stay with the Company and 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 these results, we provide both short-term and long-term incentives to our executives to encourage the effective management of major functions, teamwork, and strategy development and execution, which we believe will contribute to increased shareholder value. Therefore, the majority of named executive officer compensation is “at-risk” and tied to Pier 1 Imports’ performance, with the exception of our interim chief executive officer.


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   26


 

COMPENSATION

 

Specifically for fiscal 2019, our goal was to focus our executive team on clear and simple metrics aligned with critical measures of success for our transformation. To this end, we changed the measures in both our short-term and long-term incentive plans focusing on Operating Cash EBITDA, Net Sales, and Earnings Per Share as adjusted for fiscal 2019. Long-term incentive awards granted in fiscal 2017 that were eligible to vest in fiscal 2019 were based on Profit Goal and ROIC metrics.

 

 

FISCAL 2019 PERFORMANCE METRICS

 

Operating Cash EBITDA

The Company’s fiscal 2019 consolidated operating cash earnings before interest, taxes, depreciation and amortization from all domestic and international operations, but not including discontinued operations, unusual or non-recurring charges nor recurring non-cash items.

 

Net Sales

The Company’s fiscal 2019 net sales.

 

Earnings Per Share

as adjusted

The achievement of targeted Earnings Per Share as adjusted for specified significant unusual or non-recurring or recurring non-cash items or events as provided in the 2015 Plan for a given fiscal year period, with such adjustments to be determined by the compensation committee.

 

 

FISCAL 2017 – FISCAL 2019 LONG-TERM INCENTIVE PERFORMANCE METRICS

 

Profit Goal

The Company’s consolidated operating cash earnings before interest, taxes, depreciation and amortization from all domestic and international operations, but not including discontinued operations, adjusted for certain recurring non-cash items and unusual or non-recurring items as determined by the compensation committee, measured from the beginning of fiscal year 2017 through the end of fiscal year 2019.

 

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.

 

 

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 2019, the performance-based components of our compensation program were designed with the following objectives and framework:

 

 

 

SHORT-TERM INCENTIVE

 

 

LONG-TERM INCENTIVE

 

 

Objective

 

Reward achievement of short-term corporate performance goals

 

Reward long-term financial results and drive shareholder value creation

Reinforce ownership in the Company

Support retention of executives

 

 

Type of Award

 

Annual Award

 

Performance-Based Restricted Stock
comprises 50% of the award

 

Time-Based Restricted Stock comprises
50% of the award

 

 

Form

 

 

Cash

 

Equity

 

Time Horizon

 

 

1 year

 

3 years

 

Metrics

 

Operating Cash EBITDA, weighted 50%

Net Sales, weighted 50%

 

Earnings Per Share as adjusted

Stock price

Continued employment

 

 

Material Changes from Fiscal 2018


Changed metric to replace Merchandise Margin dollars with Net Sales to focus on top-line growth; weighted Operating Cash EBITDA and Net Sales equally


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

 

 

Changed metric from Operating Cash EBITDA and ROIC to Earnings Per Share as adjusted to focus executives on a key transformation metric

 

Earnings Per Share as adjusted will be measured for each of the three fiscal years in the period due to the level of uncertainty during the transformation, with the opportunity to “bank” shares earned each fiscal year; each fiscal year was weighted at one-third and only a target level was set for fiscal 2019

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   27


 

COMPENSATION

 

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 2018, approximately 91% of the votes cast approved the compensation for our named executive officers.

Shareholder Engagement

Our board of directors and our compensation committee value the opinions of our shareholders. In fiscal 2019, we made changes to our principles and programs that continue to support the foundations we have used historically and those which reflect shareholder feedback, sound corporate governance and a balance of retention with continued alignment of pay with performance. To that end, we continued to:

 

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

 

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

 

Evaluate executive salaries on a case-by-case basis rather than utilizing across-the-board increases

 

Analyze external data when setting our named executive officers’ compensation

 

Further, we believe the changes we made to our programs are well aligned to important metrics and results that are critical for our shareholders and for our strategic transformation.

 

 

Peer Group Used for Comparison

The fiscal 2019 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.

 

Designer Brands Inc.

 

Fossil Group, Inc.

 

Haverty Furniture Companies, Inc.

 

 

Kirkland’s, Inc.

 

RH

 

Sleep Number Corporation

 

 Stage Stores, Inc.

 

Stein Mart, Inc.

 

 

The Container Store Group, Inc.

 

The Michaels Companies, Inc.

 

Ulta Beauty, 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. Given our recent performance, pay realized by executives has been below the market 50th percentile and a significant rebound of our stock price as well as improved performance would be required for executives to realize this positioning.

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.

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   28


 

COMPENSATION

 

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 industry and broader market

 

 

Cash

 

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

 

Short-Term Incentive

 

To encourage focus on short-term business performance

 

Cash

 

Rewards achievement of short-term corporate performance goals

Pays only if threshold performance levels or above are met

 

 

Long-Term

Incentive

Performance-Based Restricted Stock

 

To increase multi-year profitability and stock price

 

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

Incentive

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 through salary continuation for a fixed period

 

Other Benefits

 

To aid in attracting and retaining executive talent

 

Benefit

 

Non-qualified deferred compensation plan

Pier 1 Imports, Inc. Stock Purchase Plan

Broad-based benefits available to all employees

 

 

Analysis of Fiscal 2019 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.

 


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   29


 

COMPENSATION

 

The compensation committee reviews base salaries for our executives annually but does not uniformly raise base salaries each year. In fiscal 2019, Ms. Walsh and Mr. Haley received base salary increases of 7% and 27%, respectively, to ensure their competitiveness to the market.

 

 

KEY EXECUTIVE

ANNUALIZED FISCAL

2018 BASE SALARY

ANNUALIZED FISCAL

2019 BASE SALARY

PERCENT INCREASE

Cheryl A. Bachelder

N/A

$1,250,000

N/A

Nancy A. Walsh

$   575,000

$   615,000

7%

William H. Savage

$   450,000

$   450,000

0%

Mark R. Haley

    $   300,000 (1)

$   380,000

27%

Robert E. Bostrom

N/A

$   615,000

N/A

Alasdair B. James

$1,000,000

$1,000,000

0%

Kelly N. Cook

N/A

$   450,000

N/A

Donna N. Colaco

N/A

$   700,000

N/A

 

(1)

During fiscal 2019, Mr. Haley received two increases in salary to reflect his increased contribution to the business and his promotion to executive vice president in April of 2018 (in April 2018 increased to $345,000 and in December 2018 increased to $380,000).

Short-Term Incentive Program

 

 

 

No Bonus Payouts for Fiscal Year 2019

Our aggressive target levels of performance for fiscal 2019 were not achieved; therefore, no named executive officer received a short-term incentive award payout. Our executives have not received short-term incentive program payouts in five of the last six fiscal year periods.

 

Our short-term incentive program is designed to reward our executives for overall Company financial performance over the fiscal year. Fifty percent of the incentive was based upon achievement of the Operating Cash EBITDA goal and 50% was based upon achievement of the Net Sales goal. The metrics were adjusted for fiscal 2019 to align with our strategic transformation ensuring a focus on critical top-line growth balanced with profitability and operations. This focus resulted in the replacement of Merchandise Margin Dollars with Net Sales.

 

 

 

 

 

              


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   30


 

COMPENSATION

 

When setting the Operating Cash EBITDA and Net Sales goals for the fiscal year short-term incentive program, the compensation committee reviewed the Company’s actual performance in fiscal 2018 and considered management’s projections for fiscal 2019. The goals set for our leadership team were rigorous and challenging and reflected our strategic plan. Further, the goals for our executives were set at more aggressive levels than for the broader company population.

 

All named executive officers were eligible to receive a cash award in fiscal 2019, except for Ms. Bachelder, who did not participate in the program. Further, Mses. Colaco and Walsh and Mr. Bostrom were eligible to participate in the fiscal 2019 short-term incentive program at 125% of their respective salaries per their offer letters upon hire. No new hires were guaranteed any portion of the short-term incentive as it had to be earned along with the other members of the executive management team. Mr. Bostrom and Ms. Colaco will maintain the 125% target award level for fiscal 2020 and participate at a level commensurate with other senior officers in subsequent years.

 

The short-term incentive program targets for the other NEOs were unchanged from fiscal 2018 and reflect a competitive award compared to Pier 1 Imports’ peer group when performance results are achieved. The targets for each key executive are shown below. No award payout was possible unless the realized Operating Cash EBITDA and Net Sales for fiscal 2019 met or exceeded the threshold level.

 

 

 

FISCAL 2019 ANNUAL SHORT-TERM INCENTIVE OPPORTUNITY

AS A PERCENTAGE OF BASE SALARY

 

KEY EXECUTIVE

AT THRESHOLD

PERFORMANCE

LEVELS

AT TARGET

PERFORMANCE

LEVELS

AT MAXIMUM

PERFORMANCE

LEVELS

ACTUAL

FISCAL 2019

AWARD

Cheryl A. Bachelder (1)

N/A

N/A

N/A

N/A

Nancy A. Walsh (2)

37.5%

125%

250%

$0

William H. Savage

22.5%

  75%

150%

$0

Mark R. Haley

22.5%

  75%

150%

$0

Robert E. Bostrom (2)

37.5%

125%

250%

$0

Alasdair B. James (3)

37.5%

125%

250%

N/A

Kelly N. Cook (3)

22.5%

  75%

150%

N/A

Donna N. Colaco (2)

37.5%

125%

250%

$0

 

(1)

Ms. Bachelder did not participate in the short-term incentive program for fiscal 2019.

(2)

Ms. Walsh, Mr. Bostrom and Ms. Colaco were eligible to receive a target short-term incentive award equal to 125% of their respective base salaries for fiscal 2019 per their offer letter upon hire.

(3)

Mr. James and Ms. Cook were not eligible to receive a short-term incentive payout for fiscal 2019 because they departed prior to the end of the fiscal year. The short-term incentive program requires participants to be employed with Pier 1 Imports at the end of the fiscal year to receive a cash award.

Long-Term Incentive Program

Our long-term incentive program is designed to reward performance over the long term and to serve as a retention tool. In fiscal 2019, we made significant changes to our long-term incentive program to better align with our strategic transformation and the executive compensation principles determined by the compensation committee.

 

 

 

Performance-Based Share Grants Did Not Realize Value in Fiscal 2019


Performance-based restricted stock grants awarded in fiscal 2017 were eligible to vest in April of fiscal 2019. These grants were tied to a three-year fiscal performance period ending with fiscal 2018 based on the achievement of Profit Goal and ROIC performance metrics. Performance for each of the metrics was below threshold levels, and no shares vested as a result.

 

Additionally, no performance-based restricted shares were earned under the first fiscal year of our 2019-2021 performance cycle based on the Earnings Per Share as adjusted measure.

 

 

 


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   31


 

COMPENSATION

 

 

KEY CHANGE

RATIONALE

Slightly shifted the blend of vehicles from 60% performance-based restricted stock and 40% time-based restricted stock to 50% and 50% respectively

Enhance the retention value while still maintaining a strong connection to creating shareholder value

 

Changed the metric in the performance-based restricted stock program to Earnings Per Share as adjusted

Simplify the plan and focus executives on a single metric critical to a successful turnaround and well aligned to creating shareholder value over the long-term

Adjusted the measurement period on the performance-based restricted stock from a three-year period to three one-year periods

Reflect the uncertainty within our business and focus on critical Earnings Per Share as adjusted milestones required for a successful long-term turnaround

During fiscal 2019, equity grants were a mix of performance-based restricted stock, targeting the achievement of Earnings Per Share as adjusted, and time-based restricted stock.

 

Approximately 50% of the restricted shares granted at target in fiscal 2019 were performance-based, with vesting based on achievement of Earnings Per Share targets, adjusted for specified significant unusual or non-recurring or recurring non-cash items or events as provided in the 2015 Plan for a given fiscal year period, with such adjustments to be determined by the compensation committee.

 

 

The Earnings Per Share as adjusted performance target was based on the three-year business plan and set by the compensation committee. The vesting schedule over the three years is as follows:

 

Fiscal 2019-2021 Adjusted Earnings Per Share Vesting Schedule

Earnings Per Share As Adjusted Vesting Schedule for FY 2019

Threshold

N/A

Target

1/3 X 100% = 33% of total Target Performance-Based Restricted Shares

Maximum

N/A

Earnings Per Share As Adjusted Vesting Schedule for each of FY 2020 and FY 2021

Threshold

1/3 X 75% = 25% of total Target Performance-Based Restricted Shares

Target

1/3 X 100% = 33% (fiscal 2020) or 34% (fiscal 2021) of total Target Performance-Based Restricted Shares

Maximum

1/3 X 250% = 83% of total Target Performance-Based Restricted Shares

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   32


 

COMPENSATION

 

Approximately 50% of the restricted shares granted at target in fiscal 2019 were time based, vesting in substantially equal amounts on the first, second and third anniversary of the grant date. For fiscal 2019, Earnings Per Share as adjusted was below target, therefore no restricted shares were earned for the first fiscal year of the three-fiscal-year performance period.

Executives that were not eligible for or were appointed subsequent to the grant of the annual award described above received the following awards:

 

Ms. Bachelder was provided a time-based restricted stock award of 729,927 shares which was valued at $1,000,000 based on the thirty-day trailing average of the Company’s common stock as of December 18, 2018, the date of her appointment as interim chief executive officer. Due to the difference in stock price between the time the award was determined and the actual grant date, the fair value of the award on the grant date was $226,277.

 

In addition to his annual time-based restricted stock award, Mr. Savage received a one-time performance-based restricted stock award valued at $337,500 that will vest based on the attainment of specific and challenging cost savings in terms of sourcing expenses over a three-year performance period.

 

In lieu of the annual long-term time-based incentive award and per her offer letter, Ms. Cook received a one-time long-term incentive award valued at $225,000, vesting in substantially equal installments over a three-year period.

 

Mr. Bostrom, as part of his offer of employment, received a grant of time-based restricted stock on January 23, 2019, valued at $375,000, vesting in equal installments on each of the first three anniversaries of the grant date.

 

Ms. Colaco, as part of her offer of employment, received a grant of time-based restricted stock on December 3, 2018, valued at $600,000, vesting in equal installments on each of the second and third anniversaries of the grant date.

 

The table below provides a breakdown of the awards granted to key executives in fiscal 2019.

 

 

KEY EXECUTIVE

 

 

PERFORMANCE – BASED

RESTRICTED SHARES AT TARGET (1)

 

 

TIME-BASED

RESTRICTED
SHARES (2)

 

 

VALUE AT TARGET (3)

 

NOTES

 

Cheryl A. Bachelder

N/A

729,927

$1,000,000

Award made in connection with commencement of the Interim CEO role

Nancy A. Walsh

209,090

104,545

$   575,000

Awards forfeited upon departure

William H. Savage

147,378

  81,818

$   562,500

 

Mark R. Haley

  94,090

  47,045

$   258,750

 

Robert E. Bostrom

N/A

657,894

$   375,000

Award made in connection with employment

Alasdair B. James

500,000

250,000

$1,375,000

Awards forfeited upon departure

Kelly N. Cook

245,454

  71,884

$   562,500

Awards forfeited upon departure

Donna N. Colaco

N/A

384,615

$   600,000

Award made in connection with employment

 

(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 2021 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. Restricted shares vest in substantially equal installments over a three-year period.

(3)

Number of restricted 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.

One-Time Cash Awards

Between December 2018 and January 2019, the Company experienced significant leadership changes against a backdrop of continued uncertainty in the business. To help secure key leaders and ensure they remained focused on driving performance and executing on the business strategy, the Company made select one-time retention cash awards. The awards provided to Ms. Walsh, Mr. Savage and Mr. Haley are subject to a pro-rata clawback in the event the executive leaves Pier 1 Imports without good reason or is terminated for cause for the term specified in the award agreement. The award provided to Ms. Cook will be paid in December 2019.

 

NAMED EXECUTIVE OFFICER

CASH AWARD

Nancy A. Walsh

$615,000

William H. Savage

$450,000

Mark R. Haley

$380,000

Kelly N. Cook

$450,000

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   33


 

COMPENSATION

 

 

In addition, Mr. Haley received a cash retention award of $345,000 that was granted and paid in May 2018, subject to a pro rata clawback as described above.

Mr. Bostrom received a sign-on bonus of $375,000 upon commencement of employment. Ms. Colaco received a sign-on bonus of $300,000 after sixty days of employment. Ms. Cook received a sign-on bonus of $75,000 after sixty days of employment and an additional $50,000 payable upon completion of one year of service, which was paid following her separation from service. Each sign-on bonus is subject to a pro rata clawback as described above.

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. This 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. This plan also assists us in attracting and retaining executives and key members of management. This plan is described and discussed below under the caption “Non-Qualified Deferred Compensation Table for the Fiscal Year Ended March 2, 2019.”

We have historically maintained a supplemental executive retirement plan for certain executive officers. During fiscal 2019, no named executive officer participated in the supplemental retirement plan.

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.

 

 

 

 

 

  POSITION

 

OWNERSHIP GUIDELINE

 

 

 

 

  Chief Executive Officer

 

 

6 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 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 were 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 cash retainer (i.e., 5 X $85,000) effective as of June 29, 2018.

Shares counted toward ownership for executives and directors 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 directors.

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   34


 

COMPENSATION

 

Compensation Factors and Governance for Fiscal 2019

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-term 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-term 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

 

Have employment agreements

 

Apply across-the-board base salary increases

 

Have tax gross-ups upon a change in control

 

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

 

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

 

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

 

Reprice underwater stock options

Role of the Compensation Committee

Throughout our strategic transformation, the compensation committee has been instrumental in the development of appropriate programs designed to attract, retain and motivate as well as stabilize our leadership team. The compensation committee has thoughtfully partnered with leadership to redefine our executive compensation principles and ensure our programs support those principles, while maintaining a focus on performance metrics and goals that are aligned with shareholder interests.

 

Step 1

The chief executive officer and the chief human resources officer present and make pay and incentive recommendations for all executives to the compensation committee. The chief executive officer does not make a recommendation as to his or her own pay. The timing of these discussions is generally at the end of a fiscal year or the beginning of the next fiscal year.

Step 2

The compensation committee considers survey data from
Pier 1 Imports’ peer group, and broader industry studies and recommendations from its independent executive compensation consultant, Willis Towers Watson.

Step 3

The compensation committee confirms prior-year performance metrics and approves current fiscal year compensation within the first 45 days of the fiscal year with an effective date for new awards generally in April or May. Long- and short-term incentive compensation grants for the fiscal year, as well as long-term incentive vesting and short-term incentive award payouts, if any, are awarded after approval by the compensation committee and board of directors.

 


PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   35


 

COMPENSATION

 

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 2019, as well as data from the Willis Towers Watson Compensation Data Bank Retail/Wholesale Services Executive Database and public sources such as proxy filings. Willis Towers Watson reported directly to, and was accountable to, the compensation committee. In compliance with SEC and NYSE requirements regarding independence, 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.

The compensation committee reviewed the factors specified in the NYSE corporate governance standards and the letter, dated March 27, 2019 from Willis Towers Watson, and determined that Willis Towers Watson was independent and did not have any conflicts of interest.

During fiscal 2019, Willis Towers Watson did not provide any other services to Pier 1 Imports other than executive compensation consulting.

 

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-term 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.

 

Compensation Committee Interlocks and Insider Participation

With respect to fiscal 2019 and from March 3, 2019 through the date of this proxy statement, no executive officer of the Company served as a member of the board of directors or compensation committee of another entity, one of whose executive officers served on the Company’s compensation committee or board of directors, and no member of the compensation committee had any relationship with the Company that would require disclosure under Item 404 of Regulation S-K.

The compensation committee is currently comprised of Michael A. Peel (Chair), Claire H. Babrowski and Katherine M. A. (“Allie”) Kline. Mr. Peel and Ms. Babrowski each served as a member of the compensation committee throughout fiscal 2019. Ms. Kline was appointed to the compensation committee on September 25, 2018. Cheryl A. Bachelder resigned as a member and chair of the compensation committee effective December 18, 2018, in connection with her appointment as interim chief executive officer.

 

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’ 2019 proxy statement.

COMPENSATION COMMITTEE

Michael A. Peel, Chair

Claire H. Babrowski
Katherine M. A. (“Allie”) Kline 

 

PIER 1 IMPORTS, INC.   |   2019 Proxy Statement   |   36


 

COMPENSATION

 

Summary Compensation Table for the Fiscal Years Ended March 2, 2019, March 3, 2018, and February 25, 2017

The following table sets forth a summary of the compensation in the past two fiscal years for services rendered in all capacities to Pier 1 Imports and its subsidiaries by the interim chief executive officer, the former president and chief executive officer, the former chief financial officer, the three other most highly compensated executive officers, and one additional officer for whom disclosure would have been required but for the fact that the individual was not serving as a Pier 1 Imports executive officer at the end of fiscal 2019. None of our NEOs were serving as such for the fiscal year ended February 25, 2017.

 

NAME AND

PRINCIPAL

POSITION

FISCAL

YEAR

SALARY (1)

($)

BONUS (2)

($)

STOCK

AWARDS (3)

($)

OPTION

AWARDS

($)

NON-EQUITY

INCENTIVE

PLAN

COMPENSATION (4)

($)

CHANGE IN

PENSION

VALUE AND

NON-QUALIFIED

DEFERRED

COMPENSATION

EARNINGS

($)

ALL OTHER

COMPENSATION (5)

($)

TOTAL

($)

Cheryl A. Bachelder

Interim Chief Executive Officer

2019

$234,154

-

$   334,275

-

-

-

$108,031

$   676,460

(appointed December 18, 2018)

 

 

 

 

 

 

 

 

 

 

Alasdair B. James

Former President and

2019

$815,385

-

$   892,498

-

-

-

$267,606

$1,975,489

Chief Executive Officer

(resigned December 18, 2018)

 

2018

$826,923

$300,000

$1,674,782

$1,001,320

-

-

$  78,568

$3,881,593

Nancy A. Walsh

Former Executive Vice President

2019

$584,231

$615,000

$   373,225

-

-

-

$202,507

$1,774,963

and Chief Financial Officer

(departed April 17, 2019)

 

2018

$  48,654

$200,000

$   671,530

-

-

-

$  23,335

$   943,519

William H. Savage

Executive Vice President,

2019

$450,000

$450,000

$   370,107

-

-

-

$129,256

$1,399,363

Global Supply Chain

 

 

 

 

 

 

 

 

 

 

Mark R. Haley

Executive Vice President,

2019

$345,288

$725,000

$   167,949

-

-

-

$  26,870

$1,265.107

Store Sales and Operations

 

 

 

 

 

 

 

 

 

 

Robert E. Bostrom

Executive Vice President,

2019

$  54,404

$375,000

$   572,368

-

-

-

$100,647

$1,102,419

Chief Legal and Compliance Officer